Both tenants and landlords mistakenly dismiss the need for renters’ insurance. Tenants believe the landlord’s policies cover their personal belongings, and landlords do not realize that requiring renters’ insurance can protect them and their business from lawsuits and unnecessary expenses. Let’s look at why landlords should require renters’ insurance from their tenants.

What Does Renters’ Insurance Cover?

Most tenants do not realize that the landlord’s insurance policy only covers the building or structure being rented. It does not cover the tenant’s possessions. Renters’ insurance, however, can allow tenants to recover losses due to property damage, theft, or natural disasters. This policy can also protect the tenant against liability claims for someone being injured on the property. With the average renters’ insurance policy costing under $200 per year, requiring renters’ insurance can be a great way to protect yourself as a landlord with very little financial impact on your tenants. 

How Does Renters’ Insurance Benefit Landlords?

Requiring tenants to purchase renters’ insurance protects the tenant and their personal belongings and protects you as the landlord from being held responsible for liability claims. Before adding a requirement for renters’ insurance in your lease, however, make sure you discuss the matter with your attorney to have everything in order.

Below, you can find the benefits of renters’ insurance for landlords.

Reduces Risk of Lawsuit

In the event of an insurance loss or an injury sustained on the property, the tenant may come after you to recoup their losses. Your insurance policy will likely not cover the tenant’s belongings or liability claims. However, renters’ insurance offers coverage for the tenant’s possessions and personal liability if someone is injured in the rental. Renters’ insurance will give tenants a way to recover their losses while keeping you out of the line of fire.

Protects Against Relocation Expenses

If the rental property is damaged by fire or another accident, the tenant will need a new place to stay. They may expect you, as the landlord, to cover their alternative lodging. While landlords are not required to compensate tenants beyond rental credits, it makes for a difficult situation if the tenant is not able to financially afford an extended hotel stay. Without the ability to afford a hotel, a tenant may try to stay in a property and can cause significant delays in repairing damages to the home. With renters’ insurance, however, tenants are able to have the costs of alternative housing covered and avoid a major headache for the landlord. 

Mitigates Risks Relating to Pets

Renters are always looking for homes that they can rent that allow pets. If you are the landlord of a rental property that does allow pets, you’ll want to consider making renters’ insurance mandatory. By requiring tenants to have renters’ insurance, you can have additional protection from claims if someone gets bit by a pet while on one of your rental properties.

Keeps Landlord Premiums Low

A claim against your insurance policy can cause your premiums to rise. However, if you put in your lease agreement that renters’ insurance is mandatory, you could protect yourself from liability claims. Not only that, but some insurance companies will offer you a discount if your tenants have the appropriate coverage! With lower premiums and more protection, requiring renters’ insurance is a no-brainer. 

California Realty Group: Granting You Peace of Mind

As a landlord, you take on a lot of responsibility — from managing the property and vetting future tenants to drafting contracts and collecting rental payments on time. If not done carefully, each task on your plate could expose you to risks.

Let California Realty Group help mitigate your risks with our property management services. We’ll ensure tenants are abiding by the lease terms and making payments on time and more. Get in touch with our real estate team to learn more about our landlord tenant solutions in California or property management services in San Bernardino.