When you’re renting out a home in the Bay area, you want to make sure all of your insurance protections are in place. The coverage you need depends on the properties you own and the assets you’re trying to protect.
One thing you’ll want to require of your tenants is renters insurance. With your own policy, a tenant’s personal possessions will not be covered. A renters insurance policy is also helpful to all parties; the tenant, the owner, and your Bay Area property manager.
We work with a lot of insurance companies in this area, and if you don’t have an agent who can help you evaluate your own policy and recommend some renters insurance for your tenants, we’d be happy to make a referral.
Here’s why it’s so important to make sure your tenants are insured.
Protecting Your Tenant’s Personal Property
Renters insurance is something your tenants should be willing to buy because it doesn’t cost a lot and it protects their own property. A comprehensive policy costs $15 to $20 a month. Without renters insurance, tenants have no protection if something damages their property. For example, if there is a fire or a flood at the property and electronics such as televisions and computers get damaged, your insurance will pay for the property damage, but your tenants will be on their own when it comes to replacing those expensive items. An insurance policy for tenants will cover them.
Renters Insurance Protects Tenants from Liability
You don’t want any gaps in coverage when it comes to protecting your property. No owner wants to take on the extra liability and risk. If your tenant leaves a pan on the stove and starts a fire, the damage to the kitchen can be expensive. Instead of going directly to your insurance policy, the renters insurance will pay for the damage that is due to the tenant’s actions. It protects you and your tenants and your rental property.
Finding the Right Insurance Company
In many cases, your tenants can add renters insurance to an existing automobile or other insurance policy they already have. This may save them money. There are also several insurance companies that specialize in providing renters insurance to buildings, so if you rent out multifamily units, check into those companies. You can be sure you’re listed on each policy as an additional insured, allowing you to keep track of the policy and its coverage.
It’s difficult to enforce renters insurance sometimes, but as a landlord, you can include this stipulation in your lease agreement. Tenants will know it’s a requirement, and they’ll understand that they can be evicted for not following the lease and maintaining their insurance. Let them know that this is a requirement that’s in their own interests.
We recommend you don’t hand over any keys until you’ve seen proof of insurance. Don’t sign a lease renewal without renters insurance.
If you have any questions about insuring your own rental properties or you’d like more information on renters insurance, please contact us at California Pacific Realty.