Landlords require tenants to carry renters insurance
Buying a policy to cover your possessions is always a good idea, but more property owners are taking the decision out of your hands.
If you rent a house or apartment, buying renters insurance to cover your possessions has always been a good idea. These days, more landlords are taking the decision out of your hands and requiring tenants to get insurance.
Though no one tracks what percentage of landlords requires tenants to buy insurance, anecdotal reports indicate that number is increasing, says an article in SmartMoney. Websites aimed at landlords advise including the requirement in the lease.
Rose Lichter-Marck, 28, who lives in New York, wishes she had bought renters insurance. When her building caught fire, she had to replace all her furniture, housewares and books. She spent $2,000 just getting the smoke smell out of her clothes. If she'd had insurance?
"They would have put me up in a hotel, paid for my cleaning and moving fees and even the broker's fee for a new place," Lichter-Marck told The Associated Press.
The landlords' insurance usually covers just the structure itself, not your possessions or a place to stay if your apartment is damaged.
Renters insurance costs $100 to $300 a year, plus an additional-cost riders for valuable items such as jewelry that may get limited protection in a standard policy.
Why would a landlord require a tenant to carry insurance? Mary Gallagher explains in an article at SF Gate Home Guides. Among the reasons:
- It makes the tenant less likely to sue if his possessions are damaged.
- Insurance often covers the removal of damaged goods, such as furniture, which may end up costing the landlord if the tenant just leaves the ruined items behind.
Some landlords also require renters to carry liability insurance in addition to property coverage.
As the rental market tightens, expect to see more leases that require, not just suggest, renters insurance. If you're a landlord, you may want to consider adding that proviso to your tenants' leases.
So what happens when you have an insurance company refuse a policy because of the landlords failure to properly maintain the building?
They want you to have rental insurance not so your possessions are protected but so you can also carry liability insurance. The liability insurance you pay for allows them to reduce their insurance obligations and costs whether you are at fault or not. Just think of it as a way to shift the burden of cost and/or liability risk to the renter without increasing the rent. You have to question the ability of enforcing requiring rental insurance in lease agreements vs. the risk of losing a steady paying occupant in today's market where housing is cheap. Insurance is very profitable; you pay in, they gamble on the risk of payout. Most policies are fairly inexpensive but so is the coverage provided. Just remember most insurance companies have been around a long time so they must be good at what they do; making smart investments from policy holder premiums and not paying out often. Note that fear in general and fear of a perceived risk are the key motivators in pushing insurance in the posts listing horrible fires and flooding.
Talk about timing. Yes, I am an insurance agent, and I posted here yesterday. Last night, I was awakened by a phone call from our after hours service. One of my policyholders had their rented home burn down last night, and the fire caused considerable damage to the unit next door. At this point, I have no idea whether they are at fault for the fire--but I do know their possessions are covered, and we'll be defending them and/or paying if they are somehow responsible for the neighbor's damage. In addition, we'll be paying the cost of any "additional living expenses" they incur while they find a new place to live.
They only took out the policy because the renters policy gave them a discount on their auto insurance. They probably have less property coverage than what they lost--but that's because they insisted on keeping the policy at the "minimum allowable premium". Bottom line is that this young couple is going to be alright because my office forced the issue a bit. BTW, I work solely on commission--and because of the reduced premium from the multiline discount, I actually made slightly less money by writing them the insurance. So why do it? Because it was the right thing to take care of them, and that's what the business is about.
At one time, I rented a condo on the bottom floor of a two floor building. The hot water heater of the person upstairs from me broke one night and I was at work as was the lady from the unit with the broken hot water heater. Water ran from her unit into mine for 9 HOURS before I got home to find my whole ceiling collapsed. When I say WHOLE ceiling, I mean in every room (2BR/2BTH, LR, KIT, DINRM and DEN). All of my belongings were ruined including all my furniture, TV's, computer, etc. I came home to my poor dog standing in 7 inches of water!
The lady upstairs didn't even know her water heater was leaking (the bottom had rusted out) as there was not one drop of water in her unit. After I went upstairs to shut the water off (she didn't know how), I made two calls, one to my insurance company (yes, I had renter's insurance for $255.00 year) and one to my landlord.
The renter's insurance was the best thing I ever did and I purchased the policy on my own, my landlord's never required it.
