By Devon Schad, The Schad Agency
THE BASICS
For most tenants, purchasing renter’s insurance is not at the top of their to-do list.
Coming on the heels of moving expenses, purchasing a policy of coverage that may come into play is seen as an unnecessary expense by many renters. Landlords should enforce this requirement in the lease.
Tenants believe that landlords, as the owner of the property, have unlimited funds, and should cover all tenant’s expenses, which is why requiring insurance brings peace of mind to both parties. It clearly makes both parties aware of what their legal responsibilities are. Because many renters live paycheck-to-paycheck, the tenant might not be able to afford both the rent and replacement of their belongings without tenant insurance.
Let’s say a tenant has their bike stolen off the front porch. Requiring renter’s insurance makes it crystal clear that a tenant is responsible for their contents, not the landlord (except in the case of legal liability). Without insurance, tenants will claim that the landlord is responsible even if a locked facility is included. “You never told me.” “This happened on your property and you should pay for my bike.”
A tenant falls asleep with a candle burning and causes fire damage to the condominium home, and to the neighboring home. Without liability protection the tenant, fearing they do not have assets to protect themselves properly, moves out. Without renter’s insurance, the landlord may be forced to pay for hotel expenses, which the tenant policy would cover. For small claims, the landlord may be forced to pay the damages of a liability matter, or for the bicycle, to keep the tenant from moving out.
In many cases, damage caused by the tenant to common property will be assessed to the landlord owner. A tenant carrying tenant’s insurance will better protect the landlord, the tenant, and the association.
THE ETHICS
Landlords must be accessible and responsive. If a tenant needs a repair, take care of it as soon as possible. Always pay for the repair, otherwise little repairs do not get reported, and the repair becomes a big deal. Be fair with money; charge reasonable rent. Late fees should be spelled out in the lease and be reasonable. It is always easier to keep a tenant then to get a new tenant.
Make sure the lease is clear and specific, as such no subleasing, number of tenants, section 8, non-smoking, late fees, etc. Surprises will always happen but keep them to a minimum. Walk-thru the property at least twice a year, with listing in the lease. On renewal, have the tenant make a list of items that need maintenance or repair.
Do all the right things for all the right reasons. Require insurance coverage by the tenant before moving in--if the policy is canceled, let the tenant know of the lease violation and make sure it is corrected.
Tenants need to be honest as to number of tenants, smoking, etc.
A good tenant is a good landlord.
RECOMMENDATIONS
We recommend replacement protection for contents for the tenant, a reasonable deductible and liability protection in an amount not less than $300,000.
We recommend a policy with special form coverage, at least $1,000,000 in liability and of course loss assessment for a condo or townhome. Beware of a basic or broad form loss coverage, use actual cash value, and ensure enough loss of rent money for a year.
Devon Schad is the owner and President of the Schad Agency, which specializes in insuring associations, apartments, landlords, businesses, and individuals.
