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

General Landlording & Rental Properties
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How much renter's insurance do you require of your tenants?

Steve S.
Dallas, TX · Member since 2014 · 650 posts · 53 votes

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.

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Brian H.
Carolina · Member since 2017 · 519 posts · 222 votes
9y

@Kathryn Daniel

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

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  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y

    Here's some info about renter's insurance in the NY area: Renter Insurance

    Your landlord insurance and umbrella only cover's your liability, not the tenant's property. Renters insurance purchased by your tenant covers his belongings.

    For instance, a tenants of ours had his apartment broken into, came after us, but I told him it doesn't cover his belongings. So he got smart, got a lawyer, got after us for lack of security. Bottom line, cost us $1,500, attorney and insurance broker advised us to settle. Tenant didn't have renter insurance.

    I require it now, the cheapest policy would do, something like damages for $25,000 should be good.

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  • Brian H.
    Carolina · Member since 2017 · 519 posts · 222 votes
    9y
    Frank Chin Oy. That sounds like a headache! Do you run into many potentially good tenants that end up walking away from the application process because you require renters insurance?
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  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y
    Originally posted by @Brian H.:

    Frank Chin . That sounds like a headache! Do you run into many potentially good tenants that end up walking away from the application process because you require renters insurance?

     No, so far had no problems. But the lease I use nowadays contains a hold harmless clause in the event tenants opt out, and thus far no one did. Years ago, I wasn't aware of all this.

    When I originally did the analysis, rentals for 2BR apt ran $1,200/month and high end renters insurance run $125 to $150 a year. So just by building it into the rent, $10/month, I got it covered.

    If good tenants walked away, my plan B was to cover it myself. However, my insurance agent said technically I cannot buy insurance for someone else, like I cannot buy auto insurance for you. Then, I figured I'll let the tenant buy it, show me the certificate of insurance  with me as additional insured, and I'll reimburse him.

    Sounds like a headache till you get sue happy tenants. Some tenants think the landlord got insurance, so if the expense high heels got stolen, I could file a claim, and like my tenant, if the Landlord refuses to pay, sue for landlord negligence. My insurance agent tells me that it would result in too many claims, and the insurance would drop me. So renters insurance would alleviate headaches with these types of tenants, and not involve your insurance.

    In my case, the tenant claimed an expensive leather jacket worth $850.00 among other things was gone due to my flimsy locks. Someone else got $650.00 high heels. So if I only got landlord insurance, I wind up not filing claims to prevent insurance from dropping me. I never wore $850 leather jackets, my wife never wore $650 high heels, but would wind up buying them for tenants, due to insurance issues.

    Renters insurance will cover all these FAKE claims.

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  • Shaun Patterson
    Property Manager · West Palm Beach, FL · Member since 2012 · 296 posts · 143 votes
    9y

    We always make our renters buy renters insurance. It may be a headache to get them to set it up but down the line it helps. Our limits right now are 10k/100k if they don't use ours we make sure that all tenants are listed on the policy and we are additional insured.

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  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    9y
    All of our renters are required to have renters insurance. Has not slowed down our leasing one bit. 100k required
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  • Kathryn Daniel
    Property Manager · Gurnee, IL · Member since 2012 · 94 posts · 43 votes
    9y

    We require a minimum of $100k personal liability. Most places require it now so applicants/renters don't seem to flinch when we say it's required. I also explain how important it is for them to have as it protects them as well ... and it's not expensive at all.

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  • Brian H.
    Carolina · Member since 2017 · 519 posts · 222 votes
    9y

    @Kathryn Daniel

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

    1Reply
  • Kathryn Daniel
    Property Manager · Gurnee, IL · Member since 2012 · 94 posts · 43 votes
    9y

    Renter's insurance. There is a limit to liability and contents in the policy. We require $100k liability.

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  • Brian H.
    Carolina · Member since 2017 · 519 posts · 222 votes
    9y

    @Kathryn Daniel  Gotcha. That makes sense.  I can't imagine people that rent their properties out without requiring rental insurance these days... blows my mind.

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  • Account Closed
    Investor · Denver, CO · Member since 2016 · 736 posts · 582 votes
    9y

    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.

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  • Brian H.
    Carolina · Member since 2017 · 519 posts · 222 votes
    9y

    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.

    1Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    The owner's insurance covers the mortgage & liability - - for anyone on the property, including guests - - does not cover tenant personal property.

    The renter's policy covers their property and has no liability coverage.  

    The cost is C H E A P like $125/yr and as it's their property, setting a minimum coverage is foolish IMO.

    2014, my upstairs tenant started a fire in a stuffed chair causing $95k damages to the property and about 75% loss of their personal property.  Sure they whined, but I told them to contact their insurance broker - - of course they didn't have one currently, but they learned they were penny wise and dollar foolish.

    I had no consequences arising from them (other than the fire itself).

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  • Jade S.
    Investor · Evans, GA · Member since 2015 · 190 posts · 103 votes
    9y

    We don't require it, however, we do have a "hold harmless" clause in the lease agreement as it relates to a tenant's personal property.  We also have a page in the lease where the tenants must sign that they have been advised by my PM to obtain renter's insurance.  I know first hand the value of such insurance as I had to make a claim on my own renter's insurance policy when I was just out of graduate school and an upstairs neighbor left water running in a bathtub.  Nasty mess in our bedroom...

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  • Brian H.
    Carolina · Member since 2017 · 519 posts · 222 votes
    9y
    Originally posted by @Jade S.:

    We don't require it, however, we do have a "hold harmless" clause in the lease agreement as it relates to a tenant's personal property.  We also have a page in the lease where the tenants must sign that they have been advised by my PM to obtain renter's insurance.  I know first hand the value of such insurance as I had to make a claim on my own renter's insurance policy when I was just out of graduate school and an upstairs neighbor left water running in a bathtub.  Nasty mess in our bedroom...

     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?

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  • Katherine S.
    Investor · Grosse Pointe Shores, MI · Member since 2017 · 160 posts · 74 votes
    9y

    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?

    1Reply
  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y
    Originally posted by @Katherine S.:

    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?

     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."

    1Reply
  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y
    Originally posted by @Brian H.:
    Originally posted by @Jade S.:

    We don't require it, however, we do have a "hold harmless" clause in the lease agreement as it relates to a tenant's personal property.  We also have a page in the lease where the tenants must sign that they have been advised by my PM to obtain renter's insurance.  I know first hand the value of such insurance as I had to make a claim on my own renter's insurance policy when I was just out of graduate school and an upstairs neighbor left water running in a bathtub.  Nasty mess in our bedroom...

     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?

     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.

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  • Brian H.
    Carolina · Member since 2017 · 519 posts · 222 votes
    9y

    @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?

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  • Katherine S.
    Investor · Grosse Pointe Shores, MI · Member since 2017 · 160 posts · 74 votes
    9y

    @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!

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  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y
    Originally posted by @Brian H.:

    @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?

     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.

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