Renters' Insurance 101

Renters' Insurance 101

Theft, damages, andaccidents are things no one wants to anticipate, but we should prepare for themin case they happen. If you are a landlord, these are realities that you shouldbe able to deal with. No good property owner wants conflict to arise betweenthem and their tenants, after all.

A landlord’s insurancepolicy covers only the building and does not provide recovery for your tenant’slosses. While this protects your interests as the asset owner, knowing thatyour tenants’ needs will also be covered in cases of fortuitous events is onlyfair and mutually beneficial.


What isRenters' Insurance?

Renters' insurance is apolicy that enables tenants to recover losses from unforeseen events liketheft, damage, injury, liability, accidents, and calamities involving theirbelongings within the rented property. Some policies even include belongingsoutside the premises of the property like items brought during travel orborrowed items.


What Arethe Basics of Renters' Insurance?

It’s best to know howrenters’ insurance works and ask questions like 'What does renters' insurancecover?' and 'What practical benefits do they provide?'

In brief, renters'insurance coverage includes:

Personal belongings: In cases of burglary or theft, or damage tothe personal properties of the tenant, having renters' insurance providesrecovering the costs of the lost or broken items.

Third-party liability: The renters' insurance covers the cost ofinjuries to another person or damage to another person’s belongings caused bythe tenant. Hospital or legal expenses in cases of medical treatments or legalsuits are also covered by the insurance. A victim’s claims are therefore moreeasily settled in a way that is legally and morally equitable.

Additional living expenses: If the tenant’s rented space becomesuninhabitable for reasons such as natural calamities or broken basic utilities,his or her expense incurred in temporarily staying in a hotel or otheraccommodation will be covered by the renters' insurance.

Renters’ insuranceobviously provides benefits to tenants but it can also be advantageous tolandlords in many ways.

For starters, renters'insurance gets the weight off your shoulders when a tenant’s personalproperties get lost or damaged. By making it clear that the policy will providefor covering the cost, it practically tells the tenant that it is not thelandlord’s responsibility to replace them or pay for them, but the insuranceprovider’s.

You may extend helpfor humanitarian reasons as a landlord but you cannot be obliged nor expectedto pay for the losses - this may depend on your relationship with the tenant,and is up to your discretion.

Another benefit thatyou cannot put a price tag on is peace of mind. Knowing that someone else isgoing to take care of the tenant’s losses if and when the unfortunate happensrelieves you of stress. Renters' insurance reduces incidents of conflict betweenyou and your tenant caused by erroneous expectations and unfair demands.


What Renters' Insurance Should I Get?

Renters' insurancepolicies offer different coverages depending on the amount of coverage,property location (risk-prone areas can cost more), property size, and claimhistory. Circumstances like if a tenant keeps a stash of valuables like jewelryor luxury goods in the property can also cause the policy’s cost to be higher.

Typical renters'insurance rates range from USD15 to USD30 a month. Premium coverages usuallyinclude damages incurred not only by the tenant but also by the tenant’schildren or pets. They also cover medical costs for a tenant's guest's injuriesif they happened on the property. Theft or damage costs for properties borrowedby the tenant are also covered.

If a tenant has kidsor pets or keeps valuables inside the property, the best policy is the one thattakes care of these things if something unfortunate happens.


ShouldYou Require It From Your Tenants?

Tenants are notrequired by law to have renters' insurance, but as a landlord, you may requireit from all your tenants as a matter of preference. Be sure though to requireit from all of them and not just on a selected few, subjecting everyone to yourpolicy.  

Also, be upfront aboutit in your advertisement and your lease agreement, as well as in renewalsthereafter. Make sure that the contract includes a clause that requires them tohave renters' insurance and to furnish you with proof of the policy.

Renters' insuranceshould not be perceived as an unnecessary expense but a reliable layer ofprotection that puts both the tenant and the landlord’s minds at ease. And tohave a ready recourse in case unfortunate things happen.

It’s always better tobe ready rather than sorry and stressed out.