Rental Insurance Question: SFH Multi-non-family tenants

[Nerissa Marbury]

I have a SFH with three non-family tenants. I am requiring rental insurance for the first time this year - $1MM liability and me listed as an additional insured.

Question: If two tenants got rental insurance for $1MM each, does the 3rd person need rental insurance too? 

I originally was thinking one policy was fine, but now that I am realizing two out of three wanted own insurance to cover personal items too. What happens if the 3rd person doesn't want insurance for personal items. Will the two insurance policies with $1MM liability each be good enough as a property owner? Or do I press the 3rd person to get insurance as well?

Or is it possible to have a tenant listed as an additional insured on another tenant's insurance policy if that is what the tenant wants?

NOTE: The tenants are all on the same lease agreement. Meaning they have joint and several liability. 

[Derek Lacy]

Nerissa Marbury

Is it allowed? Sure underwriters can do anything. Have I ever seen an underwriter do it? Nope.

The way that would settle 1 and 2 have coverage, three none. Let's say they do $75,000 in covered damages, and each exactly equally at fault.

Insurer 1 pays $25k
Insurer 2 pays $25k
You get a judgement for $25k against tenant 3.

The you could be your property insurer through subrogation (going after the at fault party).

Here's a wrench to throw in your plans, in insurance we love to talk best practices. What are you doing to confirm tenant legal liability coverage for water damage?

Traditionally fire, smoke, explosion are the only perils covered on tenant legal liability on the renters form. But some insurers cover water damage as well. Quite frankly overflowed toilet or bath is much more likely than explosion.

My suggestion, ask for a certificate of liability each year from the agent stating you as additional insured and water damage is a covered peril on tenant legal liability.