As part of purchasing a property with a mortgage, homeowners must also buy homeowners insurance coverage. Likewise, rental property owners purchase landlord insurance to cover their property interests and protect their financial interests. Renters have no such requirement for renters insurance, often overestimating the cost of renters insurance and underestimating the costs associated with potential losses and personal liability.
Whether you require personal liability renters insurance or not, it's crucial to make your tenants aware of its purpose and the coverage options available to them. Proper communication can help the renter avoid a catastrophic loss and subsequent financial reversal.
What is the purpose of personal liability renters insurance?
While many renters may think of renters insurance coverage for their personal belongings, personal liability coverage goes a step further. For example, suppose someone is injured on the property. In that situation, personal liability coverage can provide compensation in the event of a lawsuit or claim.
Personal liability renters insurance protects the tenant if they damage the property of others. Pet protection provides additional coverage if a tenant's pet bites someone on the property.
A landlord insurance policy typically does not cover tenant property or protect their interests. Tenants need to understand this important distinction so that they can adequately protect themselves.
A lawsuit or unexpected medical bill can result in an inability to pay rent or renew their lease. Therefore, ensuring tenants are financially protected from the results of liability for an accident or injury is vital.
What does personal liability renters insurance cover?
Personal liability renters insurance coverage varies by insurer and the amount of coverage purchased. Some policies are structured with comprehensive coverage, while other policies include a variety of riders and add-ons. For instance, to cover pet-related liability is considered an add-on. Personal liability coverage generally covers accidents or injuries to visitors or workers in and outside of the home.
Some common examples of injuries are:
- A falling object inside or outside the property
- Hazards associated with unique property features like a swimming pool or trampoline
- Personal activities like an accident in sports
- Damage caused by children
What does personal liability renters insurance not cover?
If a tenant is responsible for an injury or property damage resulting from the operation of an automobile, their auto insurance policy would provide coverage. Equally important, personal liability coverage generally would not offer protection for damages related to a business operated out of the rental property.
Liability coverage commonly does not protect another resident of the rental property. For example, if one of the tenant's roommates slips and falls, their health insurance covers any resulting injuries. However, if the roommate falls on a coffee table and breaks it, the renters insurance policy is likely to cover the table through personal property coverage.
How much personal liability coverage do renters need?
No one can definitively determine how much personal liability coverage renters need. Health, age, and disabilities are factors. An accident could result in a minor injury to a young healthy person but could result in a traumatic injury to an older person or one living with a disability. A renter who frequently entertains and has a large number of regular guests may have more risk than one who rarely hosts visitors.
Tenants should take the time to run the numbers and determine how much coverage they can afford. They may be pleasantly surprised to find that added coverage only amounts to a few more dollars each month on their policy premium.
How can you help your renters obtain personal liability renters insurance?
The best-case scenario is proactively protecting against accidents before they occur. This is one of the many reasons repairs need to be made promptly to the property. Communicating clearly to tenants what their responsibilities are for general property maintenance will also help prevent property damage.
However, when accidents arise, adequate preparation and renters insurance coverage are essential.
Demystifying the process of obtaining renters insurance ensures that tenants are better protected from unexpected claims. While you can't get renters insurance on tenants' behalf, you can require renters insurance as part of the terms of their tenancy. If you require renters insurance, you'll want to monitor it on an ongoing basis to guarantee that it doesn't lapse.
As part of your application and onboarding process, provide resources that outline the importance of renters insurance. Consider including an informational handout or a video as part of the information you supply to new tenants so they can understand their liability and potential protection. Also, try including a checklist so that renters can take an inventory of their belongings and make sure that their personal property is protected as well.
RentSpree offers a fast and effective way to connect your tenants with the personal liability renters insurance coverage they need. Our partnership with Sure provides on-demand quotes and an easy sign-up process so that tenants can get the relevant information and get covered sooner. It's a value-added service that landlords and property managers can offer and monitor right from the RentSpree dashboard.