Renters don’t pay much value to renter’s insurance with the misconception that only the landlord is responsible for any damage to their belongings. Whereas having one can protect both tenant and landlord, should there be any damage to property or belongings?
Even replacing the minimal property damage usually costs thousands of dollars, and having one can protect you from this extra expense.
The landlord can require that the tenant should buy and maintain the renter’s insurance. It is a way of protecting the renter’s belongings and landlord’s property.
Thus, if there is damage to the property by fire or flood, the items got stolen, or some accidental damage, renters, and landlords will be saved from paying hundreds of dollars.
It can be considered as an additional layer of protection from unexpected expenses and legal liabilities. However, as the laws vary state by state, it’s always better to discuss with your attorney the addition of the renter’s insurance clause in the lease.
The advantages you would have as a landlord
Reduction of financial and legal responsibilities
Suppose there is a fire in your house or some other accident. As several states hold the landlord responsible for the tenant’s accommodation, you will be considered responsible for providing your tenant a temporary shelter.
Dealing with the property damage and finding a place with all the necessities for your tenant at a time can be nerve-wracking.
If your tenant has renter’s insurance, you will be freed from arranging temporary housing and its expenses. This will be covered solely by the insurance company, and you will be able to focus on your property losses.
Coverage of deductibles
In case of inadvertent damage to your property by the tenant, your insurance policy will pay you the repair costs but not the deductibles. So, paying the deductibles from your pocket would cost you a considerable amount.
If your tenant possesses renter’s insurance, the policy will cover the homeowner’s insurance deductibles. Thus you will be eased from a substantial financial burden.
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Mitigation of threat of Lawsuit
In instances where damage occurs to the tenant’s belongings, it is possible that he holds you responsible for this damage and file a claim against you. In such a situation, renter’s insurance will be extremely helpful for the landlord and keep you out of the situation.
Screening of tenants
When you require renter’s insurance in the lease, you will also get a chance to screen the best tenants. If the applicant claims that he can’t afford the insurance cost, there is the possibility that he might not pay you the rent in full or on time. Allowing such a person to live in your house would be a risk to your property.
In such a case, you can either educate the applicant that renter’s insurance is relatively inexpensive (less than $20 a month). Many renters purchase it for their own benefit or dismiss the application and find a renter with one.
Peace of mind
If your renter has renter’s insurance, there will be one thing less to worry about. You will be free from lawsuits and the fees for those legal issues because they are not your responsibility.
Moreover, as the property and the renters’ belongings are covered in the insurance, both you and your renter will be safe from challenging financial situations.