Renters Insurance

7 Replies

I'm getting ready to rent out my first few rental homes and have been on the fence with the subject of requiring renters to get renters insurance.  It seems like many leases I have looked at require it, but I fear that forcing it on tenants may scare some otherwise good people away.  I also try to put myself in the tenants shoes and I kind of think it feels like an unnecessary demand, when I am already saying "no pets", "no smoking", "no persons in the rental not on the lease", "no parking on the lawn", etc....  


I would really appreciate some of your opinions on the subject.

Originally posted by @Ty Whitman :

I'm getting ready to rent out my first few rental homes and have been on the fence with the subject of requiring renters to get renters insurance.  It seems like many leases I have looked at require it, but I fear that forcing it on tenants may scare some otherwise good people away.  I also try to put myself in the tenants shoes and I kind of think it feels like an unnecessary demand, when I am already saying "no pets", "no smoking", "no persons in the rental not on the lease", "no parking on the lawn", etc....  


I would really appreciate some of your opinions on the subject.

 You are not scaring good tenants away, you are attracting good tenants.  Those who are good tenants will understand and comply.   

No pets, no smoking etc isn't going to be sufficient.   What if your tenant claims that his belongings were stolen when the exterminators were at the house?  If your tenant has his  own renter's insurance, he can file a claim with his insurance company, otherwise your tenant may come after you, the Landlord.  

You also need an extra layer of 3rd party liability protection so that your tenant's policy will be invoked first before the claimant comes after the landlord.

Renter's insurance is a must have in my opinion, but how to ensure that your tenant will comply  is a totally different story.    

I suppose you can add a clause in the contract that for every month without renter's insurance, you will deduct a certain amount from the security deposit,  although you probably should check with your state to see if that is legal first.

I don't know if it will scare off renters, but there are advantages to requiring renter's insurance according to 

http://homeguides.sfgate.com/benefits-requiring-te...

Such as you are less likely to be sued if the property is damaged, and renter's insurance usually can include liability coverage that will pay you the landlord for repairs after say, there was a fire caused by the tenant. 

I personally got away from renters entirely a few years ago. I only owner finance my houses, and the occupant must pay for home insurance.

Originally posted by @Ty Whitman :

I'm getting ready to rent out my first few rental homes and have been on the fence with the subject of requiring renters to get renters insurance.  It seems like many leases I have looked at require it, but I fear that forcing it on tenants may scare some otherwise good people away.  I also try to put myself in the tenants shoes and I kind of think it feels like an unnecessary demand, when I am already saying "no pets", "no smoking", "no persons in the rental not on the lease", "no parking on the lawn", etc....  


I would really appreciate some of your opinions on the subject.

 Renter's Insurance should definitely be a must.  You are doing yourself and your tenants a disservice if you do not look to educate them on the importance of this coverage.  I can also tell you without a doubt that the best tenants will always want to carry their own insurance without anyone requiring it of them.  They understand that their policy will protect them against any of their own personal liabilities AND protect their personal property in the event of a fire or theft or water damage, etc... where your policy covering your liability and the dwelling will not extend coverage to them for liability or property damage.

It's best to have this conversation prior to anyone moving in and it can easily be added to your lease agreement.

Ivan

@Ty Whitman Great question! This is something that everyone seems to go back and forth with. I'm looking forward to hearing both schools of thought.

I require renters insurance.  The lease specifically states it's required.  It also specifically states that I am not responsible or liable for any personal belongings.  I don't ever check to see if they got a policy or not.  But, I always tell them this real life experience.   

In one of my properties, I had a new roof installed.   A heavy rain occurred, the roof leaked through the ceiling, and onto a $2,400 MacBook Pro.  Tenant notified me of the roof leak.  Not until after I had inspected the roofers repair did I learn of the MacBook damage.  Their renters insurance had fixed the computer for them.  If they had asked me to repair or replace, I would have pointed out the lease paragraph stating insurance is required and I'm not liable.  

Thank you everyone for your input.... good points and something I will seriously consider doing.

If the tenant won't pay $250 a year for renters insurance. Than I do not want them!