Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
My insurance agent says I can require my tenants to have renter's insurance. I run a pretty tight ship as far paperwork and managing my properties, but this is one area I maybe failing in. I appreciate any thoughts here?
@Todd Powell
Hi Todd. I’m currently dealing with a major catastrophe in my 2 family , and despite my recommendations, no one is carrying renters insurance. Now the home is not liveable, and everyone is looking to me to solve their problems. If they had insurance, they could go to a hotel or anything and it’d all be fine. So I’ve learned my lesson the hard way, and from now on i will require it. Hope my tale of woe helps with your question lol. Good luck!
@Todd Powell
I require the tenants to have it. If they don’t already have an insurance relationship, I refer them to my independent agent. I’m not aware of any reason why a landlord couldn’t build it into the rent and buy it, since the renter is the insured and gets the benefit of any claim payment.
I’ve never had pushback from it. However, my portfolio is SFR’s in good neighborhoods, no multi-family (yet). Most of my tenants have pets, which is a good reason to require the liability. The cost is nominal ($10-15/month).
I don’t require it and probably won’t in the future either . That is probably a good business idea and something I’d pursue if I dealt in higher end rentals but in c and d class your not going to be doing this . unfortunately They don’t have extra money for it they don’t see value in paying for it and it could hinder them from paying their most important bill > my rent! If I required that on top of the rent they would simply go down the road and rent from some landlord who doesn’t . Most tenants would likely cancel it or let It lapse after a while anyways and your not going to evict over it . I’d rather make sure they are paying my rent on time instead of the insurance man .
ALL of our tenants are required to have renter's insurance without exception. We don't have any rentals for under $950/month. If they can't afford renter's insurance, then it's a guarantee that they won't be able to keep up with their monthly rent payments either.
@Greg M.
Thank you so much for all that information regarding renters insurance. I did not know it is so advantageous.
One question crossed my mind ... in a case of evIctIon because the tenant dId not follow the lease terms, does the renters insurance pay for the court fees/ lawyer fees that the landlord may Incur for that?
Thanks!
Hi @Todd Powell, I do require my tenants to have renter's insurance. It's a requirement in my lease and I do ask for a copy of it to be sent to me. I do not however follow-up with them throughout the lease term to make sure it's always active. It's more of a CYA for me. I think its beneficial to require renter's insurance because it helps mitigate the threat of a lawsuit and keeping me out of court--when damage occurs to a tenants belongings particularly when it's caused by their own fault and the renter doesn't have renter's insurance, there's a high probability the tenant will try to claim some type of landlord responsibility or reimbursement for damaged belongings. If the damage is severe and requires temporary relocation, the last thing you want to have to deal with is negotiating lodging accommodations on your behalf. If the tenant has renter's insurance than they do not to have to rely upon your goodwill or ability to pay for their temporary lodging and can just make a claim against their renter's insurance to take care of their damaged belongings and temporary lodging. Basically, don't make yourself the first option of allayment. Most tenants will take the path of least resistance, if they have renter's insurance they will certainly choose that path for reimbursements of damaged belongings and temporary lodging first.
...and if you're prospective tenant puts up a big fuss about having to pay for renter's insurance they're probably not the type of tenants you want. If someone can't afford to pay the low monthly rates of renter's insurance, than how close to the edge are they really living. One bad budgeted month would more than likely result in a late or non-rent payment.
I don't think it's something to bring the hammer down on, but it is a good thing to put in your lease as a CYA.
Nope. That's just a cost of doing business, but you can usually recover these costs from the tenant in court.... if you can get the tenant to pay the judgment.
We require proof of renters insurance, one of my property managers even uses a forced placed insurance if the tenant allows theirs to lapse. The reasoning I require it is because we allow pets, and if the tenants animal causes someone else harm the property owner could be on the hook, the renters insurance helps curb this, we have the tenant name the breed, name, sex, weight, of the animal (s) on the policy
Yes, our lease says they have to have it. So If there is a problem and they want to come after us we ask them to just claim it on their renters insurance. We are in the process of getting with a insurance agent to make sure they have it and if not she will sell it to them. This removes our staff from having to do the verification!
My insurance brokerage offers a policy which allows the landlord and/or PM to include a form in renters / tenant insurance in the rent. The liability (property portfolio) is protected first and foremost. It helps protect the assets you own and minimizes the requirements for your tenants.
**BONUS** The landlord and/or PM can make money off of this policy. An extra $4 - $10 per door in the net operating income (NOI) every month.
If you're interested let me know. I would be happy to explain the policy more in depth.
Definitely include RI on your lease and make sure you are added as an additional interest so you can monitor. I have been an attorney for 23 years and only a handful of cases where I sued the tenant resulted in finding a renter's policy that would have covered the loss. Instead, the landlord/owner has to tender their policy and risk increased premiums for things they usually had no control over and could not have prevented.
I would not hand over keys to a tenant without proof of coverage and a dec policy that I call and confirm is active. You might remind the tenant this protects their possessions which they presumably value.
@Todd Powell
Maybe my school of thought is because I haven’t experienced any insurance related nightmares yet, but I do not require tenant to carry renters insurance. However, I highly recommend it during lease signing and educate them that the landlord is not responsible for their personal items in the event of a disaster.
@Todd Powell
Maybe my school of thought is because I haven’t experienced any insurance related nightmares yet, but I do not require tenant to carry renters insurance. However, I highly recommend it during lease signing and educate them that the landlord is not responsible for their personal items in the event of a disaster.
Great discussion! I do not require renter's insurance, though let them know verbally and written that it is highly recommended and where to obtain it.
After reading this discussion, I am going to start requiring it because I see how it can be helpful to me (without any extra costs to me - sign me up!).
I appreciate reading about the real life scenarios where it was use and how it benefited the renter and landlord. Things in my mind are potential instances of a tenant's dog hurting someone else, or if the property is uninhabitable due to a down sewer line or power outage. Anyone have good insurance experiences in face of otherwise bad times?
I have a clause in my lease that says tenants are required to carry their own renter's insurance, and they have to initial that clause. But I don't ask for a copy of their policy or verify that they are staying current on their renter's insurance because I wouldn't actually evict them over this.
Simply write it in your lease that they have to carry renters insurance and that the tenant must name you as an additional insured. The insurance company will notify you as the landlord if the insurance has lapsed. If they allow it to lapse it is a violation of their lease and begin the eviction process.
When I was renting an apartment with my wine a few years ago when we were starting out, our landlord required renters insurance. It wasn't that expensive, and at the time I thought it was a nuisance. Now as a landlord with 3 properties myself, I require insurance of my tenants. It's not expensive and if one of their dogs bites a neighbor my insurance is not on the front line; it's theirs. It doesn't cost a lot, and it's piece of mind for you, and you don't shell out anything. Why not?