Renter's Insurance - how do you phrase that in the lease?

[Mary Joe]

Does anyone have the language you use in the lease for Renter's Insurance?

I am about to renew the lease with my tenant but it gets very costly having to spend another $250 for my attorney just to add a simple paragraph.

I have drafted something here, not sure if I have missed anything. I would greatly appreciate it if someone can provide a standard or more professional language that is commonly used to address renter's insurance in the lease.

My DRAFT:

"The Tenant agrees to obtain renter's insurance at his own expense and with adequate coverage for the duration of the lease agreement. The Tenant acknowledges and agrees that in the event that he does not have renter's insurance or if his policy provides insufficient coverage, then the Tenant shall be personally liable to all damages and losses that would normally be covered under a renter's insurance policy."

Any advice would be appreciated!

Thanks
MJ

[Joe Bertolino]

Michael B,

I am an insurance guy so of course I am going to disagree... But I mostly disagree because you are dead wrong. Renters policies from most if not all major carriers are replacement cost, not ACV for contents. I have not seen a ACV renters policy in a decade. The "big waste of money" you are referring to is $10-20 per month for $25-50k in contents, $100k in liability and increased living expenses. The basic principal of insurance is that you are trading a small certain loss (the premium) to protect you from losses that typical renters could not survive. If a fire occurs and they lose everything, very few have a savings or emergency fund to cushion the blow. They can't replace their belongings while dealing with the increased living expenses (weeks of hotels, eating out, deposit on new apartment, etc). Sure, the Red Cross might help a little bit or they may be able to lean on friends and family, but that is not a sure thing.

I don't make any real money off of renters policies. It takes roughly an hour to completely rate, bind and issue a renters policy, for a $15-25 commission. That is well below my typical daily/hourly sales goals but I will do it because these people need security the most. In less time I can bind and issue a policy on an apartment building that pays an average of $1150 in commission while I have a backlog of about 30 properties waiting to be quoted. Writing a renters policy is an accommodation for a current client's tenant, it is not very profitable for an agent or a company. In fact carriers will start to get concerned if more than a certain percentage of your total book of business is made up of renters insurance as it is much less profitable then auto or homeowners insurance.