As a landlord, you may wonder what are the best ways to insure your property. Besides your own insurance policy, should you require your tenant to hold a renters insurance? We think you definitely should. We have talked elsewhere about landlord policies, so let us discuss the benefits of the renters insurance for your rental investment.
What does renters insurance cover?
Renters insurance provides coverage if the tenant’s personal belongings, furniture, clothes, or electronics, for instance, are damaged by dangers mentioned on the policy, such as fire, water, smoke, theft, or vandalism. It also provides the tenant with liability coverage if someone is hurt on the property, or if the tenant accidentally damages the property. The renter’s insurance, however, does not cover the house structure, which is insured instead through a landlords’ policy.
Why is renters insurance so important for the landlord?
In case a person is hurt on the premises or the tenant damages the property, any claim will be placed first on renters insurance, and only after on the landlord’s policy. Asking tenants to hold renters insurance is a must, yet it is rather hard to keep track of the tenant paying the policy. Ideally, you need to ask your tenant to provide a proof of contract before they move in. If you ask to be listed on the contract as an ‘interested party’, you will receive a notification when that policy lapses, and you can ask your tenant for a renewal.
At HomeVault Property Management, we ask our tenants to maintain a minimum required insurance coverage of $100,000 for damage to the landlord’s property for no less than the following causes: fire, smoke, explosion, water damage, backup or overflow of sewer, drain or sump (see our blog “Why Tenant Liability Insurance is a must”). But we also advise our tenants to acquire a renters policy to insure their own belongings.