Should I Make Renters Insurance Part Of A Lease Agreement?

Throughout Pennsylvania, landlords are wondering if they should make renters insurance part of a lease agreement.

While property management companies have the benefit of in-house lawyers, you as a private landlord might be limited in your ability to access that advice.  That often leads to confusion about what you can or should require, whether it’s legal in a given part of the state, and whether residents will revolt.

We have the answers you need about Allentown, PA Renters Insurance and coverage statewide, and whether you should make it part of your lease.

Is It Legal To Require Renters Insurance As Part Of A Lease Agreement In Pennsylvania?

While insurance is heavily regulated in most states, and with good reason, those regulations are mostly relevant to the insurance companies themselves.  They have compliance departments dedicated to analyzing such things and making sure that their policies meet the requirements.

There are a number of things that you cannot or may not require in a lease agreement in Pennsylvania.  Most of them are spelled out fairly explicitly in statute.  For example, you may not specify that only residents or guests of a certain race are allowed.  That’s just common sense.  On the other hand, as long as it’s part of the original contract, you often may specify a policy about guests in general, quiet hours, or just about anything else that you might want to include.

Generally, you can and may require renters insurance as part of a lease agreement.  It’s very standard, and it protects you in several ways.  First, you can be sure the tenant understands that you have zero responsibility for their personal property.  You know that, of course, but requiring renters insurance helps to make sure they understand.

If there is a loss caused by a tenant, your insurance can and will cover it.  Broadly speaking, a fire is a fire regardless of the cause – setting aside “expected or intended” results of the person who started the fire, of course.  Fire is a covered peril on your landlord policy.

The insurance company will want to get as much of that money back as possible – they’ll even try to recover your deductible.  If the tenant has renters insurance, your insurance company is likely to be able to recover against the tenant and even potentially get back what you paid for a deductible.

Landlords can and may require renters insurance as part of a lease agreement in Pennsylvania, with one notable exception.  If you rent to a subsidized tenant, either because the property receives funding or the tenant receives funding, you generally may not require renters insurance.  The rules on those vouchers are quite clear about what total expenses the tenant can be expected to pay, and you don’t want to run afoul of them.

How Should A Landlord Be Listed On Renters Insurance In Pennsylvania?

As a landlord, if you require renters insurance as part of a lease agreement, you want to be certain that the policy stays in force.  First of all, a lapse or cancellation is a lease violation.  Second, if the policy isn’t in force there’s no protection available for the tenant, you, or for your insurance company to go after following a loss.  What’s the best way to do that?

Landlords should require they be listed as an additional interested party.  That’s worth repeating.  You want to be an additional interested party, not an additional insured.  The additional interest designation gets you copies of notifications for changes in policy status which gives you the information you need.  It does not confer any coverage rights on you that wouldn’t be available to anyone at all under the policy.

Liability is a third-party coverage.  It’s designed to protect people who are not a party to the policy at all.  What would happen if you were listed as additional insured and a fire loss caused damage to the building?  You (and your insurance company) may have trouble recovering through subrogation against that tenant’s policy because you’re a party to the policy and not eligible for liability coverage.

Listing a landlord as an additional interest is something that nearly every company can do, and it’s a good way to keep track of the policies your residents are carrying.  If you have a few units, you might be able to track those in an Excel spreadsheet or similar.  If you have more than a few units, you’ll tear your hair out trying to do it that way and you should look into renters insurance tracking platforms.

Renters insurance tracking  is imperative if you require renters insurance as part of a lease agreement, because it’s the only way you’ll enforce the penalties you’ve set out in the lease.  You did set out penalties for non-compliance, right?  You’ll want to track current residents, policy details, compliance, who’s on the policy, and a number of other things.  The best way to do that is in a platform built for the purpose.

Will It Be Harder To Rent If I Require Renters Insurance As Part Of A Lease Agreement?

No, it will not be harder to rent if you require renters insurance as part of a lease agreement.  Renters insurance is affordable.  All major property management firms and most private landlords now require the coverage, so residents expect it.  Most importantly, if the tenant balks at being required to insure their liability and their own personal property…  Is that really someone you want to rent to?

Allentown, PA Renters Insurance is affordable and easy for residents to purchase.  It takes about sixty seconds to buy a policy online through Effective Coverage, or the resident can call.  In either case, they can list you as additional interest and proof of coverage can be sent in real time.  The national average price of renters insurance is about fifteen dollars a month.

If your tenant is offended by the idea that you want them to spend fifteen bucks a month, they’re probably not a good risk and you’ve dodged the bullet of a bad tenant without having to reject someone who technically qualifies, but feels like a bad fit.  You’re certainly not the only one who requires renters insurance.  If they want to rent from any property management company, it will be required.  Most private landlords nationwide are requiring the coverage.

Whether a tenant needs to get same day renters insurance or you want to investigate insurance tracking platforms, Effective Coverage offers the solutions that you need. Just call (800)892-4308 or click to get covered - whether you need Allentown, PA renters insurance quotes online or coverage anywhere else!

Effective Coverage offers the nation's only completely mobile platform to quote and purchase renters insurance right from your phone or tablet in just one minute. Get an online renters insurance quote today and protect your family.

What's Your Insurance Language?

• Do You Need Renters Insurance ASAP? Check out the fastest way to buy renters insurance online and get covered in just 60 seconds!
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• Do You Need Some Time Alone With Your Thoughts? We understand, which is why we created the Pennsylvania Guide To Renters Insurance. 
• Just Want To Watch A Movie Together? See our Video Pennsylvania Renters Insurance Guide!