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5 reasons why landlords should require renter's insurance

As a landlord, you put yourself at risk from your renter’s actions and could be held liable for a wide range of losses. You could also experience financial difficulty if your rental property is damaged. Requiring your renter to have renter’s insurance greatly reduces your risk and makes the process easier if something does go wrong.

1. Damage to your renter’s property

One of the main reasons you should require tenants to have renter’s insurance is that it will cover their property if disaster strikes. If your renter’s property is damaged in a fire or insured accident, your insurance would not cover your renter’s belongings but their renter's insurance would.

2. Liability

A landlord’s insurance policy does not cover claims arising out of their tenant’s negligence. This is yet another reason why tenants should carry their own renter’s insurance. Otherwise, as the landlord, you could be negatively impacted by a potential liability claim involving your rented dwelling or suite. If your tenant has renter’s insurance, their policy would step in if there was a liability claim and the landlord would not need to be involved.

The same applies to liability for property damage. If your renter damages your rented dwelling due to neligence (for example, forgets to turn off the tap and floods the kitchen) and does not have renter’s insurance, you would have to claim the damage on your own policy, pay a deductible, and lose your claims free discount. If the tenant carries a renter’s policy, their liabililty coverage would likely cover the costs to repair.

3. Your deductible is covered

As mentioned, your insurance may cover damage caused to your dwelling by your renters but you would first need to pay your deductible and would then lose any claims free discount you might have. If your tenant has renter’s insurance and something goes wrong, they would be responsible for filing a claim on their insurance and paying the deductible. This not only saves you money and time but also prevents your premiums from increasing because of frequent claims.

4. Renters could be forced to relocate due to a disaster

Natural disasters, fires, and other losses happen unexpectedly and can make your house or apartment uninhabitable. If you own more than one unit and multiple units are damaged, the expenses for temporarily relocating tenants would add up quickly.

Renter’s insurance covers additional living expenses and would pay for your renter’s temporary move while your rental suite is repaired. Advise your tenant to ensure their policy includes adequate coverage for additional living expenses.

5. Pet-friendly rentals

According to the Canadian Animal Health Institute, about 41% of Canadian households have one or more dogs and 38% have one or more cats. When looking for a place to rent, finding a pet-friendly one is a top concern for many potential tenants, and not allowing pets diminishes your pool of applicants to choose from.

Liability and property damage concerns are two of the main reasons why landlords do not allow pets and requiring tenants to have renter’s insurance is a simple way to solve this problem. If your renters have the right insurance for covering pet-related property damage and liability claims for incidents like dog bites, you can have more renters to choose from. They could end up being great renters who stay for extended periods because of the difficulty of finding pet-friendly rental homes.

Landlords should require renter’s insurance

Landlords and tenants will both be better off if renter’s insurance is required by the landlord. If an insured loss causes extensive property damage or results in a liability claim, both parties will be protected and the process will be easier for everyone involved.

You should make renter’s insurance a requirement on a renter's lease and ask for proof of renter’s insurance when it is signed and renewed.

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