As a landlord or investor, it’s important to have your tenant(s) get renters insurance. Here’s why.
Today I’m joined by Paull Guerrero of Allstate Insurance to answer an all-important question for investors and landlords: Why make your tenants get renters insurance?
The biggest value lies in transferring liability and risk onto your tenants. If your tenant has a cooking accident causing a fire that burns the house down, for example, the right liability coverage will transfer the risk to the tenant and allow you to afford to be able to rebuild the house.
If someone brings a dog over to your house and it bites another person and that person decides to sue, the tenant’s renters insurance will be used to cover the lawsuit—not yours. A good attorney will sue anyone who has money in these cases, so again, making sure your tenants have renters insurance protects you by using it to satisfy the injured party.
You can ask your tenant(s) to get renters insurance, but how do you know they actually are covered? By adding an additional insured. Essentially, you add yourself or your LLC as an additional insured onto the renters insurance policy. This is like being a lienholder on a vehicle. If they cancel the policy, you get notified along with them.
The right liability coverage will transfer the risk to the tenant.
Most importantly, if a check needs to get cut to repair damage inside the house, you have to endorse the check to make sure it’s fixed. This way, the renter can’t just take that money and disappear. Remember, if your property is in the name of your LLC, don’t put your name on the check—put the name of your LLC on it. That way, you protect yourself from any lawsuits.
If you have questions about this topic, you can call Paul at (512) 441-8597. If you have any other real estate questions, feel free to give me a call as well. I’d love to help you.