Chances are, if you are a homeowner, you have given thought to having tenants for a passive income or helping pay for your mortgage.
However, one cannot always ensure that you will find the best tenants suited to your needs, and in such scenarios, renters insurance comes in handy. Although renters insurance policies are primarily meant to provide financial coverage for tenants against risks included in the policy, it can be very advantageous for house owners as well.
A reputable and trustworthy insurance provider like Surex can help your tenants get the best price for their insurance and let you sleep in peace as the landlord. Keep on reading to know more about renters insurance for landlords and its benefits.
What is Renters Insurance?
Renters insurance, also commonly known as tenants insurance, is the coverage provided by insurance companies on tenants’ personal belongings. The policy provides coverage against kinds of damages and losses such as fire, theft, injury, natural disasters, and much more.
It allows tenants to get insurance for their personal belongings when they live on rented property. The landlords’ insurance covers the building only and not the personal property and content of the tenants. So, they are in no way liable for any loss incurred by the tenants on such property. Thus, it is a wise choice for tenants to avail this insurance.
Renters insurance premiums depend on which area the rented property is in, the content of your belongings, and the liability limit. For instance, some insurance policies for renters in BC start at around $300/year and increase according to content values and liability limits.
Is Renters Insurance for Landlords Mandatory?
A property owner cannot compulsorily ask a tenant to purchase tenants insurance. However, if the lease terms require a tenant to have tenants insurance, it becomes mandatory for the prospective tenant to have requisite insurance cover to rent the property successfully. Many landlords are not aware of this insurance, and tenants end up pursuing such landlords to pay for their losses.
What does Landlord Renters Insurance Cover?
Any insurance policy, irrespective of its type, provides coverage against the risks included in the policy document. Risks covered, however, may differ per insurer and insured depending on various factors. Nonetheless, most of the renters insurance policies usually cover the following:
- Damage against perils like fire, vandalism, theft, certain natural disasters, injury, water damage, and a few others depending on the insurance company.
- All kinds of personal property or belongings like clothes, furniture, electronics, bicycles, and anything else placed inside the property.
- If the tenant is negligent or is the cause of any damage or injury to their belongings or guests, the renters insurance will provide coverage for it.
- The insurance also helps cover moving costs, hotel room costs in case the rented property needs repairs.
- Usually, the insurance covers costs related to damage or injury to any third party caused by the tenant or any action arising from the tenants.
However, the renters insurance does not cover all costs; it does not cover all contents inside the property. For example, it will not cover a costly/ valuable item such as an antique vase or a precious piece of jewelry. A tenant may not get complete coverage for it and may require separate individual insurance.
How does Renters Insurance Benefit Landlords?
British Columbia or any other province or territory in Canada does not mandate renters insurance. But as landlords, you can make it a mandatory lease clause for your tenants to have renters insurance. It has innumerable benefits that can make renting your property less troubling.
Avoid Future Litigation
This is one of the biggest reasons why landlords should make renter insurance mandatory. Usually, when there is property damage, tenants pursue the landlords to cover it. Though this may not be the landlord’s responsibility, all legal expenses would be paid out of pocket.
In addition, if the tenant’s negligence has caused damage to the landlord’s property, the tenants insurance will cover it. However, if a tenant does not have insurance and refrains from paying for the damage caused, you may have to seek legal aid. The ensuing legal expenses would also need to be paid out of pocket for the landlord. It is a massive headache and can be avoided entirely for a minimal cost.
Covers Relocation Expenses
There might be an incident where you have to bear the cost of the tenant’s relocation due to property damage. This can be costly. Tenant insurance adequately covers these relocation expenses, providing you with a much-needed financial cushion.
Pet Coverage
If your tenant happens to have a pet, it increases the risk of property damage or physical injury to a third party. Tenants insurance provides coverage under such circumstances.
Protect Other Tenants
If your property has multiple tenants living in different units or together, the renters insurance covers damages and injuries inflicted by another tenant.
Peace Of Mind
Knowing that your tenant, their belongings, and their liabilities are covered under a tenants insurance policy can bring you a great sigh of relief. A tenant with tenants insurance also indicates that they have an excellent credit score, are financially stable, and can pay the rent on time.
Endnote
Renters insurance is a massive benefit for landlords and tenants. So it is essential to give it some serious thought. It helps landlords be assured of no future headaches arising due to the negligence of tenants.
Thus, you can always include an insurance clause in your rental agreement. It is best to talk to an insurance expert who can provide you with the correct information.
