Renter’s Insurance – Is It Worth It?

Are you the owner of a building with residential tenants? Good, let’s talk! As a residential building owner, you’ve likely gone through all the hard work – made sure your building is safe and sound, handled all your city/state code requirements, and obtained the proper building insurance coverage. And then life happens! Disaster strikes, and your building suffers a loss, or perhaps a guest is injured through no fault of your own. If your tenants don’t carry renter’s insurance, this could negatively impact both you and your tenants.
Let’s talk about property. A covered peril in your property policy (i.e., fire, smoke, water damage, windstorm, lightning, theft, vandalism) is called on for coverage following a loss. Your building suffers damage, but you are properly insured, so your building is restored, and you are made whole following the claims process. As a result of the loss, your tenant’s belongings were also heavily damaged. Your tenant doesn’t carry renter’s insurance, so they may turn to you for coverage. The fact is, there is no coverage for tenant contents in a building owner’s property policy. Let’s face it – that Jordan sneaker collection wasn’t cheap!
Let’s talk about liability. Your tenant invites a guest over, and the guest is injured through no breach on your part. If the tenant does not carry renter’s insurance, the claim will automatically be directed to you and your insurance policy, as the building owner. Depending on the circumstances, the claim may or may not be paid, but even if no payment is made, you will have to go through the process and incur possible defense costs which will become part of your claim history and drive up your insurance costs.
It’s worth it! As a residential building owner, best practice is to strongly recommend, or require, that your tenants carry renter’s insurance for both their protection and yours. If you need help nudging your tenants along in understanding the value, you can let them know that in addition to covering their personal belongs in the event of a loss, renter’s insurance can also afford the following: Hotel costs after a disaster; Medical expenses for injured guests; Damaged cause to others; Legal costs if your sued; Dog bites; Stuff you’ve rented or borrowed; Belongings away from home. If they don’t have an insurance agent, refer them to yours – I’m sure they would love the referral. Stay safe and keep up the good work!