If you’re a landlord and you haven’t been mandating tenants to carry coverage, now is an excellent time to start. There are benefits for you as well as for your residents. But how do you tell tenants that renters insurance is required? Steve reached out to us because he’s a landlord in Boise and wants to begin asking tenants for Idaho Renters Insurance.
Steve asked if there was anything specific he needed to know before requiring coverage, or any situations where he couldn’t tell tenants renters insurance is required. That’s a great question, let’s dig in.
May I Tell Tenants Renters Insurance Is Required?
Of course you may. In all fifty states, landlords generally have the right to include whatever provisions they’d like in the lease. Across the country, landlords are writing things like quiet hours and the penalties for violating them into leases, so there’s no real reason you can’t tell tenants renters insurance is required.
There is one exception to the above. If you rent to tenants who are a part of certain subsidized housing programs, you may not be able to require the coverage because of the regulations of that program. In that case, you should consult your copy of the program documentation and/or seek legal advice.
Outside of that small part of the population, you can add the requirement to the lease when there’s a new lease, when it renews, or by mutual agreement in writing to amend the lease.
How Should I Tell Tenants Renters Insurance Is Required?
The best way to tell tenants renters insurance is required is with a letter. Whether it’s a new tenant or a renewal lease, it’s always helpful to point out changes to the lease and specific policies and rules that apply to the housing you’re renting to them.
Not sure what to say? Here’s a sample letter to advise them:
One of the requirements of your new lease is that you must maintain at least $100,000 (or $300,000) of personal liability insurance. The most common way to do this is with a renters insurance policy. The landlord disclaims any and all responsibility for damages to your personal property arising from fires and other events. However, a renters insurance policy generally will include personal property coverage to protect your belongings, as well.
All adult residents living in the unit must be named on the policy.
You must name the landlord as “additional interest” on this policy. This means the insurance company would notify the landlord in the event of a lapse or cancellation. “Additional interest” and “Interested Party” are the only acceptable designations. The additional interest should read as follows:
Landlord Name, Mailing Address, City, State, Zip
Please provide a copy of the declarations page of your policy meeting the requirements listed above prior to moving in (or renewing your lease.)
This is an important component of your lease. Failure to keep the required coverage in force will be considered a breach of the lease and is subject to any and all of the same remedies.
How Does Telling Tenants Renters Insurance Is Required Benefit Me As A Landlord?
Tenant negligence is the number one cause of damage to apartment units and rental homes. Cooking fires are the most common example, but smoke damage, water damage from an overflowing bathtub, and other causes of loss due to tenant negligence would also be covered.
Yes, your insurance would probably cover that loss – assuming you have a landlord policy, not just a homeowners policy. But your insurance will want to look to the person who caused the loss to recoup the money paid on that claim. Your tenant isn’t likely to have that kind of cash.
Your insurance company suing your tenant for money they don’t have would create an unpleasant situation and could make it difficult for the tenant to pay you rent. When your insurance company is able to subrogate against a renters insurance policy with liability coverage, it turns into a quiet matter between insurance companies that has little impact on the tenant. The tenant doesn’t have to pay to defend against the subrogation, their policy will generally take care of that as well.
Telling tenants renters insurance is required also makes sure that if there is a fire or other serious loss, they have a place to go. Loss of use coverage means they’re not mistakenly looking to you for alternate accommodations. In addition, the personal property coverage ensures that their things are protected.
You have no responsibility to the tenant for their belongings, but some renters are under the impression that you do. It’s easier to make sure they have the coverage from day one, which resolves the misunderstanding while protecting them.
Will Tenants Push Back On The Requirement?
If you tell tenants renters insurance is required, you will almost never receive pushback from them. Renters insurance is a few dollars a month, and almost all landlords now require it. People are getting used to the requirement, and it’s not a significant strain on their budget.
However, if a tenant is adamant that they don’t want to buy Idaho Renters Insurance, that may be a signal of a problem tenant. Do they go off on an ill-informed rant about their rights as a tenant? Do they become confrontational over it? Those may be red flags of other negative tenant behavior.
It’s easy to tell tenants renters insurance is required when you make it part of the process of showing and taking applications for the apartment. Mention it, put it in writing with the additional interest requirement, and it’s easy. For convenience, make sure you provide tenants with an email address to send a copy of their coverage to.
One more thing to be aware of. If you require renters insurance and you receive a cancellation notice from the insurance company, do not just accept the original declarations page from the tenant. What you need to see is a reinstatement notice. The declarations page they received six months ago does nothing to prove they have coverage today!
Oh, and if you’re curious, here’s why you as a landlord want to be additional interest and not additional insured on your tenants’ policies…
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