Tim Norris explains why it’s beneficial to the property owner for the tenant to carry renter’s insurance.
Learn more about how renter’s insurance protects both the tenant and the property owner. Also find out who’s insurance covers what in a fire that was from neglect by the tenant.
Mike: Welcome back to the FlipNerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Tim: Good afternoon, folks. My name is Tim Norris. I’m today’s host to the REI Classroom. I’m the President of the National Real Estate Insurance Group based in Kansas City, Missouri. Today, we’re going to talk just a little bit about the importance of ensuring that your tenants carry what we all know as renter’s insurance.
Mike: This REI Classroom real estate lesson is sponsored by VirtualStaffNow.com.
Tim: We typically understand, as investors, that the client that is the renter, their property is not covered by your insurance. So if they want coverage for what is known as personal property, they’re going to need to carry renter’s insurance or tenant’s insurance. The one important factor, however, that many of us forget, is the liability portion of their renter’s insurance actually protects you as the property owner. Sixty percent, believe it or not, of renters from some of the data that we’ve understood do not carry renter’s insurance, by the way. I’m going to give you a few reasons, especially one big reason on why you should require your tenants to do so.
In the event of a fire, for instance, that’s negligently caused by that tenant and over 60% of property claims, believe it or not, are caused by tenant negligence, in that fire, if they, in fact, carry renter’s insurance, you are protected by that renter’s insurance liability coverage. As an example, let’s just say one of your tenant’s kids accidentally, negligently causes a fire in that home or in the property that you own. If they’ve engaged that renter’s insurance, you could actually have the coverage for that damage paid directly by their renter’s insurance company, without you even having to use your property insurance. Even though, technically, it’s a third party coverage, if it exists and the negligence on the tenant’s part is clear cut and many times admitted, then the third party, that is their renter’s insurance company, may step in and pay the client.
It doesn’t mean that you don’t have coverage, but it means that you may be able to get away with not using your coverage and using that third party coverage. So with statistics out there, many, many renters and tenants not carrying the coverage, coupled with the fact that the majority of clients are caused by negligent tenants, it’s really a good idea to make sure that they’re engaged in that renter’s insurance. That’s about it for today, folks. See you next time on the REI Classroom.
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