5 Reasons Why Landlords Should Require Renters Insurance

According to Forbes, many tenants underestimate the value of their possessions or mistakenly believe that their landlord is responsible for their belongings, leading them to think they don’t need renters insurance. Requiring tenants to have renters insurance can protect them in case their property is damaged or stolen. Even replacing a small amount of lost property can be costly, and it’s undesirable for tenants to face unexpected expenses. If you’re unsure about making renters insurance mandatory for your tenants, continue reading to discover the top advantages of renters insurance for both landlords and tenants.

Is it possible for landlords to require renters insurance? As stated by Zillow, landlords can make renters insurance a requirement in a new lease or lease renewal. However, it is advisable to check local and state laws before adding a clause mandating renters insurance to your lease agreement.

What does renters insurance cover?

Similar to homeowners insurance, renters insurance covers the cost of replacing personal belongings (such as computers, televisions, furniture, or bicycles) if they are damaged, destroyed, or stolen. The landlord’s insurance typically covers the buildings or structures, but according to FindLaw, tenant property losses are usually not covered by the landlord’s insurance.

According to Nolo, renters insurance can cover:

  • Loss due to theft
  • Negligent destruction of tenant or landlord property
  • Liability for injuries
  • Natural disasters

Why landlords should require renters insurance

Assists with relocation expenses – Depending on the state you reside in, you may be responsible for covering the cost of tenant relocation in case of a fire or other natural disasters. Even if it’s not required by state law, you may feel obligated to help your tenants while dealing with your own property damage. Zillow mentions that many renter’s insurance policies offer coverage for temporary living costs if a tenant needs to relocate due to damages.

Reduces the risk of a lawsuit – According to Nolo, the landlord’s liability policy is unlikely to cover a tenant if the property is damaged or someone is injured due to the tenant’s negligence. Tenants can benefit from obtaining renters insurance since it protects both their personal property against damage or loss and covers their personal liability if someone is injured while on the property.

Protects you in the event of property damageRentPrep highlights that if a fire or other accident (without the tenant’s fault) causes damage to the tenant’s property and they have no other means to cover the loss, they may seek compensation from you. Your own insurance is unlikely to cover the tenant’s personal property in such situations, but renters insurance might. Requiring renters insurance provides peace of mind knowing that your tenants have a way to recover losses.

Allows you to be pet-friendly – With 68% of U.S. households owning a pet, landlords who accept pets have a larger pool of applicants to choose from. Renters insurance can help mitigate the risks associated with pets by providing dog-bite liability and property damage coverage. Coverage may vary depending on the state, type of animal, and insurance company. If renters insurance is the sole basis for allowing pets, it’s important to ensure that your tenants’ policies cover pet liability.

Lowers the chance of increased insurance premiums – Zillow reports that a landlord’s insurance premiums can increase or even be canceled instead of renewed if there are too many claims. If a tenant has renters insurance that may cover all or a portion of a loss, you can potentially reduce the likelihood of your own premiums increasing.

While there are definite advantages to requiring renters insurance, it’s still crucial to thoroughly screen potential tenants before allowing them onto your property. Renters insurance can help minimize the risks for your tenants, but one of the best ways to reduce your own risk is by finding tenants who pay rent on time and respect your property. SmartMove from TransUnion provides detailed information and leasing recommendations, allowing you to choose the right tenant.

TransUnion SmartMove offers landlords a comprehensive solution with excellent reports, convenience, and reliable tenants. Landlords receive a rental screening-specific credit report, a criminal background check sourced from numerous national criminal records, a national eviction report, a ResidentScore, and a customized leasing recommendation.

For more tips on renter’s insurance and why landlords should require their tenants to have it, speak to one of our Triton Insurance Group Independent Insurance Agents. He or she can help you or your tenants obtain the right coverage at an affordable price.

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