Most standard leases include a clause that informs renters that their property is not covered under the Landlord’s insurance policy. Most leases and property owners strongly recommend that tenants purchase their own renters insurance. It is not standard practice to require tenants to buy renters insurance. One reason why landlords do not require renters insurance is requiring tenants to get renters insurance could turn away potential tenants and can be a headache to enforce. However, the benefits of requiring renters insurance for your building may outweigh the potential drawbacks.
According to Mary Gallagher, an urban planner and consulted in San Francisco, there are several benefits to requiring tenants to get renters insurance. She lists the following benefits:
Decreasing likelihood of a tenant based lawsuit
According to Gallagher if a tenant doesn’t have insurance to covered the tenants losses, the tenant is more likely to sue the landlord and claim that the landlord was at fault because the damage arose either directly or indirectly from the building
The property is more likely to be cleaned up post damage
Since most renters insurance also covers cleanup it is more likely that the rental property will be cleaned up after the property is damaged if the tenant has renters insurance. If the tenant doesn’t have renters insurance they could just leave the apartment and leave the owner to deal with the cost of cleanup
Tenants with Renter’s Insurance are Less Likely to Move
Tenants without renters insurance may cut and run after they damage their apartment. This not only costs you in cleanup but will also cost you the units rent until the vacancy is filled.
Renters Insurance Can Include Liability Coverage
Tenant renters policies can also include liability insurance. So if a tenant causes the damage the insurance would also pay the landlord to get the property fixed rather than the landlord having to use their own insurance and eventually going after the tenant for damages.
However, it may not be enough to require tenants to have renters insurance. According to EffectiveCoverage.com if landlords are not careful a tenant can buy a renters insurance policy, show the landlord and then cancel the policy the next day. Therefore EffectiveCoverage.com recommends that landlords or property managers be added as additional interests on renters policies so that they will be notified if a policy is changed, cancelled or renewed.
With RISSOFT software for property management, landlords and property managers can track and attached renters policy information to specific units through the document management option. By using RISSOFT’s exclusive software for property management, landlords and property managers can keep organized so that they can track important information about units and tenants saving them time and money
This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge Property management systems for all 50 states. Request a demo or contact us today to receive more information.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.