Renter’s Policies

As an investor, landlord, property manager, or property owner, you may not normally think of ‘renter’s insurance’ as being necessary for your business, but if you have residential tenants - it is!  Many landlords require that their tenant’s purchase renter’s insurance prior to occupancy and others actually give discounts on rent for those that maintain their own coverage.

If written correctly, most renter’s policies provide for replacement cost coverage of your tenant’s personal property and belongings in the event of a loss.  More importantly (to you), it also contains liability coverage that can prevent you from being sued. Renter’s policies are normally very inexpensive and they provide a great deal of coverage.  This is especially important for rental properties located in questionable neighborhoods or multi-family units.

As a true story to illustrate what value a tenant-owned renter’s policy can be to a landlord, consider the following.

A landlord rented a single-family home to a family in December.  Less than two weeks after moving in, the home was burglarized and all of the tenant’s electronics were stolen along with the Christmas gifts intended for their children.  Since they had just moved in and had occupied the house less than a month (not to mention that it was Christmas), the tenant demanded that the landlord compensate them for their loss and claimed that the home had not been adequatly secured against break-in when rented.  When the property owner refused to pay them for the items that had been stolen, they filed a suit in small claims court and contacted the local housing authority.  The tenants ended up getting all of their deposit and current rent money returned and the landlord had to pay a fine as well as the tenant’s legal costs (as well as his own).  Had the tenants had a renter’s policy in place, they would have been fully compensated for the stolen belongings from the beginning and the issue would have never escalated to become a legal battle.

Another situation to consider is that of injuries occurring due to a tenant’s pet. Even if the lease strictly prohibits animals on premises, many tenants ignore this and obtain pets during their occupancy anyway.  In this situation, if a tenant does in fact obtain a pet (regardless of what the lease states) such as a pit bull, rottweiler, or any other type of animal, and that animal injures another person (a neighbor’s child for example), you, as the property owner and/or landlord, could be sued for the injury.  The rationale being that although the lease states that animals are not allowed and the tenant violated this fact, you are responsible for the actions of your tenants and, therefore, had you maintained the property and performed regular inspections, you would have been aware of the animal lease-violation and the injury would have never occurred.

In a situation such as this, if your tenant had a renter’s policy in place, it is he or she who would be sued by the injured party and the claim would be on the liability portion of their policy.  However, if they do not have a renter’s policy, the next step ‘up the ladder of litigation’ is the property owner and/or manager.

If you have any questions regarding renter’s insurance or if you would like for us to speak with your tenants about this coverage, please contact us at (512) 501-4010 or (800) 299-8994 and we will discuss your situation and let you know how we can help.