Do You Have Renter's Insurance?

You live and you learn, right? So we’ve never required our tenants to have renters insurance. I have always thought that if you don’t have renter’s insurance, that is a risk you must be willing to take in the event anything would ever happen. I didn’t think it was necessary for us as landlords to require it. Until we had our first fire.

Thankfully our tenants were all okay and home when it happened, otherwise it would have been completely awful. A dryer fire started in the laundry room, which is located at the back of the home. Our tenant was working in the living room when she smelled smoke. When she opened the door to the laundry room, she saw the fire. We have a car wash directly behind the property, and thankfully the guys over there came running over to help put out the fire before the fire department got there. Their quick action helped stop the fire from spreading.

Even though the damage was limited to the laundry, the entire home smelled of smoke. There was ash residue all through the first and second floor on the walls and ceilings. Initially, my tenant believed she had renter’s insurance until she called and realized she had let it lapse. Our insurance covered the cleaning of the home and the damage to the laundry room as a result of the fire, but none of their personal items were covered.

From talking with the insurance adjuster, he said the smell of smoke will never really leave the items unless they are thoroughly cleaned. He even said since the tenants don’t have insurance, they should start fresh with new mattresses because the smell will always be there. If the fire had been worse and the tenants were displaced, renter’s insurance would have covered the cost of the hotel. If the tenants had lost personal items or personal items were damaged, their insurance would have covered it. Luckily the damage and loss of personal items in this fire was limited, but the cost to replace clothing and clean household items will fall back on the tenants. I am just thankful it wasn’t any worse than what it was. So what’s the pros and cons of requiring renter’s insurance? When I break it down it becomes a little clearer.

According to MoneyCrashers.com, renter’s insurance covers the renter’s belongings in the event of loss, theft, fire, or other damage. Renters can choose the level of coverage that best protects the value of their property. Many policies do not cover damage caused by floods or earthquakes, but it is possible to purchase a separate policy to cover these events.

In the case of our tenants, they are responsible for their belongings. If their apartment had burnt down, they would have had the burden of replacing all their belongings. Some people may think they don’t own anything crazy expensive so its not worth getting insurance but think about the cost of replacing all your belongings- that is expensive. Not only that, but if you don’t have renter’s insurance you will also have to pay out of pocket for somewhere else to live. Renter’s insurance will typically cover your housing for up to a year.

Another benefit to renter’s insurance is that it will protect your assets. What this means is that if someone were injured in your apartment, you could be held liable and sued. Renter’s insurance will help minimize those costs.

I think the biggest misconception, and one that I tended to believe, was that renter’s insurance was expensive. With that thought process, we had a hard time mandating it for all our tenants. With a little bit of research, I found that on average renter’s insurance was about $187 per year. That equates to roughly $15 per month. At that cost, it is definitely worth getting. Now that we know more and understand first hand how it all works, I think its very important for renters to get insurance. The last thing I would ever want to deal with is a fire that displaces a tenant and they don’t have insurance. But you don’t know what you don’t know. Now that we have a better understanding of all this, it will change things moving forward.

What are your thoughts? Do you think landlords should require renters to have insurance? Comment below!