Renter's Insurnace when there are multiple tenants

[David Tang]

What are people's thoughts around tenant's Renter's Insurance in Chicago? We recently signed a lease with tenants (2 people - Person A & B) where they have 1 renter's insurance. Person A has the renter's insurance while Person B does not, but Person B's belongings is "mostly covered" by Person A's Renter's Insurance. I think it is fine as long as their belonging are covered under someone's renter's insurance, but would most people request each individual tenant's have their own Renter's Insurance?

[Alison Brenner]

My insurance agent advised that all tenants, over the age of 18, should have their own policy. Renter's insurance protects tenants' property and landlords' property. Let's say Person B sticks a travel size deodorant down your toilet and floods the residence while Person A is traveling for work. You are going to want to file a claim against Person B and hold Person B accountable for the damage.

[David Tang]

Quote from @Alison Brenner:

My insurance agent advised that all tenants, over the age of 18, should have their own policy. Renter's insurance protects tenants' property and landlords' property. Let's say Person B sticks a travel size deodorant down your toilet and floods the residence while Person A is traveling for work. You are going to want to file a claim against Person B and hold Person B accountable for the damage.

That is a very fair point. Would having both people listed as insured (ie. having Person B be listed as an additional insured) also work? Safe to assume it is different between "couples" and just roommates. If the tenants are all just roommates, I would highly advice each get their own individual renter's insurance. In the case if they are a couple, I can also see if they are under 1 (at least added as an additional insured.

[Alison Brenner]

My agent would say all adults over the age of 18...regardless of marital status. I totally follow your train of thought and don't entirely disagree.

Here's the thing. As landlords, we are better protected if all residents over the age of 18 have their own renter's insurance policy. It's not our job to assess the potential longevity of a couple's relationship or whether one partner may file for divorce or leave the relationship within the next 12 months. We need to establish SOPs that can universally applied regardless of how stable the residents' relationship seems at the time of move-in. Hope this makes sense.

[Nathan Gesner]

Every tenant should have their own policy. Unless they are married, they need their own policy.

Make sure you are added as "additional interest" on each policy so you can track it. If the tenant ever cancels coverage, you will be notified.

Here's an article explaining: https://www.credible.com/blog/home-insurance/additional-insured-vs-additional-interest/#:~:text=Additional%20insured%20is%20only%20available,t%20collect%20a%20claim%20payout.

[David Tang]

Quote from @Alison Brenner:

My agent would say all adults over the age of 18...regardless of marital status. I totally follow your train of thought and don't entirely disagree.

Here's the thing. As landlords, we are better protected if all residents over the age of 18 have their own renter's insurance policy. It's not our job to assess the potential longevity of a couple's relationship or whether one partner may file for divorce or leave the relationship within the next 12 months. We need to establish SOPs that can universally applied regardless of how stable the residents' relationship seems at the time of move-in. Hope this makes sense.

This is very helpful, thanks for taking the time to sharing!

[Jay Thomas]

In Chicago, while it's not legally required for renters to have insurance, many landlords prefer it in the lease agreement. It's recommended to ensure all tenants are covered for both property and liability reasons. If only one tenant has insurance and there's an accident caused by another tenant's negligence, things can get messy. So, it's smart to talk to your tenants about why having their own insurance is important, and maybe show them where they can get it cheaper.Consider revising future lease agreements to require individual policies. Ultimately, separate renter's insurance provides better protection, minimizing confusion and ensuring proper coverage for unforeseen circumstances, benefiting both landlords and tenants.

[David Tang]

Quote from @Jay Thomas:

In Chicago, while it's not legally required for renters to have insurance, many landlords prefer it in the lease agreement. It's recommended to ensure all tenants are covered for both property and liability reasons. If only one tenant has insurance and there's an accident caused by another tenant's negligence, things can get messy. So, it's smart to talk to your tenants about why having their own insurance is important, and maybe show them where they can get it cheaper.Consider revising future lease agreements to require individual policies. Ultimately, separate renter's insurance provides better protection, minimizing confusion and ensuring proper coverage for unforeseen circumstances, benefiting both landlords and tenants.

In Chicago, is it allowed for me to mandate renter's insurance? I know in some states, we are not allowed to mandate tenants to get renter's insurance.

[Owen Rosen]

Quote from @David Tang:
What are people's thoughts around tenant's Renter's Insurance in Chicago? We recently signed a lease with tenants (2 people - Person A & B) where they have 1 renter's insurance. Person A has the renter's insurance while Person B does not, but Person B's belongings is "mostly covered" by Person A's Renter's Insurance. I think it is fine as long as their belonging are covered under someone's renter's insurance, but would most people request each individual tenant's have their own Renter's Insurance?

 Whose term was "mostly covered?"  Hopefully not the agent!  That is baaaaaad advice.

[John Warren]

@David Tang speaking from experience, you want the tenants to have coverage. We went through flooding and a fire last year in Cicero and Berwyn, and none of the tenants had coverage. All of them were inherited, and all of them expected the owner to chip in to replace their belongings. It was really tough as FEMA was even involved in the flooding in Cicero, and for our tenants, they did nothing.

Since then, we have been pushing mandatory tenant insurance. It has not been smooth at all as most tenants do not want to pay. Even some of the ones that had all their belongings lost in the fire refused to pay in a new apartment we moved them to. 

[Mario Morales]

@John Warren I have tenants in place and I would like to send them a few bullet points on why it would be important to have renters insurance. How can I incentivize them to add me as an interested party if they choose to get renters insurance, have you had any experience with this?

