As a real estate investor or property manager, you may wonder, should you require your tenants to have renters insurance? Is it legal to need it? What policies should I include? What benefits do my tenant and I gain by making this a mandatory business practice, and how do I enforce it?
As a full-service property management company in Orlando, Florida, we’ve seen the devastating outcomes when landlords decide not to require rental insurance; lawsuits, broken relationships, loss of income, damages to personal belongings, and so many more.
To keep your property running smoothly and to avoid lawsuits, let’s talk about why requiring your tenant to have rental insurance is a must!
To begin, let’s start with the basics.
What Is Renters’ Insurance?
Renters’ insurance, often called tenants’ insurance, is property insurance taken out by the tenant to protect their personal belongings from unexpected and liability claims.
Renters’ insurance generally provides three types of coverages:
Personal Property Coverage
Personal property coverage is a policy that protects your tenant by paying to repair or replace personal belongings if they are damaged, destroyed, or stolen. However, according to Forbes, many tenants don’t think they need renters insurance today. Many renters underestimate the value of their possessions or are under the misconception that their landlord is responsible for damages made.
Personal Property Insurance covers this kind of valuables:
- Televisions and innovative TV systems
- Laptop, PC’s
- Trees and Shrubbery
However, not all personal property coverages are the same. As the property manager, it is first essential to have your tenants understand what is covered and what is not. They should talk to their policy provider before choosing the best policy.
Liability Insurance Coverage
Liability coverage is another policy that rental insurance provides. This coverage pays for damages your tenant causes to other people or their belongings.
For example, a guest is over at your tenant’s property and trips on the rug on the front step. If their guest decides to sue them, they’re judged to be at fault.
Liability coverage does NOT cover the follow:
- Injuries that may fall under a landlord property owner’s responsibility include icy sidewalks, dead trees, unkept maintenance, potholes, etc.
- Damage, and vandalism to their personal belongings
Additional Living Expenses
Additional living expenses cover a tenant for any extra fees due to a covered loss.
These costs include:
- Hotel Bills
- Temporary housing
- Gas/Mileage to/from a temporary rental house, kids activities, work, etc
- Moving costs
- Restaurant meals
- Pet Boarding
These are just a few of the items that are covered under additional living expenses.
What are the benefits for Landlords?
As you can see, requiring renters insurance can help reduce stress and worry, but it can also support landlords to sleep better at night.
These benefits include:
- Avoiding lawsuits
- reducing your liability risk
- avoiding confrontation
Renters insurance is a must-have requirement for tenants when owning a rental property. However, being a rental property owner, you should direct your tenants to consult a licensed insurance broker or provider.
Here are a few Renters Insurance Providers:
Orlando Property Management Summary
Whether you have two units or 300 thousand units, the effective coverage is the best way to go when it comes to owning a rental property.