Should A Landlord Require Tenant Insurance
Morgan's question: If tenants are required to have tenant insurance.
Yes, absolutely. I'm not an attorney, so I can't give you legal advice but it's my impression that tenant insurance serves several different things for you. So merely having that in your lease, that the tenant is responsible to have tenant insurance, helps to eliminate a lot of reliability. So if the tenant moves in, doesn't get tenant insurance but the lease states that they were supposed to get tenant insurance and something gets damaged, especially something that the tenant owns, they're now responsible. You can always fall back and say that it's legally required to have talent insurance and that was your choice not to get tenant insurance. So the fact that a hot water heater maybe blew out and caused water damage and damaged some of their possessions, it puts some of the burden onto the tenant.
But beyond that, tenant insurance is important to make sure the tenant actually has the tenant insurance, even though it's of value just having it in the lease. The tenant insurance covers everything. Besides just the tenants belonging, it also covers the property. And the other nice thing I love about insurance companies is, a lot of the times when there's a problem, it's taken out of your hands. Dealing with problems is a massive undertaking and you're not an expert at that. You're not going to be an expert at getting compensated in some way. So, having multiple insurance companies basically put the insurance companies against each other. The insurance companies will get together, just kind of push you aside and they're going to deal with the situation.
You'll contact your property insurance company and say this occurred at my property. They're going to ask you what information do you have on the tenants and what information do you have on their insurance company. You'll provide it and they're just going to push you out the way and they're going to do the work. They know the verbiages, they know what conversations to have and they'll work it out amongst themselves.
It's recommended to have tenant insurance, put it in the lease and do your best to check on that. It's tough because as a property management company, we actually provide the tenants with tenant insurance, so we don't mess around. Tenants are required to have tenant insurance. We have so many properties and we have massive, massive buying power, so we actually get a much superior tenant policy than tenants can get otherwise from much lower cost than they could get, so we're getting them great coverage.
It's easy for us, and from our end, we know the tenants have coverage and we know they have great coverage. I don't think the average landlord would be able to do that, so I would definitely have the tenants actually name you as the second on their policy, that way you'll be notified when the policy is canceled. Otherwise, you would have to have the tenant check in with you every couple months just to make sure it's there. Good luck!!!