According to Money Geek, the average cost of renters insurance in Virginia is $127 per year. That is less than $11 per month—a small price for your tenants to pay for peace of mind that should any losses or damages be incurred, they are covered.
By adding a single clause to your long-term lease agreement, you also protect yourself from litigation in the event of damages or loss. So, should landlords require renters insurance for their Portsmouth rental properties? The answer is a resounding "yes!" Here is why.
What Does Renters Insurance Cover?
Renters insurance is similar to homeowners insurance for tenants. While the property owner is responsible for insuring the physical structure with landlord insurance, tenants must protect their belongings with a renters insurance policy.
Why should renters have insurance? Your landlord's insurance does not cover the loss or damage of the tenant's clothes, furniture, electronics, and other belongings. It also doesn't offer renters any compensation if they become displaced from your property mid-lease due to structure damage, flooding, or different scenarios that could make your rental unit uninhabitable for some time.
Depending on how much protection your tenants require, they can select different values for property and liability protection. Tenants may also opt for insurance policies that provide additional coverage for workers they hire or invite to work on the property. Examples include au pairs, nannies, tutors, babysitters, home care workers, and housekeepers.
Can Landlords Require Renters Insurance?
Yes, landlords can require renters' insurance as a term stipulated in a new lease or lease renewal contract. However, checking local and state laws and working with a property manager before adding the clause to your lease agreement is advisable.
Discussing the issue during the tenant selection process
Stipulating the prerequisite in the lease agreement
To avoid discrimination claims, ensure that you require the same of all your tenants.
Can Property Owners Enforce the Requirement?
You have stipulated the requirement for the lease in your rental agreement. How do you ensure your residents have taken out a renters insurance policy? A Portsmouth property management company can help!
According to the VRLTA, you may request that the tenant submit written proof of their coverage. Renters are also required to maintain the renters' insurance throughout the lease term.
Advantages of Renters Insurance
Are there any advantages for property owners when requiring residents to have insurance coverage?
If your tenants have renters insurance, you have peace of mind knowing that you will not be held liable for damages to their belongings or personal injuries that might happen during their tenancy. They will be reimbursed for any damages or injuries that occur on the rental property through a renters insurance policy.
Landlords may be liable to cover a tenant's relocation costs in the event of a fire or natural disaster. However, many renters' insurance policies cover temporary living costs should a tenant need to relocate while repairs are made.
2. Protection from Property Damage Claims
If a tenant suffers property damage through no fault of their own (like damages incurred by a fire or a burst water pipe, for example), renters insurance is their best resource for compensation.
However, in some cases, tenants might come after you for compensation. In these instances, your landlord's insurance is unlikely to cover this. However, if the tenants have renters insurance, they might be able to recoup these losses quite easily.
3. Reduce the Risk of Lawsuits
A landlord's liability policy will not likely cover a tenant against claims made for damage or injury due to the tenant's carelessness. However, if they have a renters insurance policy, they have a resource to pursue compensation without going after the property owner.
4. Tenant Pre-Selection
Stipulating renters insurance as a requirement may help you in the tenant screening process. If a potential tenant says that they are unwilling or unable to acquire renters insurance, it could be a sign that they are not a suitable candidate for your rental property.
Approximately 70% of American families own at least one pet. If your rental property is pet-friendly, the pool from which you can attract potential tenants becomes much bigger.
Some renters insurance policies may cover the costs of damage to rental properties caused by pets and injury resulting from dog bites. If you do select pet-owning tenants, ensure that the renters insurance coverage they have does offer dog bite liability and pet-inflicted property damage.
6. Lowers the Likelihood of Increased Insurance Premiums
If your property insurance must cover all the claims made by your tenants, you will likely see an increase in your insurance premiums. If too many claims are made, your policy might not be renewed at all.
Can Landlords Buy Renters' Insurance on Behalf of Their Tenants
A landlord may not obtain renters insurance on behalf of the tenant. However, property owners can partner with an insurance provider to make the process of acquiring renters insurance easier and more affordable for residents.
A property owner can require the tenant to cover the cost of the premiums in one of two ways:
By adding the cost to the monthly rental fee.
Requiring that the annual premium is paid upfront with the security deposit.
Some property managers or owners with sizeable real estate investment portfolios negotiate with an insurance company to get a 'bulk discount' to offer renters insurance to their tenants at a reduced rate.
Peace of Mind Comes Easier with the Best Property Management Portsmouth Offers
Familiarizing yourself with all the landlord-tenant legislation and rental requirements of your rental property can be overwhelming. Enlist the services of the best property management Portsmouth offers to give you peace of mind knowing that all the paperwork is correctly drafted and that all parties are sufficiently insured.
Protect Your Rental Properties With the Right Policies
As you can see, there are several advantages for property owners requiring renters insurance. It is in the tenant's best interest as well as yours! While renters insurance can help minimize your renter's risk, the best way to minimize the property owner's risk is to select reliable tenants and work with property management professionals.
For peace of mind, entrust the tenant screening process and day-to-day running of your Portsmouth rental property to Osprey Property Management! Reach out to learn more about our property management services.
What do you need in a property manager? Download the "Guide to Finding the Best Property Manager in Hampton Roads"to find out!