Last week I was scanning one of those many Facebook Landlord groups, and I came across a post from one of the members that really made me scratch my head. In it, he said…
“From now on, everyone needs to ensure their tenants have tenant insurance…”
From now on, I thought?
It made me chuckle, because we’ve been doing this on all of our properties as well as my own personal properties since I started investing back in 2014.
It turns out this member had just watched a video online given by a lawyer speaking about the benefits of tenant insurance.
Speaking from experience, the benefit it to the tenant, however there are some residual benefits to the investor as well. What a lot of tenants don’t realize is that in the unlikely event of a flood, backup or fire, their possessions are not covered by the investors insurance policy.
Tenants may not be too impressed that they must pay tenants insurance on top of their monthly rent however it is in their best interest. As a landlord, you can explain the benefits and give them some general advice. You’re not abdicating your responsibility by getting tenants to take out insurance. You are showing you are a responsible landlord who has the tenant’s interests at heart.
In fact, it really doesn’t cost that much. It ranges from $20-25/month, depending on the type of coverage you have.
Some of the additional benefits to your tenants are:
- Additional living expenses—Tenant insurance covers living expenses if the rental unit is uninhabitable. Some states require landlords to cover these if the tenant doesn’t have insurance. So, you can save yourself a lot of money if the tenant has an insurance policy.
- Pets— Tenant insurance lets you be a pet-friendly landlord. This fact makes it easier to attract tenants and reduce rental vacancies. Tenant insurance that includes pet liability gives you peace of mind if your tenant has cats, dogs, or other pets.
- Stolen property— Tenant insurance covers damages or losses for stolen property. Without tenant insurance, a tenant could sue you because you have to ensure the property has adequate security. But they are more likely to claim on their insurance rather than file a lawsuit.
- Landlord insurance premiums—Insisting tenants take out tenant insurance can lower your premiums. For example, your premiums will shoot up if you make claims for property damage or injuries caused by tenants. Tenants who have tenant insurance are more likely to accept part of the blame and claim on their insurance policy.
If you’re not already doing this, I urge you to “heed the advice” of the gentleman in that Facebook group I referenced above, and “from now on” ensure that your tenants have tenant insurance! You’ll be glad you did.