Although nearly 100% of homeowners have home insurance coverage, less than 40% of renters are covered by rental insurance.
Although your tenants may not know it, not having rental insurance can have some major consequences for both of you. That's why it's in your best interest as a landlord to require rental insurance for your tenants. It's a small change that can make a major difference in case there's a disaster.
Read on for our top 10 reasons why you should require rental insurance from all of your tenants.
When you're dealing with tenants, it can be an uphill battle when trying to convince them to get rental insurance. There are a number of excuses they might give you in the beginning, but there are ways you can prepare your rebuttal.
Here are some of the most popular tenant excuses against rental insurance and what you can do counter them:
As a landlord, you're probably well aware of how much pushback you can receive from tenants if you're trying to add an extra expense to their bills. However, if you approach them logically and with numbers, you'll likely convince them that rental insurance is in their best interest, as well as yours.
Unlike most homeowner's insurance plans, rental insurance covers a broad range of things and doesn't require prior itemization regarding what's covered.
Here's a general list of what most rental insurance plans cover:
If they've never considered a plan before, your tenants might be surprised by what a simple rental insurance plan can cover. By requiring it, you're actually doing them a big favor.
As mentioned before, the cost of having rental insurance might be a lot lower than your tenants expect. This can be extremely helpful to point out when explaining why you're requiring them to have it.
The prices vary depending on where you are, but you can often find good coverage for $10-$20 per month. If the annual cost comes in a lump sum, it can be even less than that. In other words, you can get good rental insurance for about the price of a cheap meal every month.
If you've been a landlord for a while, you know that there are plenty of bad tenants out there who are irresponsible with paying their dues on time. If you're requiring them to do the leg work and get a good rental insurance plan, then that's a good sign that you've found a dependable tenant.
Tenants who understand the benefits of having rental insurance coverage are more likely to be responsible when it comes to other things, like rent and reporting damages when it's necessary. If a potential tenant fights you on this request or fails to get coverage, they likely would have given you more problems down the road as well.
Requiring your tenants to have rental insurance not only brings the most responsible tenants to light, but it also reflects well on you as the landlord. By doing your research and showing you value your tenant's belongings, you are establishing yourself as a reputable landlord. The right tenants will see that and trust your judgment.
If any disasters happen during your tenants' leasing periods, things can get ugly when you're trying to figure out who's responsible. In some cases, tenants might try and find you at fault for damage to their property, which can lead to some long and painful legal proceedings.
Liability is a huge concern for landlords in many cases, especially those dealing with bodily injury. For example, if your tenant doesn't have rental insurance and themselves or a guest sustain an injury resulting from the property, they could try and pin the fault on you. If they have rental insurance, however, those costs would already be covered.
There are a number of landlord/tenant legal disputes that can come up while you're renting out your property. Don't get caught in the middle of it. Requiring your tenants to have rental insurance will protect you both.
Unless your tenants have rental insurance, their belongings and valuables are at the mercy of any potential disaster that could occur, such as a fire or a burglary. Even if you are personally insured, they would still be on the hook for replacing their own items.
Requiring rental insurance ensures that everything is protected, from your home's foundation to all the personal belongings in it. It's a small price to pay for your tenants to know all their stuff is safe, no matter what.
Even though you probably already have homeowner's insurance, you could be stuck paying a huge deductible if your tenant accidentally causes damage, such as a fire or flood. If you require your tenants to have rental insurance, this not only protects them from paying unforeseen costs, it protects you as well.
Despite what you might think, it's surprisingly easy to require and enforce your tenants having rental insurance. In fact, it's so easy, you can't really afford not to.
Add a section in your lease that requires your tenants to have rental insurance in order to occupy your unit. Look up examples online if you need some ideas. It's really just as easy as that.
When your potential tenants get rental coverage, all that's left to do is require a copy of it during lease signing. That way, you'll ensure their compliance before you enter a leasing agreement.
Sure, it may look like an extra cost at first, but it's a small cost in the grander scheme of things. Rental insurance is a small price to pay for the peace of mind you'll both get once your tenants are covered.
Although no landlord wants the unthinkable to happen to themselves or their tenants during a leasing contract, bad things happen. Burglaries, floods, injuries, and property damages are all looming obstacles you may have to face as a landlord. By requiring rental insurance, you're giving yourself and your tenants peace of mind that they'll be prepared for any disasters that could happen during the leasing contract.
Although requiring rental insurance is highly beneficial to you and your tenants alike, there are a few drawbacks you should be prepared to address.
Here are the main drawbacks of rental insurance for your tenants.
The last step for convincing your tenants to get a rental insurance plan is being prepared to address all concerns and arguments potential tenants may have. By thoroughly educating yourself, you'll present a compelling argument that benefits you both in the end.
If you're renting property in Canada, it can be really easy to get started on requiring rental insurance from your tenants. By educating yourself and preparing quotes, you'll have an easier time getting your tenants to comply.
Contact us today for more information on rental insurance for your property.