Not only did the insurance company send out a company within two hours to start the clean up, an adjuster was there within four hours. I have guaranteed replacement costs of $50,000.00 (the max), loss of use, housing for pets and guaranteed hotel vouchers for up to $145.00/night. The adjuster gave me a pre-paid Visa card for $5000.00, found me a room at a Homewood Suites where I could have my dog with me. I was able to buy clothes and a new laptop right away.
All the work was done on the unit within two months and I had all new furniture.
All my pictures and important papers were stored on a shelf and in my safe deposit box.
I now own two units that I rent out and I require renter's insurance of my tenants. A renter is foolish not to have it. While my landlord at the time had insurance to cover the appliances, furnace, central A/C, cabinets and fixtures, the condo association was responsible for the general structure meaning anything from the drywall out.
For $255/year, it was well worth the piece of mind. I give my tenants 45 days to get and keep a policy active and I check to make sure it is kept active during the term of the lease.
Landlords are tired of getting sued by tenants when tenants stuff gets ruined because a water pipe freezes and breaks and floods the unit....or a storm sends a tree through the roof and walls and all that rain pours in for the next 3 hours.
But now the REAL truth.
The insurance industry is behind this movement. Renters make up a LARGE portion of the population and getting larger every day...so that is massive amounts of free money that the insurance industry isn't getting handed to them....and they can't have that.
The insurance industry will NEVER pay a renter insurance claim just like they never pay ahomeowners insurance claim unless the property is leveled AND not flooded.
Property insurance is gov'ment mandated THEFT.
Many landlords require a tenants insurance policy because of pets. If someone gets hurt by your pet, the landlord can sue you and your insurance company for any liability incurred.
But there are ways to still get out of paying.
Your landlord has a LEGAL obligation to ensure that the entire premises is to be free of hazards. This includes certain language in a lease to help prevent tenants from using extension cords too small for an application, leaving candles unattended, etc.
If your stupid neighbor burns down the building, you can still sue the landlord if they didn't have appropriate language in their lease.
Other items would be fires caused by electrical problems within the building itself.
Most apartments have old wiring, old outlets/switches, etc. Or even aluminum wiring.
If the landlord is negligent in making the premises free from electrical hazards due to neglect or tort, you can still sue the landlord.
Slumlords beware! Tenants are money hungry just like the landlords are.
Here is something: landlords want your social security number in order to do a background check.
How many landlords are willing to give YOU their social security number so you can do a background check on them? You surely would want to know if they are having legal issues, solvency issues, etc.
I wouldn't want to rent some place from a landlord who has solvency issues, the building go into foreclosure, and me having to move at my sole expense again, would you? If they want to know your credit, you should be allowed to know theirs.
Level the entire playing field and things will improve.
How about the landlord providing insurance to cover your losses due to criminals breaking into your apartment because they didn't have a secure entry door? Or adequate lighting?
Next time a landlord requires you to provide insurance, tell them to provide an equal amount to cover him as well, naming you as the beneficiary.
Contract law requires all leases (aka contracts) to NOT be one sided. A lease is a contract. Ask your lawyer about your state laws regarding this. A one sided lease is an ILLEGAL lease.
I bet they run the other way.
I could write huge articles on this subject, from both sides of the fence.
I don't believe renter's insurance should be a federal or state mandate. I don't want government to regulate any more personal responsibility. Not having renter's insurance ONLY affects the renter. It is the renter who bears the risk, and that renter should have the right to decide whether or not to risk doing without renter's insurance.
For myself, I could replace my belongings quite cheaply because I don't have much. I thrift store and/or garage sale for almost all my household purchases now and would do the same IF I collected on renter's insurance. The things that are really valuable to me are my old photo albums and pictures sent to me by my son and his family of the grandchildren. And I can remedy losing those by putting the pictures on a CD and storing that in a safe deposit box along with other valuable papers.
However, I choose to have renter's insurance for the liability coverage in the event a guest has an accident while visiting me, i.e. slip and fall on a rug, while getting out of the bath tub, etc. Some people have no health insurance coverage to cover that kind of mishap, or have only Medicare or Medicaid. Neither of those would cover all the expenses of a fall in my apartment.
At about $10/m, the cost is minimal so I just shop more carefully to pay for it. For many people, that's less than they pay for their latte's, cigarettes, a drink now and then, or any other "want" they have.
