California Landlords: Require Renters Insurance in Your Lease
The National Fire Protection Association estimates that 70% of fires in multifamily dwellings are the result of tenants’ negligence.
Many landlords don’t know that a lease can require tenants to obtain and maintain renters insurance – and doing so benefits everyone involved.
Most tenants assume that the landlord’s insurance policy covers renters’ personal property in the event of damage to the home. In the vast majority of leases, renters will be disappointed to learn they are not covered.
Reduce the threat of a lawsuit. The number one benefit of requiring renters to have renters insurance: it can keep you out of court. When a renter’s belongings are damaged (and the renter does not have insurance) there’s a high probability the tenant will try to claim it’s your responsibility.
Reduce your responsibility. In the event of a fire or some other disaster, landlords feel responsible for finding their tenants a temporary residence. That means, in the middle of dealing with damage to your property, you’re called on to manage lodging and necessities for your tenant. If they have renters insurance, tenants don’t have to rely on you. That’s their insurance company’s role.
Reduce bad tenants. Requiring renters insurance in the lease will cause potential tenants who can’t afford it to drop out of contention. Renters insurance premiums are reasonable and affordable. If someone can’t afford the relatively small premium, how good a tenant will they be? Paycheck-to-paycheck people are good folks, but terrible tenants.
Encourage peace of mind. Knowing your tenants have renters insurance will help you sleep better. With renters insurance required, you won’t face lawsuits and legal fees for issues that aren’t your responsibility. Your relationship with your tenants will improve. And in the event of a disaster, your property will be repaired and your tenant’s belongings replaced.
Finally, ask for proof annually. Just because a tenant shows you initial proof of renters insurance at lease signing doesn’t mean its still in effect. Every year, you should ask for an updated insurance renewal to prove insurance remains in effect. When a renters insurance requirement is in the lease, the tenant letting the policy lapse is grounds for eviction.
If you have any questions about adding a renters insurance requirement to your lease, feel free to email me at firstname.lastname@example.org.