Insuring your rental property is one of the most important ways to protect your asset from the unexpected, and the type of insurance policy you purchase will depend on your unique situation and the requirements of your lender, if you have a mortgage on the property. In addition, if the property is your primary residence and you rent out a portion of the property (e.g. a bedroom) your insurance will likely differ in some ways from a policy written for an owner occupied property without tenants. Check with your insurance professional to determine the type of insurance that will suit your needs.
Should I ask my tenant to get renter’s insurance?
Lease agreements will include a clause that refers to insurance, and that the landlord’s insurance policy covers the property and negligent acts of the landlord. The tenant should obtain insurance if they wish to insure their own property from natural disaster (fire, windstorm, flood, etc.) or vandalism. A lease will typically state that the tenant is the liable party for property damage or personal injury that occurs as the result of their negligence or purposeful acts. Similarly, the landlord is responsible for the same on their part. While you cannot legally require a tenant to obtain renter’s insurance it certainly makes sense to specify the responsible parties for insurance purposes in the written lease. The tenant can then decide on their own if they wish to protect their personal property with a renter’s insurance policy.
The importance of documenting the condition of the premises
A written Condition of the Premises document is used at the beginning of a tenancy to indicate any known problems or defects in the rental unit. It is used as a starting point for the security deposit and referred to again at the end of the agreement term to assess any necessary damage charges. But as part of drafting this document the landlord can use pictures with time and date stamps, which can also serve as proof of the condition of the premises for insurance purposes. Pictures of appliances and any furniture or fixtures that are included in the rental should be recorded as well in the event of an insurance claim. The more information you have about the specifics of your property asset the easier it will be to deal with an insurance claim, and remember to date stamp the photos.
