As a landlord, you understand that both good and bad tenants create risks. They could sue you for injuries or take you to the landlord-tenant board to dispute issues, ultimately costing time and money. If they accidentally start a fire and damage surrounding properties, you could be liable for the resulting damages.
Tenant insurance can mitigate your risks as a landlord. This article details exactly why your renters should have tenant insurance ready.
Tenant insurance reduces your liabilities
Damage to your property
Suppose a tenant accidentally starts a fire and burns down the building while cooking. Although you can sue them for compensation, if they declare bankruptcy, there may be nothing to sue for and you’ll be liable for any costs arising from their accident.
That’s why ensuring your tenants are insured is vital. If a tenant’s insured, you’re tapping their insurance policy for compensation (often with limits in the millions).
Even if you’re insured, the opportunity to tap your tenant’s insurance instead of your own can prevent your insurer from raising your rates significantly. It also creates a second way to obtain compensation. Instead of relying only on your own business’ policies, you can rely on your tenants’ as well.
Third-party bodily injury and property damage
If your tenant invites someone over and they trip and injure themselves in your tenant’s unit, you could be legally and financially liable for their injuries. Your tenant could also be legally and financially responsible.
When someone faces harm in the space you’ve rented out, they may try to sue you because your tenant can’t afford to pay for damages. With renters’ insurance, your tenant’s policy can compensate for any legal claims. As a result, plaintiffs have less reason to file a claim against you and can directly sue your tenant instead.
Ensure the wellness of your tenants
Contents insurance protects your tenant’s things if they’re ever burglarized. If they come home to find that someone stole their laptop or television, they can simply claim their tenants’ insurance for the replacement value. This prevents them from diverting funds to replacing their things and possibly having trouble paying rent.
Additional living expenses
If an accident occurs in the building and remains uninhabitable, your tenant may have no living space. Renters’ insurance can provide the capital required to make temporary living arrangements as your property becomes livable again. This can prevent arguments on who should be responsible for these costs.
Renters’ insurance is an important policy for any tenant to have. It reduces your risks as a landlord and ensures your tenants are well off in case of an emergency. Although renters’ insurance isn’t always mandatory, it’s something to encourage.