Requiring rental insurance

3 Replies

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

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.

We point out in our leases that we do are not liable for their property and that they need to purchase their own rental insurance if they want coverage.

Just a suggestion but maybe you can provide it as an amenity and just bump up the monthly rent

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here