Maryland Residential Lease (Purchased from BP) Question.

[Lakshay G.]

Hello Everyone,

I have a question regarding the MD Residential Lease. On page 8, point 19B states 

"Landlord, in its sole discretion and for its sole benefit, shall cause the Premises to be insured as it deems appropriate. Tenant shall have no right or claim to any insurance or insurance proceeds of Landlord. Tenant understands and agrees that Landlord has no obligation to obtain insurance for Tenant including, but not limited to, liability, hazard, or contents insurance. Tenant shall, at Tenant’s sole cost and expense, obtain renter’s insurance covering the full value of all personal property of Tenant in the Premises, and providing liability coverage to Tenant in an amount not less than $_________, which policy shall name Landlord as an additional insured. Tenant shall maintain such renter’s insurance at all times during the Term of the Lease. Tenant shall provide a certificate of insurance to Landlord demonstrating that Tenant has procured the required insurance coverage, within ten (10) days after the commencement of the Term of this Lease and within ten (10) days after any renewal or change in such insurance coverage. If Tenant fails to procure the required insurance, allows such insurance to be cancelled or to lapse, or fails to timely provide the required certificates of insurance, the same shall be a Default of this Lease.

What should be the amount? I know this amount is circumstantial but what would be the number in general? It's for a 2 bed/1.5 bath row home property.

Thanks in Advance.

[Russell Brazil]

I dont require renters insurance, but all my policies have liability set at $300,000

[Beth H.]

I don't require insurance either.  I highly recommend that you have a Maryland attorney review the lease and make changes as it pertains to the laws in Maryland before you start using it.  I also carry $300k coverage myself.

[Lakshay G.]

@Russell Brazil Can I ask why you don’t require renters insurance? In your opinion, why is it that some landlords to require it and the others don’t? Your liability is set at $300,000 that you’re paying for, why shouldn’t a tenant have some sort of insurance?

@Beth H. I purchased the forms from bigger pockets that are Maryland Based (I mentioned it in the subject 😉). I literally quoted the words from that lease. And why don’t you require renters insurance, just curious?

I’m about to rent out my first deal, first property.

[Beth H.]

I am not familiar with the lease you have.  I just know there are some unique situations to Baltimore City if that is where your property is located.  On tenants insurance, my properties are mostly section 8 or lower end so they usually don't have the funds for it.

[Russell Brazil]

Originally posted by @Lakshay G.:

@Russell Brazil Can I ask why you don’t require renters insurance? In your opinion, why is it that some landlords to require it and the others don’t? Your liability is set at $300,000 that you’re paying for, why shouldn’t a tenant have some sort of insurance?

@Beth H. I purchased the forms from bigger pockets that are Maryland Based (I mentioned it in the subject 😉). I literally quoted the words from that lease. And why don’t you require renters insurance, just curious?

I’m about to rent out my first deal, first property.

 Because I dont care if the tenant loses all their belongings in a fire, or if they get sued. Also its simply not that common in the dc area for renters to have renters insurance, so even if I required it, the tenant would be cancelling it the day after they showed me the policy.

[David Fernandez]

I required renters insurance. It not only protects their belongings as Russell mentioned, it also has a General Liability protection that can help pay for incidents they caused to my properties or to other tenants covered by their insurance. 

I got cheaper insurance rates for requiring my tenants to have insurance. Also, if they caused an incident, they insurance pays, not mine and I don’t get an increase in premium. 

I ask for $100,000 in liability coverage. $300,000 would be better, but I don’t want to overkill them either. Their premium at $100k liability coverage should be between $10-$15/month. 

[Lakshay G.]

Originally posted by @David Fernandez:

I required renters insurance. It not only protects their belongings as Russell mentioned, it also has a General Liability protection that can help pay for incidents they caused to my properties or to other tenants covered by their insurance. 

I got cheaper insurance rates for requiring my tenants to have insurance. Also, if they caused an incident, they insurance pays, not mine and I don’t get an increase in premium. 

I ask for $100,000 in liability coverage. $300,000 would be better, but I don’t want to overkill them either. Their premium at $100k liability coverage should be between $10-$15/month. 

 Thank You for your input Sir. Are you willing to share which insurance company you use? I don't think my insurance company State Farm gave me an option to drop my premium just because a renter would have insurance as well.

[Nicole A.]

I like having renters insurance stated as required in my leases. And the tenant should be listing the landlord as Additional Interest/Insured, and typically, you are then notified if the policy is dropped. I think the typical renter insurance liability amount is $100,000 but you could simply take out the line that asks for a specific number to make things a little more simple. 

There's definitely no need for that much detail listed in the lease in my opinion. So if it's going to cause headaches, just take that little piece out.

[David Fernandez]

Originally posted by @Lakshay G.:

Originally posted by @David Fernandez:

I required renters insurance. It not only protects their belongings as Russell mentioned, it also has a General Liability protection that can help pay for incidents they caused to my properties or to other tenants covered by their insurance. 

I got cheaper insurance rates for requiring my tenants to have insurance. Also, if they caused an incident, they insurance pays, not mine and I don’t get an increase in premium. 

I ask for $100,000 in liability coverage. $300,000 would be better, but I don’t want to overkill them either. Their premium at $100k liability coverage should be between $10-$15/month. 

 Thank You for your input Sir. Are you willing to share which insurance company you use? I don't think my insurance company State Farm gave me an option to drop my premium just because a renter would have insurance as well.

I use a company that only does commercial insurance policies (multi family buildings, office buidings, retail centers, etc.) as I mostly own MF 5+ units. Let me know if this is for a MF building and I’ll DM you their contact info.

Also, let me re-phrase my initial statement where I said I get cheaper rates. My insurance company didn’t drop the rates because I require my tenants to have renters insurance, but I was able to find a company that it made it a must for me to ask my tenants for it and they were significantly cheaper than others I was getting quotes from. 

Sorry if I misguided you at first! 

[Nicole B.]

I require insurance and probably always will.  It's really not expensive for the tenant.  When I was renting, it was only $15/month!

[Lakshay G.]

Thank you again everyone. 

[Joe Addison]

Lakshay,

You should always require renters insurance.

Remember to ensure that the ownership entity of the rental property is added as additional insured to the tenants renters policy. Typical minimum liability limit requirements are around $300k. Their liability coverage will respond to property damage/bodily injury claims where the tenant is found negligent.