Landlords: What you need to know about renters insurance
Mutual Insurance is expanding its coverage by offering renter’s insurance to new members. There are some conditions and considerations that apply, like the number of unrelated adults in the dwelling and dogs, but the same savings and service will be available. And as always, Mutual will follow its members whether moving to a new apartment or buying a new home.
If you are a landlord, you can tell your tenants to contact us about a policy. If you don’t already require them to carry coverage, here are just some of the reasons you should and specifics you should include in the lease agreement. Renters insurance helps promote respect of property by the landlord and the tenant and that results in peace of mind for all.
Why you should require renter’s insurance
- In all 50 states, landlords have the right to include whatever provisions they want in a lease, like quiet hours or no pets. If you rent to tenants who are not part of specific subsidized housing programs, you can require insurance coverage. Check your local and state housing codes for more information.
- Tenant negligence is the number one cause of damage to apartment units and rental homes. Things like cooking fires, smoke damage, overflowing tubs, and sinks are just some of the more common causes of loss.
- A landlord policy, not just a homeowner’s policy, may cover this damage, but your insurance will want to look to the tenant to recoup money paid on that claim.
- 68% of U.S. households have a pet. Landlords who accept pets have a wider pool from which to choose. Renters insurance can help mitigate the risks with dog-bite liability and property damage coverage.
- Landlord insurance premiums can increase after a claim if there are too many claims. A tenant’s policy may cover all or a portion of a loss and potentially lower the risk of your own premium increase.
- Renters insurance can help make sure a tenant has a place to go if there is a fire or other serious loss. He/she won’t mistakenly be looking to you for accommodations.
- You have no obligation to your tenant for his/her belongings. Some renters are under the false impression that you are. If you make sure they have coverage from the start, you can avoid this type of misunderstanding and a potential lawsuit
- Requiring insurance eliminates most if not all pushback in the case of a claim. It is very affordable and tenants are growing accustomed to the requirement.
- If a potential tenant balks at the need for insurance, this is a good indication that he/she may not be the right tenant for you.
Requirements of coverage you should include in your lease
- Make sure there is plenty of personal liability insurance. Mutual Assurance requires $300,000.
- Be sure to disclaim all responsibility for damages to personal property arising from fire or other events.
- Make sure the policy names you (the landlord) as an “additional interest” on the policy. As such, you will be notified in the event of a lapse or cancellation.
- Ask for a copy of the declarations page meeting the requirements before the move-in date.
- The lease should contain a statement that tells the tenant that failure to keep the required coverage will be a breach of the lease.