Carla, a landlord in Houston, TX, has a question about requiring her tenants to have renters insurance. She writes,
I’m a landlord in Texas. Should I require my tenants to have renters insurance in Houston, TX? Am I allowed to require renters insurance? My deductible is high and I’m aware that some damages to the property might not be covered by my fire policies.
That’s a great question, Carla. Good for you for thinking proactively!
Should I Require My Tenants To Have Renters Insurance?
Absolutely! Commercial deductibles are high and profit margins are low. There’s no reason that tenant negligence should be taking money out of your pocket. You carry insurance, including liability insurance, for yourself and your properties. It’s perfectly reasonable to ask your tenants to do the same. Most landlords put it as a provision in the lease, so that there’s no question about the requirement. If you currently have 100% occupancy, you can still implement a renters insurance mandate over the course of the next twelve months. You can do this as leases renew by adding the provision with each successive lease renewal.
Can I Require My Tenants To Have Renters Insurance?
Absolutely, Carla! As a landlord, you can put just about anything you want in the lease, from quiet hours to renters insurance. Because it’s a binding contract, you can enforce provisions in the lease with fees, fines, or other methods. It’s a good idea to require tenants to have renters insurance, even if you only have a few units. Whether you’re just keeping the buildings occupied until you sell them, or you’re a national property management company, a renters insurance requirement makes sense. Whether you’re requiring Texas renters insurance, California renters insurance, or New York renters insurance, it’s universally a good idea.
How Do I Track Policies When I Require My Tenants To Have Renters Insurance?
Unfortunately, some tenants will just buy a policy, show the declarations page, and let it cancel the next day. It happens all the time. That’s where the Effective Coverage renters insurance tracking platform comes into play. By listing the landlord or property management company as an additional interest on the policy, with the address of the Effective Coverage Processing Center, you can be assured that you’ll receive notifications about lapses, cancellations, and even renewals. The whole process is managed from Effective Coverage’s national headquarters in Albany, NY. All you have to do is wait for the notifications to roll in as tenants purchase coverage!
But Don’t I Want To Be The Additional Insured If I’m Requiring Tenants To Have Renters Insurance?
No! A landlord being listed as additional insured can bring trouble if you need to collect under a tenant’s liability coverage. Since liability is a third party coverage, being additional insured makes you a party to the policy. It’s a bit more complex than that, but that’s the basics of it.
Whether you have two units or twenty thousand units, Effective Coverage has a way for you to require tenants to carry renters insurance and track their compliance. Contact Effective Coverage’s Property Management team at (800)892-4308, option 3, for immediate information on how we can help you mitigate risk, and in larger cases even help you generate revenue through our resident indemnity program, Renters Liability Pro!