There are VERY few people who can't afford $10/m. They may have to give up another "want" but VERY few will have to give up a need. For them, there are food shelves.
I'm fortunate to live in a complex that is well taken care of. They also screen their tenants well. However, if their good judgment is proven otherwise and they get a tenant who consistently violates the rules, those tenants don't last very long around here. FYI, this is a building where rental assistance is accepted. Regardless, the management doesn't put up with loud parties, uncontrolled children, or tenants who consistently have guests who break the rules. It is well maintained although when carpet is replaced, the carpet is more industrial than residential -- because industrial lasts longer. Dripping faucets are fixed ASAP as is the boiler when it has shut down (once this winter). The good management is one of the reasons I'm staying here until I die, or do something stupid that they kick me out! I don't plan to do something stupid. LOL Like many seniors, we've been taxed out of our homes, and can't afford to hire someone to do the maintenance and upkeep on a home anymore and we physically can't do those things ourselves, either. Renting is the only option for some of us. It comes with benefits, too. I don't have to worry about a thing concerning my present abode when I go see my grandchildren! No worrying if the pipes are going to break if the furnace goes out or if a prowler will break in. Yep! I have it good!
I was in Ft lauderdale area in 2004 /2005 when Charley . Jean and Francis decided to make their appearances. Equity Residential renters were required to take Insurance - there were a lot of happy residents when they were covered for damages from the Hurricanes.
It could easily have been you or the neighbor causing a fire - the cost can be as low as $13 without using your insurance company - or even less if you have multiple policies.
About a year ago, a fire in an apartment badly damaged a wing of another building in my apartment complex in New Jersey. All the tenants in that building had to evacuate for about a week, for those in the wing affected, it was vacated for about 7 months as damaged occurred to the roof and related structures as well as at least 4 apartments totally gutted. Those with renter's insurance were in a much better position to get recovery for their losses and for temporary housing. Renter's insurance also protects you as to any injuries by any visitors.
Not everything is a scam to rip you off, people.
A landlord couldn't care less whether your possessions are protected--but the liability coverage is critical to them. In today's legal system, they can be held liable if you do something stupid. Simple fact of life...they are perceived as having deep pockets (whether they do or not) and if you screw up and burn down the neighbor's apartment, two things are going to happen. 1. The neighbor's attorney is coming after you for damages 2. The neighbor's attorney is coming after the landlord, simply because they are perceived to be wealthier than you are, so they get dragged into it on the trumped up basis that they should somehow have prevented you from screwing up. Don't tell me that's ridiculous, because it happens every day.
Renter's insurance is very cheap. In fact, many people get it for "free" because multiple line discounts often drop your auto insurance premium by more than the cost of the renter's insurance, when you have both with the same company.
I think it is important to have if you rent a renters policy and is OK for a landlord to require. For example. 1.Most policies are a package and cover many things, if you were to accidentally clog your toilet and it caused water damage you could be held responsible for that, most insurance companies would cover that loss under accidental discharge etc,etc. 2. You should always make sure you have replacement cost on your personal property before you think your getting a check for $15,000.00 as one person put it an actual cash value policy would give only give you the depreciated value. 3. If someone visit's you and get's hurt accidentally who pays the hospital bill. If you have insurance they will if not you get sued. If it only happened once in your life how many people want to give up or even have $100,000.00 or up to $500,000.00.(The liability part of your insurance fallow's you out side of your home. Check your ins for detail's)
Legally, I do not see how they can make that a requirement. I certainly wouldn't do it. It is one thing if you have something that they are actually going to cover, however, I have had the best insurance and it is just throwing money away, because of the loopholes. AAA refused to pay with my homeowners insurance with a special rider for my computer, when my then 4 year old grandchild squirted water on my computer with her squirtgun from the top of the stairs, trying to get me. It killed my computer $2000.00 down the drain. I had to laugh, because she didn't mean it. But I didn't laugh when I found dout that AAA would not pay because she was my grandchild and not some deviant down the street.
I don't have anything of value anymore, simplified my life and it would be silly to have insurance on contents because I don't care. I want things that are quick packable that one person can manage or is hand designed and made. If I had furniture totalling 60 grand, I would rethink it. But seriously, most posessions are just things, except what the grandkids made.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.