One of the most common questions we get when someone is required by their landlord to have renters insurance is,
Does renters insurance protect the landlord?
We were asked this very question by someone who has Atlanta, GA Renters Insurance, and they were very concerned about it. The concern is understandable – you want to protect yourself against the risks that life brings, you’re not all that interested in protecting the landlord. He can and should buy his own insurance for his own risks.
What Happens When Your Landlord Files An Insurance Claim For Tenant-Caused Damage?
If you have a small kitchen fire, your landlord is likely to file an insurance claim with his insurance. That’s the fastest and easiest way to get the money paid and the repairs completed. His insurance is there to protect the landlord. When he files a claim against his policy, though, he can’t double dip. In other words, he can’t get paid by the insurance company and by you for the same damages.
In order to avoid that, the landlord assigns his right of recovery to the insurance company. Who does he have a right of recovery against? You, since the kitchen fire was your fault. Since your landlord has given up his right of recovery against you by assigning it to the insurance company, you might think that you’re home free. You would be incorrect.
The insurance company now owns the right of recovery against you, having “purchased” it in a sense by paying for your landlord’s claim. They are likely to be intent upon using it to recover what they can recover of the money that was paid out. The insurance company has an army of lawyers at their disposal whose job is to subrogate, or sue the neglgient party who caused the loss that they paid for.
That would be you, in this case. Your renters insurance doesn’t protect the landlord at all. His insurance protects him. What your renters insurance does is protect you when someone sues you for bodily injury or property damage caused by your negligence. That “someone”, of course, can include the landlord’s insurance company. Your renters insurance will pay for a defense against those claims, as well as for the amount of the loss itself if proven that you are responsible for it.
What Happens When Your Property Suffers A Loss?
Does Renters Insurance Protect The Landlord?
Since your property doesn’t belong to the landlord, he has no ability to insure it nor could he be expected to. Renters insurance doesn’t protect the landlord against a personal property loss, it protects you. Your policy pays for losses to your property caused by a long list of renters insurance perils which are written into the policy. You have read the policy, right? You should, because that will tell you exactly what’s covered.
You don’t need to protect the landlord, you need to protect yourself against the risk that life will happen. Generally your policy will pay replacement cost vs. actual cash value on your property. This means the claim settlement will be the amount of money that you need to go buy new property at retail of like kind and quality to what was lost. You’ll be back on your feet in no time!
In addition, don’t forget about loss of use. In most areas, you have a right to go back to your apartment once the damage has been repaired. But you may have to pay rent in that time, or pay rent into escrow. You will have other expenses, such as someplace to stay and the additional costs of living that come from not being in your home. Those costs add up quickly. Once again, renters insurance doesn’t protect the landlord, it protects you.
Your renters insurance protects you by covering those additional living expenses, so that the money doesn’t have to come out of your own pocket. Since you might have to put down first, last, and security on a new apartment, this coverage helps to keep your additional living expenses from eating into the money you have saved for those expenses.
In a nutshell, Atlanta, GA Renters Insurance doesn’t protect the landlord. It protects you against liability claims. It protects your property against a wide variety of things that could cause damage or loss. It protects you from having to pay for additional living expenses after a loss. It’s not there to protect the landlord, and that’s not why the landlord requires it.
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