Should you require renter's insurance?

Question

Do you think we should require tenants to get renter's insurance?

Greg M. · Answer

Per my lease, I'll purchase it for them + add on a $100 fee for my time. They either pay it or late fees start to get charged. If need be, at the end of the lease I'll non-renew and take it from the security deposit.

Bjorn Ahlblad · Answer

Absolutely. Have yourself named as 'additional interest'.That way you get notified if the policy gets canceled.

Adam Martin · Answer

I require it and ask that I am an additional insured.  Truthfully thought I don't follow up on it and I get so many letters from insurance companies trying to get me to switch that I am likely to throw a notice they lapsed away.  What I feel it does do though is provide me a valid excuse for not covering their losses.  I am very clear from the get go that I don't insure their property and even if there is a loss of their property I will not cover it for any reason, that's what renters insurance is for.  If I have an issue on the property and they are requesting to be reimbursed due to damaged property, the thousand dollars in steaks every tenant has when the fridge goes out, or there is a disaster and the home is not habitable and they are wanting hotel accommodation I just remind them to contact their required insurer.  If they cancelled that's a personal problem and if it gets to a claim in court I can just point to the clause that they ignored.

Scott M. · Answer

While I agree on the surface this is a simple question and the simple answer is yes, in practice, depending on a lot of factors though the reality is it isn’t this simple across the board.

Assuming that locally you are allowed to make this a requirement there is nothing difficult about requiting it, the question is what happens when a tenant lets it lapse.

Do not need to be a manager of a large number of doors to have to deal with the scenario that @Alyssa brought up.  You can mange a single door yourself and if the tenant is quiet, doesn’t ask for anything, pays everything on time but let the insurance lapse would you kick them out?  Maybe your state allows you to do fore placed insurance and you add that to the lease and charge the tenant.  What if they don’t pay.  Now you are paying for their insurance.  Does your local level allow you to evict for non-payment of insurance?  Check w/your lawyer.  Not all judges in all areas will see it your way.  Yes, you may win a money judgement but will you win a possession judgment?  And so you win a money judgement?  Are they collectable?

Lots of factors can come into play.  How many doors you own or manage.  The types of homes/tenants you attract (low income/high income) and on and on and on.

To me, before you say yes, it is a requirement, the question to answer for yourself if what will you do when it lapses and see the process through to the end and decide if that is worth it.  You may decide to make it a requirement and then not follow through if it lapses but 1 year is better than none?

Also, look at your lease and ask yourself what benefit or potential downside is there to you if you do/don’t.  Your lease may cover 100%, if not, talk to your lawyer and fix that.

Also, be careful about adding fees to insurance.  You have to do that properly or you could be breaking insurance license law’s.

Dave E. · Answer

@Henley H.

Yes. Just simply yes.

Alyssa Dyer · Answer

@Henley H.

Sheesh. Million dollar question.

I have a management company, so my answer is a little layered. For my personal properties, yes, I definitely require it.

For the properties I manage for others we encourage tenants to have it, put that in the lease, give referrals to insurance companies, and have them sign a separate form that outlines what renter’s insurance is for.

We stopped making it a hard requirement because we found our owners didn’t want to pursue eviction when tenants let their policy lapse, but had a perfect payment history otherwise. It made the internal operations too messy to have that inconsistency.

Hope this helps!

Bill F. · Answer

@Henley H.

What will you do if you require Renter's Insurance and the tenant lets it lapse? Evict them for violation of lease terms? If you won't do that, then don't put something in your lease that you can't/won't enforce.

Tom Harkins · Answer

@Henley H. I recommend it but don’t require it. Should tenants want to protect themselves with renters insurance? Absolutely. Is it my job to force them to? No.

Aj Parikh · Answer

Yes, always have them get renter's insurance. It will help in case of damage to property due to theft

Samuel Proctor · Answer

@Henley H. I would recommend requiring it. You don’t have to enforce it, but I’ve noticed it’s a big help dealing with tenants when you can refer to you requiring it both on the lease and verbally upon lease signing if something does go wrong.

Should you require renter's insurance?

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