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Why it is Crucial to Require Tenants to Carry a Renters Insurance Policy

As a landlord here in Waco, TX, you likely have a landlord insurance policy to help protect your rental property. These landlord insurance policies typically include a loss of income component, coverage to repair or rebuild your rental home in the event of a natural disaster, and personal liability protection. While these coverages are an excellent way to protect your home and interests from undue harm, they do not necessarily protect your tenants.

What does a renters insurance policy cover that my landlord policy does not?

A renters insurance policy covers the cost of replacing a tenant’s personal belongings if they are stolen, damaged, or destroyed. Your landlord policy does not cover your tenant’s possessions. Renters insurance also covers the cost of a tenant having to relocate if your property faces severe damage due to a covered event, such as a fire, tornado, or hurricane, which would not be covered by your landlord policy either.

What if my tenant does not have a renters insurance policy in place?

If a renters insurance policy is not in place, a tenant or a third party may come after you for any damages (such as payment to replace belongings or pay medical bills after a dog bite). Even though you may not be liable as the landlord, tenants (and others) may still seek compensation if your tenant does not have a renters insurance policy. Renters insurance avoids the potential of disputes.

How large of a renters insurance policy should my tenant decide to carry?

You can require a tenant to have a renters insurance policy and may even require a minimum level of coverage, but it is ultimately up to the tenant to shop for and purchase their own insurance. Typically, a tenant will choose a policy covering the cost of replacing their belongings by determining the value and worth of their items. If they need guidance or direction, contacting their auto provider is a great place to start.

What happens if my tenant decides to drop their rental insurance policy before the end of our lease agreement?

If your lease requires your tenant to have renters insurance, and your tenant fails to maintain a policy, your tenant would technically be violating your agreement. Note that if your lease agreement does not specify that renters insurance is necessary for the duration of your lease, you cannot suddenly require a tenant to have a policy and then threaten eviction if they are non-compliant. You can, however, include a provision within your lease agreement upon renewal stating that renters insurance is mandatory.

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