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Should You Require Renter's Insurance?

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Most rental property owners understand the importance of having their own property insurance coverage. When it comes to renter's insurance coverage, many leave it to the renter. Should you be joining the ranks of rental property owners who require their renters to purchase renter's insurance as a condition of renting from you?

What exactly is renter's insurance?

Renter's insurance covers the renters personal property. If their property is damaged in a fire, flood, or other accident, they can file a claim for its value, and many renter's insurance policies offer full replacement value instead of current value.

Renter's insurance also gives renters liability coverage similar to that of a homeowner's insurance policy. If their dog bites someone, someone trips over an item they left in a common area and is injured, or some other mishap occurs, the liability coverage provides protection against a personal injury lawsuit.

Why do tenants need renter's insurance?

Few tenants understand that the landlord's property insurance only covers the landlord and not the tenant. If the building burns down or is flooded, the landlord's insurance company will pay for repairs or rebuilding. However, the tenants' personal property is not covered unless the landlord opted to pay for that additional coverage, and most do not.

As with any insurance policy, the economic benefits come down to whether a tenant could afford to replace everything. A total loss of all of their clothing, furniture, electronics, and other goods could easy be valued at tens of thousands of dollars.

Why should a landlord care if a tenant is covered?

If a tenant suffers a loss and they aren't insured, there's a good chance they're going to try to seek reimbursement from the landlord. This may involve administrative time and costs in dealing with letters, phone calls, or meetings. The tenant may also file a lawsuit, and even if they are unsuccessful, there will be time and legal costs associated with defending it.

Perhaps equally importantly, the tenant may take to social media or the press about their situation. Even if the landlord is under no legal obligation to reimburse the tenant, their public image could be damaged.

What are the cons of requiring renter's insurance?

The biggest source of negative tenant feedback will probably be that they're forced to take on an additional cost. However, the cost is really quite affordable when compared to the possibility of not being covered if  everything is lost.

For more information about renter's insurance requirements, contact a local property management company, like Cornerstone Properties Ltd, today.


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