Many tenants do not obtain their own renters insurance. Either they underestimate the value of their personal possessions or they incorrectly assume the landlord’s policy will cover them.
In most states, landlords can require renters to have their own insurance, and here are three reasons a landlord should consider doing just that:
- You can be protected from damage to your property.
If there’s a covered accident, such as a fire, your building policy would pay the losses to the dwelling or building. However, if the fire was caused by your tenant’s cooking mishap, the tenant would be liable, or responsible, for the loss. If the tenant has a renters policy, they could have some coverage for this loss. If the tenant does not have a policy to adequately cover their personal liability, a claim could be made against your policy that could also affect your premium.
- You can mitigate the risk of renters having pets on the premises.
As a property owner, if your tenant’s dog causes injuries to someone on premises, you could be held liable for the claim. Requiring a renter to carry their own renters insurance can help mitigate the risks of pets with dog-bite liability and property damage coverage. By requiring tenants to carry insurance, you can market your property more freely to include pet owners.
- Protecting your own policy from large or multiple losses.
Insurance is a vital tool to protecting your financial well-being from large, unexpected losses. But having frequent claims can increase your premium and even make it harder to obtain insurance. By requiring tenants to carry their own insurance, you may lower unnecessary claims against your policy simply because the tenant does not have their own coverage.
As a landlord, you should consider requiring proof of your renter’s insurance along with the signed lease agreement. Before doing so, you should consult with legal counsel to confirm compliance with any state and local laws regarding requiring tenant’s insurance. Landlords may also consider requiring tenants to list them as an additional interest on the tenant’s policy to make sure it stays in force with adequate coverage limits. And to make sure you have the insurance protection you need, be sure to speak with your local independent insurance agent.
Coverages described here are in the most general terms and are subject to actual policy conditions and exclusions. For actual coverage wording, conditions and exclusions, refer to the policy or contact Landmark Risk Management & Insurance.
Claim scenarios are for educational purposes only. Every claim is adjusted according to its own specific set of facts. Whether or not insurance coverage would apply to any claim is dependent on the facts and circumstances of each individual claim and the language of the insurance policy.
Neither The Cincinnati Insurance Company nor its affiliates or representatives offer legal advice. Consult with your attorney about your specific situation.