It’s easy to think that rental property owners have it good, but being a landlord has its share of responsibilities and possible liabilities, too.
For example, landlords worth their salt must spend for rental property insurance, which tends to be more expensive than a standard home insurance policy. With this type of coverage, landlords can easily repair any damage within the property they’re renting out.
Their tenants’ belongings, however, are an entirely different story since rental property insurance does not cover them. Still, some tenants could resort to filing a lawsuit against their landlords for damaged belongings within the rental property.
To sidestep this risk, most landlords require tenants to obtain renter’s insurance, and rightly so.
What Renter’s Insurance Covers
As its name suggests, Renters insurance provides tenants coverage for the contents of the house, apartment, dormitory, or condominium they’re renting in the event of damage or loss due to a covered peril.
As with a standard home insurance policy, basic renters insurance coverage will compensate tenants for their clothing, appliances, furniture, smartphones, and other personal property damaged or lost due to covered perils, which may include:
● Riot or civil disturbance
● Damage caused by vehicles and aircraft
Renters insurance doesn’t cover damage or loss due to earthquakes and flash floods. The same goes for vermin infestations.
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For a landlord, there is always the risk of tenants holding them liable if they get hurt within the property, especially if the former’s negligence or inaction about, say, a loose handrail on a stairway or an uneven floor led to the latter’s injuries.
But what about injuries suffered by a guest due to the renter’s negligence or inaction, like leaving their kids’ toys around and causing slip and fall accidents?
Fortunately for renters, there is another similarity between renters insurance and homeowners insurance: the liability protection component.
If a renter’s visitor suffers an injury within the renter’s rented property, that person’s medical expenses will be shouldered by renters insurance through its liability portion.
Renters insurance covers the renter’s legal expenses in case of a lawsuit, as well as any money a court may award to the injured party.
Should the renter or any member of his household cause damage to a neighbor’s property, renters insurance will also kick in and cover everything up to the policy’s limits.
Additional Living Expenses Coverage
The similarities between renter’s insurance and home insurance don’t stop with liability protection.
Many renters insurance policies also cover additional living expenses or ALE, just like standard home insurance coverage.
Renters can make use of the ALE coverage if the place they’re renting is temporarily uninhabitable because of damage caused by a covered peril.
While a landlord’s rental property insurance will take care of repairing or rebuilding the dwelling itself, renters insurance will cover the tenant’s expenses who will have to stay temporarily at a hotel.
Aside from hotel bills, the ALE portion of a renters insurance policy will also pay for a tenant’s meals, laundry, and other expenses until the property they’re renting is fully restored.
It Covers Damage Renter’s Cause
Typically, any damage caused by a tenant to a rental property gets covered by their security deposit.
Sometimes, however, the security deposit is not enough to cover the damage.
In such cases, landlords sue tenants for damages not covered by the security deposit, and that’s where renters insurance comes in.
So, if a tenant causes water damage because of an overflowing bathtub or accidentally breaks a window, their renter’s insurance policy should cover it.
If you’re a rental property owner, it makes a lot of sense to require potential tenants to show proof of having renters insurance coverage before finalizing any rental agreement. Do that, and you’d be doing yourself and your tenant a huge favor