Renters insurance Needed?

Question

My wife and I are new Duplex owners and put in our contract that they need to have renters insurance (just because that’s what we’ve had when we rented). We had pushback from it because “they’ve never had renters insurance before”. Is it a big liability for our tenants not having insurance our is it a minute problem that we can overlook?

Thanks for any insight given here!

Corby Goade · Answer

Nathan hit the nail on the head- they're either in or out. If you have a prospective tenant trying to negotiate with you about the terms of a lease before they've signed anything- RUN, don't walk. If you negotiate now, you'll be paying the price for that indefinitely.

Nathan Gesner · Answer

RED FLAG!

You tell them the requirements of renting from you. They can accept that or move on.

Don't let them start changing the rules. Make them get renters insurance and make them list you as "additional insured" or "additional interest". That will put your name on the insurance policy and you'll be notified if they ever try to cancel the insurance policy.

Will Fraser · Answer

Hi @Joe Windsor!  Since most of the properties I own had tenants in them when purchased I get the same pushback frequently.  Ultimately I don't know how much increased liability you'd have if your tenants did NOT have renter's insurance, but I do believe it will benefit you in multiple ways to have them have it.

#1 - it circles the INSURER as the one responsible for the tenants personal belongings in case of a claim NOT the landlord.  This is the case anyways, but it's going to be the tenant's knee-jerk reaction to say "You should have to replace my laptop since that pipe burst and it soaked my coffee table, where the laptop was."    With them having their own, independent insurance policy it ensures* that they are taken care of (and helps them have SOMEONE other than you to call with all those questions).

#2 - it draws a line in the sand between the old and the new.  "I can understand that you've lived here for 3 years and have not had this before.  We're going to do this moving forward because it is a best practice, and best practices exist to serve everyone.  You don't see the benefit of them until there's a problem, and that's not the time to do the right thing.  Now is, so back to the original point:  tenant insurance."  This conversation pairs nicely with, "We'll also be popping by 4x a year for seasonal maintenance checkups" and any other best practice you want to incorporate.

In the final analysis most landlords are not professional nor are they skilled.  Their lack of procedure and other processes should have little or no bearing on your landlording, and usually it only takes a bit of explanation to help a quality tenant understand that.