Renters insurance can be of benefit to landlords.
Accordingly, landlords should encourage tenants to have renters insurance and,
if allowed by their state’s law, should consider making renters insurance
mandatory for all their units.
One estimate is that less than a quarter of renters have renters'
insurance. Many residential tenants do not realize that they must purchase
their own insurance to cover damage to their rental property resulting from
risks such as fire, vandalism, and theft. Many also do not understand that they
will be potentially liable for injuries to visitors to their rental properties
or for damages to the property of others, including the landlord’s property,
resulting from negligence of the tenant or of the tenant’s guests. Many
mistakenly think that the landlord’s insurance will protect them regarding these
matters.
Accordingly, landlords and property managers should make
every effort to be sure that their tenants realize the importance of purchasing
their own renters insurance. Lease agreements should clearly state that the
owner’s insurance policy does not insure a tenant’s personal property, protect
the tenant against liability claims, or cover damages to the landlord’s
property caused by the tenant’s negligence. Detailed information regarding
insurance issues should be included in the lease agreement.
Many fires in rental units are caused by tenants while
cooking, by use of faulty appliances or extension cords supplied by tenants, or
by improper use of those items. Accordingly, tenants should also be made aware
that the landlord will have the legal right to collect from the tenant for any
damages to the landlord’s property caused by the tenant’s negligence and that
the tenant may be held liable by the landlord’s insurer for any amounts paid
related to such damages.
The tenants’ casualty coverage will reduce potential
landlord-tenant disputes after tenants’ losses, including from fire, water
damage, and theft. The tenants’ liability coverage may also provide additional
liability protection for the landlord.
Many tenants
have limited assets and are somewhat “judgment proof.” Accordingly, landlords
should usually expect to be named in any lawsuit when someone is injured on a
rental property, no matter that the landlord was in no way at fault. However, a
tenant’s insurance policy may eliminate the need for the landlord’s insurance
policies to pay claims.
No matter how good the coverages provided by the tenant’s
policy and whether or not named in a claim related to a rental property,
landlords should, however, report any event that could lead to potential claims
against the landlord even when it seems obvious the claim will ultimately be
against the tenant’s policy. It will be up to the landlord’s insurance company
and the tenant’s insurance company to determine which of them is liable for
payment of claims.
In most, perhaps all states, the tenant can be required to
carry renter’s insurance by the lease agreement. Some landlord insurers, particularly
for commercial properties, require that tenants be required to carry insurance.
However, landlords should verify that their state does not prohibit or
otherwise regulate such a requirement for residential rental properties. When
requiring the tenant to carry insurance, the lease should also require that the
policy include the rental property as an additional insured and a vested party
for reimbursement in the case of any damages. The lease agreement should
specify the minimum coverage limits for property damage liability in an amount
sufficient adequately cover potential damages to the landlord’s property that
result from tenant negligence.
As with all issues regarding management, landlords must
apply the insurance requirement to all tenants in order to avoid fair housing
violation claims. To be safe, this would mean applying the requirement to
leases executed, renewed, or extended after the decision is made to institute
the requirement. For month-to-month tenancies this would mean as soon as
allowed by state law.
Additional Information
For additional discussions regarding insurance issues see
our “Managing Income Property” eCourse and our “9 Landlord Insurance Issues”
Mini Training Guide.
LandlordOnline.com
wants you to Be a Better Landlord.
