As a landlord with a lot of stake in owning a multifamily property, it’s important to protect your assets at all costs. Requiring your tenants to obtain renters insurance will be that extra layer of protection that you may need. It’s better to be over cautious than under prepared! Renters insurance is relatively inexpensive and shouldn’t be a deal breaker for most tenants. As a Chicago property manager, we recommend all owners to require tenants to have renters insurance.
What is the advantage?
For one, it keeps you (the landlord) out of court! If something happens to a tenant’s belongings or someone gets hurt in the tenant’s apartment, having renters insurance will prevent the tenant from going after the landlord. Renter’s insurance policies generally have a minimum limit of $100,000 general liability, which can cover a majority of damage to the property or any damaged or missing personal belongings.
For example, say a pipe burst and damages the unit, some personal belonging in it, or even the unit below it. Renters insurance would be able to cover a majority of the cost! Say your tenant hosts a party it results in someone getting injured, the first person that typically that gets contacted to cover the damage will be the owner/landlord. If the tenant had renters insurance, the owner/landlord wouldn't have to deal with it. Essentially, the landlord will be covered for any scenarios like this that fall under the renter's insurance maximum coverage.
It also keeps you from renting to a bad tenant. If a tenant complains about having to pay this, generally, affordable monthly cost of renters insurance, then maybe that is not a tenant you want to have in your building. There is nothing wrong with a tenant wanting to stay within their means, but this minor detail could be telling of their ability to pay rent.
So can you require your tenant to purchase renters insurance?
Absolutely, as long as you require it of all your tenants! This requirement should be included in your rental lease agreement and should be reviewed with the tenant so it’s clear (as people often don’t read the terms in fine print). It would even be helpful to make this known in your rental listing so people are aware upfront.
As a Chicago property manager, renters insurance is a great line of defense in the case of an emergency for all parties involved. There are no disadvantages to requiring this of your tenants, so any owner should think about implementing a required renters insurance policy.