[John Warren]

@Mario Morales this is not easy that is for sure. Our provider has a whole process built around compliance. I am not convinced I could get it done on my own to be honest without their help. At minimum, you could require them to show proof of renter's insurance when the lease begins and then you could call their agent to go over the requirements to make sure you are added. The tricky part is if they cancel mid policy or something like that. It is hard to have enough controls in place here. 

[Costin I.]

@Mario Morales @David Tang - here are my 2¢:

1. You want to get that in place at the beginning as part of the lease's contractual obligations and make it a default condition. Hard to get that chicken back in the coop after. A reputable and experienced property management company will often present additional terms that require the tenant to obtain renters insurance and that the landlord be named as an "additional interest" on the policy. It is also beneficial to have the tenant show proof of such insurance coverage within X days of the date of signature of the Rental Agreement.

2. Very important to have them add you/your PM LLC as "additional INTEREST". This doesn't give you any coverage, just the right to inquire about the status of the policy and notifications if the policy is not paid or canceled for any reason.

3. You do not want to be added as "additional insured" - that will give you coverage, but that will also create a conflict of interest in the case of damage/claim, if the tenant doesn't want to pay, you'll have to sue...yourself.

4. If they have dogs, ask them to confirm there is no exclusion to dog bite liability. 

5. We explain to tenants the property is insured as a structure only (empty). 

We also specify the following points to prospects/tenants, either via the lease documents and addendums or "The Welcome Package":

The property management company or the owner shall not be liable or responsible for loss or damages to articles or property belonging to the tenant. It is advised that the tenant maintain fire and theft insurance for their personal property as well as liability insurance coverage. We are happy to refer you to an agent if you need one.

6. Protecting the tenant and landlord with insurance is a smart expenditure for peace of mind.

• - If the property catches fire, through no fault of the tenant, the owner's insurance does not cover the tenant’s personal property or expenses they may incur while the property is being repaired.
• - If the tenants cause their neighbors to suffer a loss, through bodily injury or property damage, their Renters Insurance will provide protection that would compensate the injured party. This protection can prevent arguments over liability, and who might the neighbors come after if they have no other protection.
• - If someone sues the tenant for monetary damages for some other reason, and they haven't done anything illegal, their Renters Insurance puts Insurance carrier money on the table and the landlord doesn't need to be involved.
• - The tenant's personal property is protected (less the deductible) while they are away from home, like in their car, or when traveling. If they lose something that is of value to them they may have fewer resources to pay the rent.
• You can get cross-line discounts on your auto insurance, saving money while protecting more of your stuff. Depending on how expensive their auto insurance is, the Renters Insurance might even be FREE! And, you might not even know that! That certainly wouldn't hurt your standing with them!
• - It gives you peace of mind to know that should a loss occur, having funds readily available to replace lost items will reduce the strain on your relationships.
• - It’s very inexpensive and easy to obtain a policy. A typical policy covering up to $15,000 in property damage and $100,000 in liability coverage costs under $200 per year

7. Clarification -- Landlords have no insurable interest in the tenant's "stuff." What the landlord SHOULD do is to make sure the landlord is added as an "Interested Party" (or "Interested Third Party") to the policy. This confers no insurance protections to the landlord, but what it will do is provide policy documents and the right to check on the policy to verify that it is in force. So, yes, a landlord can require insurance and a smart landlord requires that she is added to the tenant's policy as an "Interested Party." (If you have ever leased a car, then you will see that your leaseholder has been added as an "Interested Party" on your auto policy. This allows them to verify that coverage is in force while not conferring insurance protections.) If that policy is canceled and the tenant doesn't provide evidence of insurance as stipulated in the contract, the contract has been breached.

8. Other information:

http://www.zillow.com/blog/can-a-landlord-force-tenants-to-have-renters-insurance-106480/

https://www.onradpad.com/ask-radpad/can-my-landlord-force-me-to-get-renters-insurance/+

http://www.nolo.com/legal-encyclopedia/renters-insurance.html

For more information on renters insurance, or to compare renters’ insurance quotes from a handful companies, go here (https://quotewizard.com/renters-insurance).

9. Pet Liability Insurance

Although you might hate the idea that your dog needs liability insurance just because other people think he or she is potentially dangerous, it’s better to pay for the coverage than to face paying for injuries out-of-pocket or becoming separated from your canine friend due to housing restrictions.

If you don’t have pet liability insurance and your dog bites someone in your home, you have a lot more to lose than just your dog. Consider the statistics: dog bites and injuries accounted for one-third of all homeowner’s insurance liability claim dollars paid out in 2014, according to the Insurance Information Institute.

What’s more, the national average cost per claim for dog bites/injuries was $32,072 that same year. As a renter or homeowner, pet liability insurance is a must, unless you don’t care about your finances going belly up. The bottom line is – it’s much better to be safe than sorry.

To protect yourself with dog liability insurance, visit:

• InsureMyCanine.com (http://www.caninejournal.com/go/insuremycanine/) to learn more and get a free quote.
• Where to Get Dog Owner Liability Insurance:
  • - http://dogbitelaw.com/insurance-for-dog-owner/where-to-get-dog-owner-liability-insurance
•      - http://www.dogbitequote.com/about-us/

Ok, I guess it was a bit more than 2¢...

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[Joe Mende]

Does anyone know if a tenant living in a non-conforming basement unit can get renter's insurance?

[Owen Rosen]

Quote from @Joe Mende:

Does anyone know if a tenant living in a non-conforming basement unit can get renter's insurance?

They can likely purchase a policy but claims will likely be denied if it's not a legal residence