The requirement for tenants to have renters insurance is written into most leases. In the past this was often not followed up on because the renter felt it was not really important and the landlord felt that his own insurance would protect him if there was property damage. In recent times landlords have realized that renters insurance has much more to offer them and are now insisting that the requirement be met by the tenant. What are these benefits?
- If there is a fire not caused by the tenant, the landlord’s insurance will not cover damage to the renter’s personal property and / or belongings or expenses incurred while the property is being repaired. Renters insurance will cover the tenant and prevent him from making claims on the landlord.
- If an action of the tenant causes injury or loss to a neighbor, renters insurance will cover the compensation, leaving the landlord untouched. However, if the tenant does not carry a renters insurance, the neighbors may hold the landlord liable for damages.
- The tenant’s personal property is covered while they are away from home so if they suffer any loss they will be compensated and their ability to pay the rent will not be affected.
- The landlord gets peace of mind of knowing that if the tenant suffers any loss due to flood, storm, earthquake or other natural disaster, the renters insurance will cover the tenant and leave him with no reason to make unjustified claims against the landlord. The landlord in turn, will be free to focus on repairing his property, with no worries or distraction of claims for damages from the tenant.
- If the tenant is sued for any alleged illegal activities conducted on the premises, the renters insurance will cover the tenant’s legal costs. This leaves his cash flow unaffected so continuing to pay the rent should not be a problem.
- Because of the lowered financial liability for any loss the tenant may suffer or cause to others, the landlord’s relationship with the tenant remains largely unaffected by such matters and this reduces the strain on it. As all landlordsand tenants know, a good relationship is important to a mutually beneficial association.
- Renters insurance is very cheap, the tenant cannot complain about any unfair demands being placed upon him. For example a policy that covers up to $15,000 in property damage and $100,000 in liability can cost as little as $200 per year. In fact, cross line discounts are often offered with auto insurance which could reduce the cost even more.
- The tenant, also has peace of mind, confident in the knowledge that their possessions are covered against loss or damage and that their liability for any activities that may occur in the rented premises is significantly reduced and will more than compensate the marginal additional outflow that the premiums for the policy may cause.
Whether you are a landlord or a tenant, you need to be aware of the benefits and implications of renters insurance. By protecting the tenant, renters insurance reduces the monetary loss that they may have to face. By doing this the strain on the tenant’s finances is reduced which in turn will enable them to make their rent payments and so not place a financial burden on the landlord. Renters insurance is one of those rare polices where the benefits are shared by two parties. Contact your insurance broker for more information on the need for and benefits of renters insurance.