All Forum Posts by: Eric Narcisco

"Unconscionable contract" would be the closest doctrine here that I can think of, and has never been applied to a lease provision requiring renters insurance in any US jurisidiction I'm aware of (Not a lawyer).

Their take on it is quite interesting, though. 

Short version: Additional interest offers you notification of policy status, additional insured confers liability coverage to you.  

If a tenant's guest slips and falls, they/their health insurance carrier could name you and your tenant in a suit.  Additional insured is not so bad in that situation.

If a tenant burns the place down, and the other tenants name you and the tenant in the suit, additional insured could be a positive thing there as well.

In both cases, tenants normally have the bare minimum, $100k of liability.  You surely have far more than that.  If the damages exceed your $300-500k liability and the $1MM umbrella you carry (hopefully, they're quite inexpensive for the coverage they offer), does the tenant's $100k policy make a real difference?  Probably not.

You could, on the other hand, run into issues by being additional insured in terms of you directly recovering from the tenant's policy because liability is a third party coverage and as additional insured, you may or may not be considered to be a third party - see your state's precedent/law to be sure.  Although, there may be bigger problems than that when it comes to subrogation against a tenant.  Also, see here, there may be a presumption of co-insured status whether or not you're additional insured.

Many management firms (The #1 and #2 that just merged to become #1 come to mind) ask for additional insured status, but there's a cost-benefit analysis to be done based on your state, your own policies, your insurer's requirements, etc.

Note that Maryland tried to make requiring additional insured status illegal (HB 1280), though the bill did not pass.  Whether they'll reintroduce it and/or other states follow suit is anyone's guess at this point, but it's not absolutely outside the realm of possibility.

Apologies for length, there are quite a few moving parts to this.  Also, not an attorney, of course.

Just about all of them do, in fact.  It's a question of how much, and that's a very good reason to require it.  Subject to your state, of course, but this can vary quite a bit between carriers.  In most states (NY, WV, or NC are less, off the top of my head) Travelers offers $4,500 loss of use on $15,000 of personal property, for instance.  That alone is worth requiring it (although someone else brought up the entirely valid point to check your state/local law as it pertains to tenant rights or the language in the lease.)

Of course, loss of use coverage hinges on a covered claim existing to begin with.  If it were a water backup issue, they'd generally need a water backup endorsement to make it a covered loss.  

Glad to help.  Just getting the information out there is a big part of what we do - there are so many misconceptions surrounding renters insurance on both sides, but many of them are tenant misconceptions.  We recently completed a study (the writeup is expected to be published Wednesday) that showed 44% of renters nationwide now have insurance, a pretty fair increase from the 37% the III found, and a great start.  Conscientious landlords are a crucial part of getting more renters covered.

John, most landlords want proof of coverage at lease signing and renewal, but that does you no good if the policy cancels halfway through the term.  You can and may require that tenants list you as an "additional interest," which would give you notification of cancelations, lapses, non-renewals, and renewals.

Additional interest doesn't provide you any coverage, of course, beyond the liability coverage on the policy, but it certainly puts your mind at rest.  Those sound like Class A units you're renting, so intentional non-pay cancels are unlikely, but people do forget things once in a while so it's good to have.

It's usually a bit more expensive to spread out payments on the policy, but most companies will do it. The national average is around fifteen dollars a month.  But with renters insurance as inexpensive as it is, there's really not much reason to do monthly payments for most people renting at that price point.  But it's an option.