Renters must carry renter’s insurance to cover their personal belongings in the same way that homeowners must carry home insurance to protect their belongings in the case of loss or damage. But, where does this leave landlords? Do they need some sort of insurance? If you’re a landlord, here are some things you should know.
Who Pays for Renter’s Insurance?
Although landlords may pay for the cost of renter’s insurance as a courtesy to their renters, the responsibility for cost generally belongs to the renter’s. While the landlord pays for insurance on the buildings, the renters typically pay for insurance that covers their personal belongings that are inside the buildings.
Landlords also purchase liability coverage as part of their insurance package. This protects them against possible lawsuits if visitors are hurt while on their property and also covers any medical bills the visitors’ might incur.
Can Landlords Require Renters Pay Renter’s Insurance?
As a landlord, you have the right to require that your renters keep a current renter's insurance policy. This is to protect the property and not their personal belongings. You can’t automatically include it in the rent unless you have a signed agreement between yourself and the renters. Some landlords require that the renters not only carry renter’s insurance but also that they list the landlord as an “additional insured”.
The reason for this is so the landlord is covered under the liability section of the policy in case something happens due to the negligence of the renters. Insurance companies may require you, as the landlord, require that your renters carry rental insurance. If the rental unit is occupied by more than one renter, the landlord can also require that each tenant carry their own renter’s insurance.
Types of Landlord Insurance
There are generally three types of landlord insurance policies.
- DP-1 Policy – This is a basic policy that only covers simple things like vandalism and fire.
- DP-2 Policy – A little broader than the DP-1, this policy also covers damages from hail, windstorms and even collision.
- DP-3 Policy – This is often considered an “open peril” insurance because it not only covers more perils but also usually gives you replacement cost rather than actual cash value.
Additional Reasons for Renter’s Insurance for Landlords
Although landlords typically require renter’s insurance to protect them from liability and to pay for loss of the buildings, there is another reason why renter’s insurance for landlords is a good idea. Rental units and apartments are a source of income for the landlord. If the building is damaged or destroyed by fire, tornado, vandalism or some other circumstance, the renter’s may have to live elsewhere until the property is repaired or replaced. In this situation, there is no income coming in. Renter’s insurance for landlords will pay the landlord for loss of income during the time there is no rental income coming in.
