Do your tenants have their own insurance? If the answer is YES, you can rest easy. But if the answer is NO, this information is for you! As a property owner, you are obligated to carry insurance on your rental property. For your tenants, on the other hand, it’s not mandatory. However, there are strong reasons why you should require tenant insurance. If you require tenant insurance as part of the lease, it may eliminate unsuitable tenants and the ones who can’t afford tenant insurance. What if a tenant isn’t willing or can’t afford to pay to protect themselves and their property? It could be an indicator of lack of care/responsibility or financial stress. This is why you should think twice about allowing them access to your home. Of course, unforeseen things happen. However, your landlord insurance won’t cover the loss or damage to your tenant’s belongings. That’s why it’s important your tenants have their own insurance. In this case, their insurance will cover their things when they’re at home and away. What if an insect infestation requires overnight fumigation? Or an unexpected flooding means to replace some flooring? In these cases, you can rest easy knowing that your tenants have coverage for the cost of emergency accommodations waiting for repairs to be completed. This is called additional living expenses coverage. What happens if a tenant has no insurance? What if a fire occurs in the rental unit or your tenant forgets to turn off a tap and overflow a sink or tub? It could cause significant water damage and the associated risks such as property damage and liability could potentially shift to you, the landlord. That’s why tenant insurance is so useful. Because while your rental property insurance may cover the building damages, your tenant’s liability insurance can also pay for compensation. Even more, as you would fill in the claim against their policy, and not yours, there would be less, if any, impact on your premiums. This is why we recommend to require at least $1 million in liability coverage from your tenants! What happens if tenant insurance is part of the lease agreements? You can ask your tenants for proof of insurance and a confirmation (list of limits of coverage, policy number, insurance providers…). In some cases, you can even save money on your own premium if you required tenants to carry their own insurance.
Why your tenants need insurance
1) Eliminate unsuitable tenants
2) Protection
3) Legal reasons
4) Proof of insurance and saving money
With YouSet, your tenants can get insurance starting at $12/month only!
