Reasons a Landlord Requires Tenants to Have Renter’s Insurance

December 26, 2011 by Chase Pacific

Chase Pacific manages residential properties throughout San Diego County.  Our primary responsibility is to our clients, which are the owners of the properties we manage.  In most instances, the owners of the properties (Landlords) offer their residences to tenants for two main reasons:  to make a profit and protect their assets.  It is becoming increasingly common to require tenants to carry and evidence a renter’s insurance policy as part of the conditions of tenancy, which helps them achieve the goal or risk abatement. The concern is that if you’re not protected with a policy, they may be financially responsible in part if someone brings legal action against you. Requiring evidence of a renter’s insurance policy is perfectly legal as long as it is required of all tenants.  There are a number of reasons why a landlord would require a tenant to purchase (at the tenant’s expense) a renter’s insurance policy and show evidence of that policy prior to taking possession of the property.  Let’s look at 3:

1. Legal Protection

The landlord’s primary concern is that there will be more than enough money to protect you and them in a lawsuit arising from accidents or injuries of others who visit you in your leased residence. For example, if you invite a guest who slips and falls in your rental home and breaks a bone, you could be sued for liability. If you don’t have money to defend yourself in a lawsuit and pay a judgment awarded against you, your guest may include your landlord in the lawsuit to recover damages. They might do that anyway, but your landlord is protected if you own a renter’s insurance policy. This is the main reason why a landlord requires tenants to have renter’s insurance.  This provision of a renter’s policy is the “liability” portion of a renter’s policy.  The term “renter’s insurance” is a broadly used term. Technically, renter’s insurance covers both personal property and liability.  A tenant’s personal belongings are typically not insured by the structural insurance that is paid for by the owner of the property.  It’s important to purchase a policy that cover’s both personal belongings as well as liability coverage.

2. Avoid Additional Claims on Property Insurance

Another reason why landlords require renter’s insurance is to avoid filing claims on their own insurance. Each claim they file will result in higher premium payments for them, and there may come a point where their insurance company will decide to stop insuring them. If you live in a rental property with many tenants, such as a condominium complex or apartment community, there’s a greater chance of this happening. Each tenant has the potential to cause the landlord to file a claim to pay for liability, medical payments or other damages. A landlord views this as a burden, and wants each tenant to take that on themselves.

3. Protection for Other Tenants

It’s also to ensure that the other tenants are protected. If you live in a duplex or a building with multiple units, each tenant is potentially at risk due to negligence of other tenants. For example, if one tenant floods their apartment by mistake, such as by leaving the tub on while at work without realizing it, it can destroy the belongings of tenants on the bottom floor or even tenants in the adjacent apartment. Those tenants will have to pay to replace any damaged items, such as electronics, and they may not have enough money to pursue you in court. However, if the landlord requires everyone to buy renter’s insurance, then all tenants can sleep at night knowing they can file a claim if necessary.

For these reasons and more, effective January, 2012 Chase Pacific will require new tenants to evidence a qualified renter’s insurance policy with a $100,000 minimum liability and Chase Pacific Property Management listed as an “additional interested party”.  Current tenants are not impacted by this new requirement.  Most policies are available for a very minimal annual cost and staff from Chase Pacific can make some recommendations on who to contact to initiate a new policy.  In most instances, if a tenant has a current policy, it can be easily transferred to a new address.  Please contact Chase Pacific if you have any questions.

Category: Misc. Tips for Owners And Tenants, Tips for San Diego Property Management Tenants