If you’re renting out your condo, home, basement suite, or property of any type; you may assume your current insurance policy would cover anything that could happen to your property. Unfortunately, this is not the case! Allowing your tenant to rent your property without obtaining insurance can leave you in a position where you’re liable for their property or the legal liability results of their negligence.
It’s no wonder it has become increasingly common for landlords in Canada to require tenants to obtain a renters insurance policy before even setting foot at the property. Below, we’ll delve into why tenants coverage should be a requirement of any renters in all properties. With this knowledge, landlords can prepare and protect themselves from losses that should be the responsibility of their tenants.
It Protects Your Inherent Liability and Third Party Property Damage
Should there be damage to your rented premises or the surrounding strata – either through the tenants negligence or even if the occurrence is no fault of their own, both the tenant and landlord can be held accountable for damages. If the renter has their own policy for liability and property protection, you don’t need to be concerned about being held accountable for the tenants risks. This doesn’t mean that landlords don’t also need a policy, but ensures appropriate allocation of risk and responsibility in the vent of a loss.
Helps Cover Relcation Expenses
Depending on which province and potentially the municipality you’re located in, you may be legally required to help cover the costs of your tenant’s relocation in the event the rented property is deemed unlivable. A flood, fire, or natural disaster could be an event that leaves your renter homeless.
Even if this isn’t a law in your jurisdiction, you may feel responsible as a landlord to help your tenant in an unfortunate circumstance. Tenants Insurance policies can cover the cost of temporary living expenses if the insured is left in a position they need to relocate due to damage at the rented property.
It Can Help Weed Out Bad Tenants
When you or your property manager are reviewing tenants applying to rent your dwelling, you want to ensure they are going to be responsible renters. When letting the applicant know they must purchase tenant insurance and get a response like it’s unnecessary or too expensive, this is a red flag.
A reasonable and responsible tenant will understand the requirement and be willing to protect themselves and you as the landlord. Also, if they can’t afford it, they will likely have a hard time covering the costs of rent as well.
It Gives You Peace of Mind
Owning a property and going through the processes of renting it out and maintaining everything can be quite stressful. Some even wake up in the middle of the night imagining worst-case-scenarios in their rental dwelling. Knowing that it’s much less likely to be financially affected by the ‘what ifs’ when a renters / tenants policy is in place can be a great tool for peace of mind.
It can also help improve your relationship with your tenants because you don’t have to fear them as prospective litigants in the event that they have some sort of personal emergency. Every time there is an issue, you can rest easy knowing you don’t need to worry about a lengthy, expensive court case on your end. Instead, you can simply be supportive in the ways that are appropriate, and sleep easy at night knowing that the tenants possessions and liability is covered and not your responsibility.
Lowers the Chance of Your Insurance Premiums Increasing
If you end up needing to make a claim under your landlord / rented dwelling insurance policy as a result of something that occurred on your premises due to a tenant’s actions, this does not bode well for your insurance premiums going forward. Best bet is to ensure liability and blame for damages are allocated appropriately – have your tenant purchase a renters policy!
Tenant Insurance: You'll Be Glad You Required It
As the old saying goes, you have to plan for the worst and hope for the best. Requiring tenants insurance adds extra protection to your investment. If there does happen to be a fire, natural disaster, or other event that affects your property, it will be invaluable to have added this requirement to your lease.
Remember, Renters Insurance is a win-win for both tenants and landlords. Nobody wants to get caught up in a sticky court case, and everyone wants their own risks and interests protected. When a tenant has adequate insurance coverage in place, it is protecting all parties involved with the rental.
If you’d like your tenants to get covered, have them click here to get a quote today! We’ll be providing more details about other landlord insurance that should be placed on rental properties in the near future, so check back soon!