Requiring rental insurance

[Kaenan Whitman]

Curious who requires rental insurance for multi family units? Any specific coverages? Why?

[Frank Chin]

It's a good idea to require tenants to get them. Many landlords and tenants assume landlord insurance covers tenant's belongings as well as possible liability. It does not.

When tenant suffers losses, such as a theft, and they find out your insurance doesn't cover them, they seek an attorney and claim it's all due to your negligence. One tenant was seeking $1,500 from us for a burglary in his apartment, including an expensive leather jacket worth $800.00.  They found out to their shock and surprise that our liability insurance doesn't cover them, then got their attorney come back alleging  negligent security, flimsy locks. We didn't file the claim with our insurance because our agent advised us, with a few claims like this, the insurance company will cancel coverage. We settled with the tenant and didn't renew their lease.

You'll go broke fast buying tenants $800.00 jackets.

Basic rental insurance only cost $150/year, and covers around $100,000 in property loss, land liability, which I don't recall how much. It's so cheap I'm even willing to cover it if it doesn't affect my landlord coverage. 

The other way is to stress in the lease they are responsible for their own property. It doesn't always work. Not long ago, there was a major apartment building fire, over 30 tenants were burnt out of their homes, and everything destroyed. The papers reported because almost all of them had no rental insurance, and the landlord doesn't cover their losses, they have to take up shelter with the Red Cross, and possibly go homeless afterwards. That is unless a bright attorney comes up with the bright idea of landlord negligence.