Landlord Tenant Insurance - A Helpful Guide
A quick guide to property insurance for landlords and tenants
Insurance is confusing enough - combining it with real estate and property management, and things get really tough! Don't worry - it's not so bad. You'll find all the basic details below.
Landlords need property insurance. This protects the land and the structure. Tenants need apartment insurance (also known as renters insurance). This covers legal liability, temporary stays should the apartment be damaged, and the contents of the rented property (personal possessions).
Insurance for Landlords
Landlords are required by law to have property insurance. This covers such things as the building itself and the land on which it stands, so if there were something like a fire, the owners of the property would be reimbursed for the value of the house or building that was destroyed or damaged.
Property insurance can be misleading by name in that it sounds like it extends to all property, but really just covers what I mentally think of as "real estate." In other words, property insurance doesn't cover property inside the property (e.g. electronics, clothing, jewelry, furniture, and the like).
So are landlords off the hook when it comes to tentants' personal property?
For the most part, yes. Landlords are generally not expected to reimburse tenants for damaged personal property, and their insurance isn't expected to do so either. However if a tenant's personal property is ruined due to a landlord's negligence, a tenant may sue for damages, so be careful!
Insurance for Tenants
While landlords are covered in the event of a terrible fire or other unfortunate event by property insurance, tenands can stand to lose everything if they do not have their own proper insurance: renters insurance (also known as apartment insurance).
Renters insurance protects tenants' personal property (essentially the contents of the apartment) from mishaps that might affect the entire property (such as a fire, flood, storm, earthquake, Godzilla attack, or what have you), and also from mishaps that may only affect the tenant (such as vandalism or burglary).
Renters insurance also protects tenants from financial damages that might be brought about from legal issues surrounding the apartment or rented property (for example, if someone were to slip and fall down wet stairs and sue the tenant).
What's more, renters insurance can cover tenant's temporary housing expenses should something terrible happen to the property that forces the tenant to temporarily relocate before moving back in or finding a new place to live.
Should landlords require tenants get renters insurance?
To ensure that their tenants do the responsible thing and protect themselves from such mishaps, some landlords require that tenants get apartment insurance by requiring it as part of the rental contract. While it's just good sense to encourage for tenants to have apartment insurance, it can also be beneficial to landlords, especially as it can be a sort of protection against tenants losing all of their property and not be able to pay rent!
At any rate, it is a good idea for landlords to encourage tenants to find and obtain this insurance coverage.