Renters insurance is a type of insurance purchased by tenants to protect their personal belongings and to defend themselves against any liability claims made against them. Despite the advantages, less than 40% of renters actually hold this type of policy. There is a considerable amount of confusion regarding renters insurance and whether it is legally required for tenants to hold it. Is it required to hold a renters insurance policy and, if not, should you invest in one of these policies anyway?
What Is Renters Insurance?
Renters insurance is designed specifically for renters who want to take advantage of some of the benefits of a homeowners’ insurance policy. Often referred to as tenants’ insurance, renters insurance primarily protects the personal belongings of the tenant. It also has other forms of protection that come into play if a third party experiences an accident while on the property.
Never make the mistake of assuming a landlord’s insurance policy will provide protection. This misconception is why the take up of renters insurance is so low, when compared to homeowners’ insurance. Most experts would recommend all tenants have some form of renters insurance.
Renter Insurance Is Not Required By Law
Renter insurance is not required by law, under any circumstances. The myth that renter insurance is a legal requirement arises from the fact other forms of insurance, such as auto insurance, are legally required.
However, most responsible landlords will ask for a minimum level of renters insurance before they accept a tenant. Even though renter insurance is not compulsory, landlords are within their rights to demand that their tenants have a valid policy before signing a rental agreement.
Why Landlords Sometimes Require Renter Insurance
Landlords often require their tenants to hold a valid renter insurance policy. The most common level of requested coverage is $100,000, but landlords can ask for more. This is most likely to occur when renting a high-value property. However, tenants should think about taking out more coverage than required if they have any high-ticket items with them, such as jewelry or rare art.
It Lowers Their Own Liability
In the event a third party is injured within the rental property, their first stop will be the tenant. If they do not possess any renters insurance, that person will likely attempt to claim compensation from the landlord.
By making an active renters insurance policy a requirement for all tenants, the landlord ensures their insurance company is not involved if someone is injured on the property. It lowers their overall liability because they will not be required to pay court costs if a claim is made.
It Keeps Tenants from Collecting Damages From Them
The landlord’s coverage through their insurance policies only extends as far as the structure of the building, along with any outbuildings. Many tenants are unaware of this and will attempt to claim compensation from their landlord if their possessions are damaged or destroyed. Renters insurance guarantees this responsibility does not fall upon the landlord. Remember, even if a tenant is sure to lose in court, the landlord will still need to pay for the costs of a lawyer and deal with the hassle of managing the claim against them.
Renters insurance ensures the tenant is covered and is aware that the landlord is not liable for the damage or destruction of their personal property. Furthermore, an often-forgotten aspect of renters insurance is that this policy will provide living costs to the tenant if they are forced to find alternate accommodation. For example, if a fire renders the property unlivable, renters insurance will cover the costs of relocating to a hotel and other associated costs, such as transport. Landlords are not required to cover these costs. If a renters insurance policy is required, it ensures the tenant is fully covered if a disaster occurs.
It Allows Them To Recover Damages
A landlord’s insurance coverage will pay for any damages to the building itself. However, a landlord will need to pay the deductible. Depending on the policy they chose, this could amount to thousands of dollars they will never get back.
Landlords often make renters insurance a requirement for all tenants because then they can recover the deductible from the tenant’s insurer. This ensures they do not have to pay anything out-of-pocket if their tenant floods the bathroom or sets the kitchen on fire.
Talk To Merchant Family Agency For More Info About Renters Insurance
Most landlords will ask their tenants to take out a renters insurance policy. They may ask for a statement of insurance and will likely ask to be added as an additional interest on the policy. This ensures they are notified the moment the insurance policy lapses. However, even if a landlord does not make it a requirement, it is still recommended that all tenants possess renters insurance to protect themselves and their belongings. Contact Merchant Family Agency to find out more about getting the best value renters insurance policy.