A few years ago, I was sitting on my couch having a glass of wine with my friend Jan. My phone rang and it was one of my tenants. I could barely hear her over the sirens in the background. “Barb! Barb! Your house is on fire! They have the whole street blocked off! You need to come down here!”
I hung up and said, “Jan, I gotta go …. one of my rentals is on fire,” and off I went. I got there in about 25 minutes and yes, the street was blocked off, and although they’d put out the fire, one half of the duplex was totally destroyed. My tenant, whom I’d just evicted, had left a rickety space heater on, and left the house. It was overturned, and the fire ensued.
Of course, I had good insurance on the building. It covered the entrie renovation of the burned-out unit.
This incident prompted me to encourage my tenants to purchase renters’ insurance. It’s cheap — around $150-200/year, depending on how much coverage you get — and in the event of a fire like I had, they would be reimbursed for everything they lost and would be given supplemental living expenses to help pay for an alternative living situation. Renters’ insurance also protects the tenant from claims against them by guests who might be injured on the premises.
Sadly, only about 43% of renters have policies. As a rental property owner, you may put a clause in your lease requiring your tenant to purchase renters’ insurance. But you’ll need to follow up on this, and have them send or email a copy of it as proof. You may want to have them add you as “additional insured”. It won’t cost the tenant any more money, but the company will contact you should your tenant allow the policy to lapse.
Many tenants see this type of insurance as just another expense, but as in the case of fire, tornados, or frenemies, etc., it’s better safe than sorry!