I just finished a webinar on insurance, walked away with a couple of tips. One was requiring tenants to obtain renter's insurance and provide proof before handing out the keys. And upon renewal, require proof again. While I think this is a great idea, especially durings these times of natural disasters, I wonder how you can be sure that they arean't cancelling the insurance after they obtain possession?

I know that's a dark thought. And if they do cancel, then what? Now evict them? Thoughts?? or Practices??

This is a common practice. My insurance agent suggests the same.

That said... you need to know your tenant pool. Class C or lower tenants often don't understand the value of insurance and will refuse to buy it, period, thus disqualifying themselves. So you may sit on a vacancy for a loooooooong time. That's fine if you're okay eating vacancy to fill a unit with a highly responsible tenant.

If you have Class B or A tenants, no worries. They probably already have renters policies and you won't have to sell them on it. They'll keep it in force too, knowing that their possessions need protection.

Typically, what you do is have the tenant name you/your company as an "additional insured." You will automatically be copied if the tenant's policy lapses or is canceled for any reason including non-payment, and you may even get pre-cancel alert notices if it's about to lapse.

I take a nuanced approach to this: for Class C, I highly recommend but do not require renter's insurance. The reason is simple: I don't want to eat months of vacancy, and since my policy includes enough to cover me in the event of a major loss that's the only time I would file a claim. I'm talking over $5,000.

The rest is covered by a combination of:

1) Selecting good tenants who are collectible if things go wrong.

2) The security deposit.

So what's the bottom line? Sell the concept of renter's insurance, but don't require it. The people who are good enough to know they need it will already have it, and the ones who don't have it must be persuaded rather than required.

Sid's 2 cents... don't spend 'em all at once!

A landlord is "king" of his property, allowed to make and set up household rules. But in some jurisdictions, once a tenant has the keys, the "king" landlord becomes a "mouse", not able to enforce much of anything.

So as long as you have in your lease the "requirement" that a tenant "Must" have and maintain Renters Insurance, that is one's first layer of protection.

In California and in many other States, it is Insurance Law that a Landlord can NOT insure tenants property. So if a rental has a disaster and the tenant loses their personal property, they will sue the owner, thinking it may be their fault -- such as the neighborhood, flood area, fire area or earthquake country. But in court an owner only has to say,

"But your honor, the lease says the tenant must have and maintain insurance! And a landlord can not insure tenants property"!

Very much agree with Sid on this one. I have similar Class C units and Class C tenants don't get insurance. At least signing, I recommend Renter's Insurance and explain what our insurance would and would not cover so that they know why they should get it. But I don't require it.

My lease says it requires renter's insurance. The only time I force the issue is if they have large canines. I allow them at my SFHs.

I explain that my insurance will not cover their stuff. I have started to include the fact that if my supplied fridge goes out they can use their renter's policy for the contents.