Do you require tenants to carry renters insurance?

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?

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Investor · Clifton, NJ · Member since 2017 · 53 posts · 54 votes

@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!

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Todd Powell
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Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
8y
@Julie Marquez This topic was on my mind as the older I get I am trying to minimize extra costs and avoid things I can up front when screening and doing paperwork. In the past, I had a tenant caused fire due to her breaking my rental agreement and caused $25,000 or so of damage. One upstairs tenant wanted to vacate asap and was polite but asked me if I had any coverage to move her out. Also, as of late, tenants are pushing the "therapy animal" legal get around for "pets." So, when @Paul Enzinger brings up bites from dogs, like many others have in this thread, it really gets me thinking. I have seen many varying responses here:
1) I don't make them.
2) Its required in my state and I make them.
3) I have them sign, or acknowledge this in my agreement, but I don't enforce or monitor (that's me!)
4) I make them have it prior to keys and enforce it.
5) I ask them to and see it up front but don not know if they ever cancel.
The thoughtful responses of the masses here show me that its more than a good idea, to get this coverage in hand prior to move in and also have the landlord be named as Additional Insured so you know when and if they drop it. I agree with this, but I would not want to evict over this as some as stated. But, I sure think covering your backside makes more and more sense. Tenants are always wonderful up front, but when the issues arise they seemingly can change colors.
Thanks for the feedback, love the thread! @Jason Powell
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Carlos Velez
Rental Property Investor · East Orange, NJ · Member since 2018 · 12 posts · 3 votes
8y
Absolutely, we require it and it’s stated in the rental agreements. Anything to reduce risk on everyone’s part - tenant and landlord! Good luck!
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Jonathan Soto
Lender · Newark, NJ · Member since 2016 · 695 posts · 252 votes
8y
I require it on my lease but don't verify if they actually have it. I believe one of my tenants purchased theirs via the Cozy website which I require them to pay rents. BEst of luck.
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Nancy P.
Naperville, IL · Member since 2018 · 330 posts · 357 votes
8y
I have three questions:
1. My Illinois agent said they had to have signed the lease before they can buy insurance. So how do you enforce since they will have already signed the lease? Predicate the getting the keys on proof of insurance?
2. If you require it but they don't get it because you didn't follow up, does that protect you in any way in case of the fire or whatever? Can it prevent them from coming after you because they failed to follow something required in the lease? ( I realize a reason for wanting it is protecting your own policy such as a dog bite case, I'm thinking more of the fire scenario where their own things are destroyed.)
3. If you have several properties and decide to require it going forward, but didn't go back and require it of current tenants (how could you if it isn't in the lease?), could a tenant use that to claim discrimination? Unlikely but I worry about that sort of thing.
Given the "support animal" situation mentioned above, I'm leaning toward requiring it in future.
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Todd Powell
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Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
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@Nancy P. Your point number one is VERY interesting if that's the case in Oregon. Does the chicken or the egg come first and how does one enforce this? Great input
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Eric Oslund
Rental Property Investor · Rockford, IL · Member since 2018 · 1 post · 1 vote
8y
@Todd Powell great questuon! I would definitely reccomend that all tenants have renters insurance. Request to be added as an “Additional Insured” and ask for a “Certificate of Liability” prior to handing over the keys. Being listed as an additional insured means you’ll be notified if the tenant cancels the policy for any reason and the Certificate of Liability is the proof that you’ve been added to the policy as an additional insured. Hope that helps!
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Aaron Rowzee
Investor · Lumberton, TX · Member since 2017 · 146 posts · 93 votes
8y
Yes and its worth it. Even though a tenant can't really sue you for a fire and the loss of all their stuff (or any manner of situations) it prevents them from trying, and it forces them to be able to recover after the fact. Renters is as low as $15/mo in my state and I require it for my tenants. Its a no-brainer.
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Eva Brock
Brooklyn, NY · Member since 2017 · 26 posts · 13 votes
8y
@Todd Powell Consider pricing it into the rents
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Nancy P.
Naperville, IL · Member since 2018 · 330 posts · 357 votes
8y
Originally posted by @Eva Brock:
@Todd Powell Consider pricing it into the rents
While I could certainly price it into the rent, my insurance agent says the tenant himself has to apply and sign for it...again, after the lease is signed. Most of my leases are signed a week or so before move in, so I guess that's when they could get the insurance.
