One of the most common questions that we get as the insurance experts for renters is when people want to know,
How can my landlord force me to insure his building? Doesn’t he already have insurance? Why should I be paying to protect something I don’t even own? He wouldn’t insure my personal property, so why should I cover his structure?
That’s a great question, actually. And you’re right that he wouldn’t cover your personal property, that’s what Syracuse Renters Insurance is for. He doesn’t have an insurable interest in your property, and you don’t have an insurable interest in his building. So what’s up with him forcing you to buy renters insurance?
Insurable Interest – He Can’t Insure Your Stuff, You Can’t Insure His Building
What is an insurable interest? It means that you have a reason to insure the thing that you’re trying to cover. In other words, if there were to be a loss to whatever it is you’re trying to insure, you’d suffer a financial loss as a result. Seems pretty straightforward, right? You can’t insure your neighbor’s car because you don’t care what happens to it. You don’t lose any money if there’s damage done to it.
Your landlord, of course, has no insurable interest in your personal property. He wouldn’t suffer any financial loss if all of your stuff were to be stolen or lost in a fire. It’s not his property, it doesn’t impact him. That’s why the landlord isn’t responsible for your personal property.
On the other hand, you have no insurable interest in his building. You wouldn’t suffer a financial loss if it were to burn to the ground – not based on the ownership of the building itself, anyway. That means that you can’t insure the building. So why does the landlord force you to insure his building by buying renters insurance?
Renters Insurance Does Not Force You To Insure His Building
Your landlord doesn’t force you to cover his building when he makes you buy renters insurance. If you look at your renters insurance policy, you’ll note that there is no coverage for the dwelling or structure. You’re primarily being asked to cover two things with your renters insurance, though it covers much more than that.
First, you’re being asked to insure your personal property. This is a secondary concern to the landlord, but it’s an important one nonetheless. For reasons unknown, some people think that their landlord is responsible for their personal property if there’s a fire or another kind of loss. This is almost never the case, save for exceptional negligence or malice on the part of the landlord, but it’s a myth that persists wildly.
Admit that you would want the coverage if there were to be a loss. You don’t want to replace your things out-of-pocket, you don’t want to pay for a hotel when the apartment is being repaired, etc. That’s a big part of what renters insurance in Syracuse does for you, it indemnifies you from those costs and expenses when there’s a sudden and accidental loss that would be difficult or impossible for you to resolve on your own.
So what else does renters insurance do for you? What’s the real reason the landlord requires you to have a policy?
He Can’t Force You To Insure His Building, But He Can Force You To Pay For Damages To It
The number one reason that landlords require renters insurance is the liability coverage that comes with it. He can’t force you to insure his building, but he can force you to carry insurance that would pay for property damage you do to any third party. He happens to be a third party, as far as that goes, of course.
If you were to overload a power strip or cause a kitchen fire, the damage to the building would be significant. Most of that damage would be covered by his insurance, but there are two problems with this. First, he has a deductible on his commercial policy, and it’s probably somewhere between $5,000 and $25,000. You, as the negligent party who caused the property damage, would need to pay that deductible.
Second, his insurance company will know that you started the fire and that you’re responsible for that damage. When the landlord makes an insurance claim on his policy and accepts the payment, part of that process involves assigning his right of recovery to the insurance company.
That simply means that he gives up the right to sue you and instead transfers that right to the insurance company. The insurance company will do just that, in an effort to recover the money that they paid out to repair the building. Your Syracuse Renters Insurance will not only pay that claim, but will also offer a defense against that claim.
You probably can’t afford an insurance defense lawyer, much less to pay for the claim. At about fifteen bucks a month, though, you certainly can afford renters insurance which makes all of the above a moot point!
Other Tenants Can Come After You, Too!
Don’t forget that the loss doesn’t just impact you and the landlord. Anyone else who lives in the building will also have damages. In other words, they’ll have standing to come after you to make good on those losses, as well. Renters insurance can protect you from that risk, also.
Your landlord isn’t forcing you to insure the building, only to make sure that you can be responsible if you cause damage to the landlord or to other tenants. It’s a perfectly reasonable risk management strategy, and it helps to manage your own personal risk as well as that of the community as a whole.
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