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Should You Require Your Renters to Have Insurance?

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Should You Require Your Renters to Have Insurance?

Renters insurance can protect both landlords and tenants in a Dallas rental property. If you’re a landlord or an investor who rents a property out to tenants, it’s a good idea to require that they obtain renter’s insurance and show you proof of their policy. While renter’s insurance isn’t required legally in Texas, it can be required by landlords as a term of the lease agreement that’s signed with tenants.

There are a few important reasons that requiring renter’s insurance is a good idea.

Renter’s Insurance Covers a Tenant’s Belongings

Your landlord insurance policy will cover any repairs or replacements to your property that are required due to a covered peril such as water damage, wind damage, or catastrophes like fires or accidents. However, that insurance only covers the property and its systems and functions. Since you are not the occupant of the property, none of your tenant’s personal possessions will be covered if something happens at the property.

That means if their electronics are damaged, furniture is destroyed, or clothing is lost to mold and mildew, they won’t have any means with which to replace those things. When they have a renter’s insurance policy, however, they can file a claim and get reimbursed for the cost of replacing those damaged and lost items. It’s a huge benefit to them and it protects their belongings.

Renter’s Insurance Provides Liability Insurance

Tenants are responsible for any damage that they cause, even if it’s an accident. If they leave the stove on and half the kitchen goes up in flames, your tenants will likely have a hard time paying for those repairs out of pocket. A renter’s insurance policy will cover their liability. It will also cover any property damage or personal injury that’s caused by the tenant’s actions, abuse, or neglect.

This will provide you with a lot of extra peace of mind. You don’t want to have to make a claim to your own insurance company when tenants cause problems or a person gets injured. You don’t want to be targeted in a lawsuit, either. Renter’s insurance will be the first line of defense against these issues.

Renter’s Insurance Can Solve the Pet Problem

Renter’s Insurance Can Solve the Pet Problem

It’s a good idea to offer pet-friendly properties. This helps you to avoid vacancies and it can even increase your earnings since you can charge a pet fee or pet rent. However, pets come with extra liability. When you require renter’s insurance from your tenants, you can also ask your pet-owning tenants to include a dog bite liability policy.

When your tenants are prepared to move in and sign the lease and hand over the security deposit, make sure they can show you proof of their renter’s insurance. You’ll also want to be added to the policy as an additional insured. This requirement shouldn’t be too difficult for most tenants to meet. Most renter’s insurance policies in the Dallas and Fort Worth areas are less than $15 per month.

If you have any questions about renter’s insurance or how to protect your rental property, contact us at McCaw Property Management.