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Sergio Aguinaga
Detroit, MI · Member since 2018 · 148 posts · 38 votes
8y
@Greg M. Why not additional insured to protect from lawsuits?
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Sergio Aguinaga
Detroit, MI · Member since 2018 · 148 posts · 38 votes
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@Marcia Maynard why additional interest over additional insured? Doesn’t additional insured protect from lawsuits?
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Cambry Moody
Fayetteville, NC · Member since 2017 · 4 posts · 4 votes
8y
@Todd Powell The tenants liability coverage would cover any abnormal damage/vandalism done by the tenant. Or if their negligence started a fire- use the liability on their policy to potentially avoid filing a claim on yours. I’m an insurance agent by day! Hope this helps!
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Cambry Moody
Fayetteville, NC · Member since 2017 · 4 posts · 4 votes
8y
@Nathan G. If you require it and they don’t keep the policy in force then they cause damage due to negligence- you stand a much better chance at winning a small claims court case against them!
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Cambry Moody
Fayetteville, NC · Member since 2017 · 4 posts · 4 votes
8y
@Greg M. Yes! Yes! Yes! All of the above! 👏
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
8y
Originally posted by @Cambry Moody:
@Nathan G. If you require it and they don’t keep the policy in force then they cause damage due to negligence- you stand a much better chance at winning a small claims court case against them!
Do you have an actual instance to confirm this or is that just your feeling?
I manage over 300 rentals and I have never had to take a tenant to court to recover damages due to negligence that would have been covered by renter insurance.
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George SkidisPro Member
Rental Property Investor · Belleville, IL · Member since 2017 · 875 posts · 529 votes
8y
Always have a lease clause that the tenant is required to carry renter's insurance. The clause should cover the fact that your insurance does not protect them or compensate them in any way. The clause is for your protection as much as theirs.
One of the benefits of residents carrying renter's insurance is that their negligent acts can be paid by their insurance policy not yours.
You can be added to their policy to receive notice of termination. Make sure it is worded properly or you may be drug into a liability claim that has nothing to do with you but your deep pockets.
Do not collect premiums on their policies. This makes you an unlicensed agent. Agent's are required to have a premium trust fund to escrow and deposit premiums collected on behalf of the insurance company. Stay out of the premium finance business.
Find a good agent in your area or call me for their renters insurance in Illinois, Missouri, Ohio or Michigan.
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Todd Powell
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Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
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@George Skidis Great input! A separate form would be great just in case they decide to drop it later on! Thanks for the awesome input!
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Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
8y
Originally posted by @Sergio Aguinaga:
@Greg M. Why not additional insured to protect from lawsuits?
The most basic answer is that as a landlord you want to make sure that your tenant has proper insurance in place to protect you against liability claims and property damage caused by them. Being listed as an additional interest accomplishes this and assures that you will get notified of any changes in the policy. Your tenant should not be purchasing a policy to insure you. You have your own policy for your negligent actions.
Also, at some point you may have to sue your tenant for damage to the unit and it would be like suing yourself as the insurance company would have to defend one insured against the other insured. [Coverage can be denied in situations like this.
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Sergio Aguinaga
Detroit, MI · Member since 2018 · 148 posts · 38 votes
8y
@Greg M. It almost feels like a double edged sword. Tenant can sue me for things and the additional insured is added protection. But, I can also sue the tenant for damaged items. In this case it backfires on me. I purchased the lease agreement from bigger pockets and they had it as additional insured and most professional investors encourage that one but I can see why it can be bad since I can’t sue tenant.
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Adrian Chu
Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
8y
Yes, request for them to purchase. It will reduce liability for you, the owner.
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Eva Brock
Brooklyn, NY · Member since 2017 · 26 posts · 13 votes
8y
Originally posted by @Nancy P.:

Originally posted by @Eva Brock:
@Todd Powell Consider pricing it into the rents
While I could certainly price it into the rent, my insurance agent says the tenant himself has to apply and sign for it...again, after the lease is signed. Most of my leases are signed a week or so before move in, so I guess that's when they could get the insurance.
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