Renters insurance can protect a tenant's financial well-being in a covered claim, but renters insurance can also benefit landlords. This win-win is why it is advised that landlords require their tenants to have renters insurance.  Need convincing?  Here are three specific reasons why it is a no-brainer.

Why Should New Hampshire Landlords Have Their Tenants Carry Renters Insurance?

1. Renters Insurance is Good for Renters

Before considering the tangential benefits that renters insurance offers landlords, the protections that tenants receive are critical. Most renters policies provide tenants with at least three paramount protections:

• Personal Liability Coverage: May help pay legal fees and settlements associated with certain liability lawsuits that could be filed against a tenant
• Personal Property Coverage: May help pay for the restoration or replacement of damaged and stolen belongings, such as furniture, electronics, books, etc.
• Additional Living Expenses Coverage: May help pay for other lodging if the leased residence is rendered unlivable by a covered disaster

Requiring renters to carry at least some of these protections isn't only in your interest as a landlord but also for renters' benefit.

Landlords Benefit in Two Ways from Renters Liability

Personal liability is the coverage that’s specifically helpful to landlords. The coverage generally helps with lawsuits arising from property damage or injuries that renters are legally held responsible. It’s helpful to landlords in two distinct ways.

Protecting Against Property Damage

First, renters liability coverage may cover damage tenants cause to the landlords’ property. 

For example, a guest of your tenant might sue if they are injured by tripping over an item left at the bottom of the stairs.  If the guest sues the tenant, but the tenant doesn't have liability coverage, the injured party may look to the next in line, which is you- the landlord.   A lawsuit can result in expensive fees even if you're ultimately exonerated of responsibility.

Renters are ordinarily responsible for any such damage that they cause to leased property. However, because tenants are responsible doesn’t mean that you can collect damages from them.

If a renter's liability policy isn’t in place, few people have the financial resources to provide compensation for extensive property damage out-of-pocket. Thus, you may not receive much if you sue a renter who doesn’t have liability coverage. With insurance in place, you should get due compensation for covered claims.

Protecting Against Liability Claims

Second, tenants likewise may be held financially liable for injuries that they cause.

For example, a guest of your tenant might sue if they are injured by tripping over a toy left at the bottom of the stairs.  If they sue the tenant, but they don't have any liability coverage, they may look to the next in line, which is you- the landlord.   A lawsuit can result in expensive fees even if you’re ultimately exonerated of responsibility.

In this situation, the renters' liability coverage would act as an initial line of defense.  The Injured guest may first collect from the tenant’s renters policy before filing a lawsuit against you. The tenant’s policy might pay all necessary compensation, so you don’t have to file a liability claim against your landlord insurance policy at all.

What if My Tenant Causes Intentional Damage to My Property?

The tenant's own renters policy would not cover intentional damage the tenant caused because property damage intended by the insured (the tenant) is often expressly excluded.  You may have coverage on your landlord policy but check with your insurance specialist to verify.

How Landlords Can Require Tenants to Carry Coverage

Landlords can usually write a renters insurance requirement into the lease terms. The requirement is usually limited to only renters liability coverage, as this coverage impacts you, the landlord.  That said, most standard insurance carriers do not offer just liability coverage for a tenant, so a renters policy with minimum property coverage for the tenant (usually as low as $15,000) would be the easiest and least expensive way to go for the tenant.  A renters policy can be as low as $150 per year.  

It is advised that you require your tenant to purchase the policy and pay the annual premium in full and provide you with proof of such.

This is because even if your tenant applies for renters insurance and gives you a binder proving coverage, it is only valid for that specific day.  A common reason for policy cancellation is nonpayment.  If the tenant pays the deposit but not the future installments, the coverage will cancel, and you would be no better off than if no coverage was ever purchased.

It can be a hassle, but requiring renters insurance with a paid-in-full receipt and proof of such each year is the safest way to protect you and your tenant. 

Can I Buy a Renter's Policy for My Tenant as the Landlord?

Though you can offer to pay for the renter's insurance on behalf of a tenant, the policy would be written in the tenant's name and ultimately their responsibility. 

The tenant would also need to meet underwriting guidelines so a previous arson conviction or owning a dog with a bite history may make the tenant ineligible for coverage.

Get Help With Insurance for Rentals in New Hampshire

If you own a rental property, let us at HPM Insurance help guide you.  Our independent agents can assist both with finding a landlord insurance policy that can protect you, and educate you further in how renter's insurance may benefit you and your tenants. We’ve worked with many landlords and tenants in New Hampshire and are ready to assist you.