Feature #1 - Landlord Resource Center with Updates, Strategic Advice and Tips
This private, members-only site provides you with access to our Landlord Resource Center that includes; Landlord Training Articles, Community Forums, Books, How-to- Guides, Q&A, Maintence, Collection Services, Landlord Tenant Law, Landlord Attorney Directory, Landlord Legal Forms. Read More
Feature #2 - Tenant Screening
Easy to use and read Credit Reports, Criminal, Eviction, Sex Offender, and Suspected Terrorist reports are performed instantly and are accessible 24/7. Eliminate waiting days, hours or even minutes – reports are delivered in less than 10 seconds! Instantly sign leases based on reliable information - fill vacancies FASTER! A recommendation to rent to the prospect is also provided instantly. Reduce the likelihood of costly Fair Housing complaints with a consistent recommendation on every applicant. In todays economy be sure to screen every applicant - Improve PROFIT by making better decisions and reducing bad debt. Read More
Feature #3 - Landlord Legal Forms
Unlimted access to over 1000 Attorney & Expert Approved Forms. You will have instant access to Landlord forms, agreements, letters and notices. With this library of Attorny & Expert Approved forms, you will be prepared for practically any situation that arises. Read More
Feature #4 - Landlord Legal Center
This area of the Private Members area is a collection of all 50 States Landlord Tenant Laws and summary of each state on key issues and policys that every landlord should be aware of. There is also a Landlord Attorney Directory for all 50 states. Landlord Tenant Laws for all 50 States - State Laws Prohibiting Landlord Retaliation - Lead Based Paint Regulations by State - Fair Housing Agencies by State - Tenants Rights to Notice Given Before Entry - Options for Tenant with Defective Units - Deadlines for return on Security Deposit - Lease Termination Notice - HUD/Section 8 Housing - Attorney Referals for all 50 States Read More
Feature #5 - Landlord Collection Services
Tenants walking away with your money? You will now be able to report bad tenants to all 3 credit bureaus. The days are over that bad tenant gets away with destroying your rental and/or oweing you money and you have no recourse. Now you can easily report them to the 3 major credit bureaus. These are same tools that the collection agencies use to recover your money. Read More
Feature #6 - Landlord 1-on-1 Help Center
Landlord 1-on-1 Help Center and Help Forum is your own private answer center where you can post questions 24/7 regarding any real estate related subject and receive answers within a short time. Answers are provided by knowledgeable and experienced individuals, most having spent decades in a wide variety of real estate endeavors. Our staff includes those who have been involved in every phase of both residential and commercial real estate, including single-family homes, condominium projects, small to large apartment complexes, office and industrial buildings, and retail centers, including as developer, investor, broker, and manager.
Feature #7 - Quick Training Guides
These Quick Training Guides range from about 15-60 pages of condensed, to point lessons on 38 different topics that will put more money in your pocket, reduce problems, exposure to lawsuits and much more.
Feature #8 - Insider Secrets to Being a Successful Landlord
These 8 Courses are over 2,000 + pages that provide step-by-step lessons, ideas, suggestions, how-to information to be a successful Landlord. The 8 Courses offered are: (1) Income Property Basics, (2) Evictions Course, (3) Collectiing Judgments, (4) Foreclosures, (5) Valuing Income Properties, (6) Buy and Selling Income Properties, (7) Managing income Properties, (8) Filling Vacancies.
Bonus #1: 2 FREE Credit Reports
Easy to use and read Credit Reports, Criminal, Eviction, Sex Offender, and Suspected Terrorist reports are performed instantly and are accessible 24/7. Eliminate waiting days, hours or even minutes – reports are delivered in less than 10 seconds! Instantly sign leases based on reliable information - fill vacancies FASTER! A recommendation to rent to the prospect is also provided instantly. Reduce the likelihood of costly Fair Housing complaints with a consistent recommendation on every applicant. In todays economy be sure to screen every applicant - Improve PROFIT by making better decisions and reducing bad debt.
Bonus #2:2 FREE issues of Landlord Magazine (Insider Secrets and Tips of Landlording)
This 15-20 page newsletters is there to give "news and information" you can use. Not only do we report industry news, national trends, and market issues, we analyze that information in our editorial to offer our opinion on how it affects you, our reader. Couple that with articles of general interest to landlords, questions and answers gleaned from our landlord forums, perhaps a review of a legal case, and a column written for the commercial property manager.
