Carrying landlord insurance is not enough, as a property owner part of your landlord risk management plan should incorporate a requirement that your tenants carry renters insurance. Outside of providing property and liability protection for your tenant incorporating renters insurance as a requirement in your landlord risk management plan will limit your liabilities and provide you with recourse if your tenant is deemed negligent for any property damage or bodily injury that they might cause on your premises. You should not carry the burden and be responsible for a loss if your tenants is negligible!

The language found under the “Liability Coverages” section of a renters policy might state something similar to this:

1. Pay up to our limit of liability for the damages which an ‘insured’ is legally liable. Damages includes pre-judgement interest awarded against an ‘insured’ , and;
2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when the amount we pay for damages resulting from the ‘occurrence’ has been exhausted by payment of a judgement or settlement.

Based on the renters insurance language the policy will afford you protections as long as your tenant has renters insurance policy in place. You need to also make certain you have a signed rental contract that spells out your tenants responsibilities in regards to damages so liability can be enforced by the contract.

Make certain your tenant does not carry anything less than $300,000 in liability protection.

The cost of renters insurance varies anywhere between $8 – $20 per month.

This article is intended for informational purposes only and is not insurance advice or a substitute for consultation with a licensed insurance broker to address your particular risk or circumstance.