Though the acquisition of renters’ insurance is ultimately your tenants’ responsibility, as a landlord it’s important that you have an understanding of what it is and why it’s important, both for your own well-being and for your tenants’.

Your tenants should be aware that in the case of a destructive event at your property (fire, natural disaster, theft, etc.), existing property insurance will only protect your actual property. In other words, tenants’ possessions and personal belongings are not covered.  In addition to protecting their personal items, renters’ insurance also helps protect tenants in the case that a visitor is injured due to their negligence while in their unit. For example, if  a tenant’s dog bites a visitor, renters’ insurance will protect the tenant.

Some property managers build a clause into their lease stating that renters are obligated to purchase renters’ insurance for the duration of their occupancy. Whether or not you choose to include this sort of stipulation in your own lease depends upon your personal preference and, also, state and local laws.

Why would it work to your benefit to require tenants to have such insurance? After all, they’re taking on the risks of being uninsured and you don’t want to give competing properties an advantage by requiring tenants to pay the additional costs, right? Before making this decision, be aware that in cases where a tenant without renters’ insurance is sued by a person who is injured in their apartment, you can be included in this lawsuit also and are not covered if a renter does not carry insurance.

If you choose not to include renters’ insurance as a lease requirement, you should still make a point of informing renters that they are responsible for insuring their own personal belongings, both verbally upon lease signing and in the actual lease text. Generally speaking, most renters’ policies are extremely affordable, and can often be obtained for less than $100 per year. Additionally, many insurance companies offer breaks in cases where a client purchases more than one type of insurance. For example, a tenant may well get a price break by purchasing renters’ insurance through the same company they receive car insurance from.

Ultimately, renters’ insurance is your tenants’ responsibility. That said, you ultimately could be affected by your tenants’  insurance status. Whether or not you decide to require renters’ insurance, always make sure that renters are aware of their options and know what is and is not covered in the event of an unfortunate circumstance.

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