How much renter's insurance do you require of your tenants?

Question

Do you simply make sure they have renter's insurance or do you require a minimum amount?

I have insurance on my properties and an umbrella policy as well.

Katherine S. · Answer

Generally, when I talk about insurance, my eyes roll to the back of my head, but thankfully I've been able to follow this discussion, except I don't get one thing:

What does being the "additional insured" on your tenant's policy do for you?

Frank Chin · Answer

That means when the tenant cancels the renters insurance, the insurance company sends a notice to the tenant, and also to me, the additional insured, that the policy was cancelled. I learned the hard way what it meant.

I started requiring renters insurance some years back. A tenant wasn't too happy about it but got it and gave me a copy of the 'certificate of insurance" as proof he got it. So far so good. Eight months into his tenancy, he left a window open during a heavy rainstorm while he was out. The bedroom was flooded, some of his furniture destroyed. He came after me to file a claim against my insurance. I said you got renters insurance so file the claim against your own policy. He then admitted he cancelled the policy right after he provided his certificate of insurance.

Long and short of it, he threatened to sue me, I threatened to evict him for violating the lease. My floorboards were all buckled and had to be replaced and repaired. If he had insurance, I would have filed a claim against him for negligence.

When I told my insurance agent what happened, she said "did you put yourself down as additional insured"? I said "no, what does it do for me."

Brian H. · Answer

I had read somewhere that you can require that they have a plan that is paid up for one year (like $150 or so I think?), so that cancelling would then make no sense, for that year.

Brian H. · Answer

@Kathryn Dillon

Personal Liability insurance? Or are you refering to Renter's Insurance???

Account Closed · Answer

I require the tenants to have renter's insurance.  The thing about doing that is, they may have a policy when they sign, but they can cancel that insurance a month later and you'd never know.

I also provide $10,000 worth of property coverage and $50,000 liability and damage coverage for them via Landlord tenant coverage.  I figure at least then the "I told you so" won't hurt as much when they tell me they dropped their coverage, and I'm still covered for an additional $49,000 (there is a $1,000 deductible) if they cause a fire or something similar happens.

Frank Chin · Answer

Yep, I threatened to evict him because he violated the lease. I was mad lied to like that. Wouldn't you be mad if someone pulled a dirty trick on you like that. Originally, I didn't want to rent to him anyway because he was a wise guy, but finally did because I didn't have other better applicants.

I got my last laugh that 3 months later, when his girlfriend threw him out. The girlfriend's dad was some millionaire industrialist in Brazil, and she actually covered the rent. He's some part time sales clerk at a local hardware store, and I wouldn't be surprised he's homeless when she threw him out.

Katherine S. · Answer

@Frank Chin Thanks Frank!  Sorry you had to learn it that way, but I will take your lesson to heart.

I learn something every time I visit this site!

Brian H. · Answer

@Frank Chin

Ouch. Yes, that is a horrible thing. Losing so much because you wouldn't pay so little!  I need to get renter's insurance... lol    Thanks for clearing up the additional insured piece too... I will absolutely be doing that.  So, if you get the notice that they have canceled and you have in your lease that they are required to have it... they are then in violation and could be evicted, if you want to go that route... correct?

Frank Chin · Answer

The landlord is normally not responsible anyway from my research into the matter. Most tenants are under the mistaken belief, if the discussion never took place, is of course the landlord has insurance, and of course it covers me. They're shocked they're not covered.

Also, in NYC, under its rent control laws, it forbids landlords requiring it. So the hold harmless actually puts the tenant on notice.

Recently there was a news story about an apartment building fire. Twenty families were left homeless and stranded at a Red Cross shelter. The story goes on to say that none of the tenants had renters insurance, so when all their worldly belongings were completely destroyed in the fire, they had no way of starting over, relying public charity. So for $150 year, a little over $10.00/month, they put themselves in such a bind.

Brian H. · Answer

The "hold harmless" clause is enough to keep you safe?  Would you be able to share that and the adendum that they sign to say they were advised to obtain renter's insurance???

Others on here, is the hold harmless enough? Or is it best to have them get rental insurance?

How much renter's insurance do you require of your tenants?

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