Woohoo! You just signed a new tenant lease! Ok, we’re tickled pink for ya – but hold on one minute, partner! (Sorry, we’re from Texas)
Did you require that the tenant have renter’s insurance?
No? Well … we’re taking back the ‘woohoo’ (sorry) … you made a critical error! Requiring renter’s insurance is not only a good idea for the tenant, but also something that affects you as a landlord.
Why, you say? Hmmm … how about greedy lawyers for a start? Having your tenants purchase (even cheap) renter’s insurance is an additional layer of legal protection for you, too. Contrary to all of the great legal shows on HBO, spending your life in a courtroom is not all gripping drama and nighttime partying (although we highly recommend the latter).
ASSumptions (you know the implication, don’t pretend you don’t):
Renter’s insurance only protects the tenant
Yep and nope. It does protect the tenant against when Barry Butthead is twerking on the dining room table, falls and breaks his arm. That’s the liability part. And usually it also protects against robbery, stupidity, and accidental breakage. We slipped in ‘stupidity’, because of things like putting a doggy toy in the toilet, causing a flooded apartment and forgetting to turn off the curling iron next to the toilet paper roll.
Of course, those types of things are YOUR fault, or at least some tenants will try to blame you. Then the greedy lawyers get involved, and well, you know the rest … you lose even if you win, if you know what I mean …
You don’t? Well, let’s say ‘Barry Butthead’ doesn’t have insurance, so they sue you (let’s say you are ‘Larry Landlord’). Next, the hospital feels left out, so they sue you too. Even IF your insurance company agrees to pay Barry’s medical bills (that’s a big IF), Larry Landlord will probably end up with higher insurance premiums.
Now, do you see how you can be affected? Doink! … that’s the sound of a light bulb hitting you on the head …
What about non-humans?
Alien coverage is typically not covered by any insurance policy (yet), but many times pets are. We are talking about domesticated pets, like dogs and cats, not monkeys, pigs, or cows. (Actually cows and pigs are pretty domesticated, but difficult to take out to do their ‘business’). We regress … if the tenant’s dog bites someone or maybe another dog, their renter’s insurance will most likely cover it. That’s a dispute you want to avoid, right? If you are accused of liability, it could take a ‘bite’ out of your profits. Sorry, we couldn’t resist!
Here’s a really simple question, ok?
If a tenant can’t afford $20-$25 per month to protect their own belongings, do you think that possibly it is a red flag that maybe, just maybe, they might have a problem paying their rent? Just sayin’ …. do they need to march up and down in front of your office waving the red flag?
Let’s get hypothetical … a bad thing happens …
Who is responsible for housing your tenant while you do repairs? While it depends on your lease agreement, the state you live in, and the cause of the ‘bad thing’ – YOU might be responsible. Or at least ‘feel’ responsible. Aawhh, you are so kind and caring, we love that! I wish you were ‘my’ landlord! But that’s another story, let’s stick with the topic.
Let ‘their’ insurance company do all that work – you’ve got a business to run! You can still send your tenant a ‘miss you’ card, while you deal with the contractors that are making your life a living hell.
The vanishing deductible
Not always, but if disaster strikes and your insurance company covers it, there is still the dreaded ‘deductible’ waiting in the shadows and ready to pounce on you. But wait! Maybe not! If the tenant was the cause, their renter’s insurance might cover YOUR deductible. This is not always the case, so don’t send me an angry email if they don’t – I get enough of that from my ex-wife.
Better than ‘My Pillow’
Not to trash a product (we love it, so don’t sue us), but maybe just knowing your assets and business is better protected may help you sleep better at night. Throw in a comfy pillow and you will sleep like a baby, hopefully without the bedwetting…
SUPER TIP #2: Look both ways before crossing the street
SUPER TIP #3: TIP #2 is better because it might save your life, but TIP #1 might save you some money and a headache!
About the author
Wayne Gathright is the president of W G Software Inc., which is the developer of the Tenant File Property Management Software (https://www.TenantFile.com). He enjoys healthy food (which leaves out most everything that tastes good), playing guitar (he’s awesome, if I must say so myself), and sucking up to landlords for profit.