Should a Landlord Require Tenants to Get Renter's Insurance?

Ms. Merritt, that is an interesting question, but I think it has to be answered on a case by case basis. I think that insurance coverage should be explained at the time the lease or rent agreement is signed, because many people do not understand it. I think it is reasonable to make getting insurance a strong suggestion, and if the landlord is a responsible person who does his or her part to make the property safe and secure, to keep costs and liability at a minimum, then, this makes a lot of sense. I think that a person managing multi-unit facilities could go one step further and host a neighborhood gathering (doughnuts, picnic, pizza, or sundaes) where insurance providers give helpful safety tips, and explain policies they. By bringing them to the residence, it makes the whole process easier.

The biggest question I would have in making it mandatory is which coverage? Flood? Fire? Earthquake? PLPD?

Great question.

Most tenants don't know that having adequate coverage as far as insurance goes is not the landlord's responsibility. It is the tenant's responsibility to make sure they are covered under every circumstance. Most tenants think that it is the landlord's job to protect their personal belongings from being stolen or damaged while they are living in your property.
This is a huge misconception on the part of the tenant. The property's insurance policy strictly covers damage to the building classified as "non-negligent" and anything that effects the loss of the landlord's personal property.
Renters insurance provides coverage for a tenant's personal things as well as covering the tenant (also known as liability coverage) just in case the renter is found responsible for property damage due to negligent behavior. It also covers a guest of the tenant getting hurt should that guest happen to get injured in the tenant's apartment. And almost every policy will cover medical payments should the guest require medical attention due to an event that occurred in the tenant's apartment.
When paying a claim, the insurance company will determine payment based on whether the tenant has a policy is an "actual cash value" policy or a "replacement coverage" policy.
Personally, I keep my buildings in top notch shape and "strongly suggest" to my new tenants that they get a renters insurance policy pointing out the obvious benefits to them as renters. Without exception, every time I have done this, regardless of whether they have followed through or not, they have thanked me for making it clear what is and is not their responsibility. We start their tenancy off on the right foot for both of us! To read more: http://personalmoneystore.com/moneyblog/2009/08/25/standard-hotel-yor...

If I was a landlord I would definitely require my tenants to have their own insurance. Here in Canada the real estate prices haven't come down by much, and it's really hard to make money with rental properties even with these low interest rates.



John,
http://www.canadabanks.net/default.aspx?article=Canadian+Mortgage+Guide

Without a doubt, it is absolutely great advice to a tenant to get insurance. But a landlord must also take responsibility for his/her own assets. Just as with a new car purchase (on an installment agreement) if you don't get full coverage, the bank will do it for you and tack the costs on to the total bill. Might be a good idea to include the coverage in the rent. Some policies can be as low as $15/mo. Might not hurt to increase rent by $50/mo to cover the premium, and the attendant administrative costs for doing so.

This is such an overlooked area by tenants.