As a property owner, you might not realize that you can require your renters to carry insurance. Before you add this stipulation to your lease agreement, make sure to check local and state laws. Some areas may have restrictions.
Once you verify that you have the legal right to require renters insurance, consider the following 5 reasons for implementing this policy.
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1. Liability is a Part of Property Management in San Diego
Imagine your tenant has a guest in their rental unit who suffers injuries due to the tenant’s negligent actions. For instance, the tenant’s pet might attack the guest, causing serious injuries. In that case, the tenant is certainly liable for the guest’s medical care costs.
What if the tenant doesn’t have the money to cover those damages?
The injured party might sue you as the property owner in an attempt to claim those damages. This outcome is a far less likely possibility if you require your tenants to carry renters insurance.
A basic policy will provide liability coverage for your tenant. Since the policy will pay for treatment of the injuries, it will be far less likely that a third-party will sue you.
2. Cover the Costs of Relocating a Tenant
In some states, a property owner must pay for a tenant’s relocation expenses. This possibility usually involves the destruction of the property by fire, flooding, or another natural disaster. In that case, your tenant may need help moving into temporary housing.
Renter’s insurance will cover the expenses associated with relocating to a new residence. It may even cover the costs of renting temporary housing.
Even if you’re not required to cover these costs by law, compelling your tenants to maintain renters insurance will give you the peace of mind of knowing they will have protection in an emergency.
3. Protect Your Tenants’ Property
When it comes to property management in San Diego, you will be responsible for damage to your tenant’s property when the damage isn’t caused by the tenant. If flooding or a fire damages your tenant’s furnishings or personal items, they may seek damages from you.
Rather than facing a claim for damages as you’re trying to rebuild your property, require each tenant to maintain renter’s insurance. The policy will cover the costs associated with replacing any items that have suffered damage. This insurance will also cover the loss of property due to theft.
4. Cover the Costs of Your Tenants’ Pets
An issue many landlords face with property management in San Diego is in deciding whether they will let tenants have pets. While having a no-pet policy might seem like the easiest solution, you should realize you’ll be limiting your pool of potential candidates. Over 68% of households have at least one pet.
Unfortunately, there are some issues that come along with allowing tenants to keep pets. A poorly trained pet might cause damage to your property. Additionally, there might be bites or scratches that cause serious health problems for the guests of your tenants or other building residents.
You can address both of these issues by requiring renter’s insurance. The insurance policy will cover property damages and medical care. Some policies have size or breed restrictions, so make sure your tenant’s policy will cover their specific type of pet.
5. Protect Your Own Insurance Coverage
Your property insurance will cover damages suffered by all of your tenants. While the law requires this for the protection of your tenants, too many claims filed by multiple tenants might pose a problem. Even a single claim can lead to an increase in your rates. More claims will lead to continually rising rates.
Additionally, you might be risking your coverage altogether. If there are several claims filed within a short period, your insurance provider might cancel your coverage. When your tenants can file claims with their own insurance providers, your policy will remain in good standing.
Protect Your Property Against Tenant Negligence
Adding a requirement for renter’s insurance is just one of the many things you can do to protect yourself as a landlord. You can learn about more good practices from a property management firm in your community. They may even be able to offer you services that will help you manage your property more efficiently.