Insuring your rental property is a necessity. The appropriate policy will reduce the risk of owning an income property and ensure that you’re still making money even if something goes wrong with the rental unit.
However, you can’t control the actions of your tenants. Requiring tenants to have renter’s insurance can help mitigate your risk as a property owner and make it easier to settle any potential disputes with your tenants.
But can you require your tenants to have renter’s insurance as a landlord in Virginia? Here’s what you need to know.
Requirements Vary by State
Whether or not a landlord can require their tenants to have renter’s insurance will vary by state. In Virginia, you can require tenants to obtain renter’s insurance for the duration of their lease with you.
As a landlord in Virginia, you can even hold the renter’s insurance policy and charge the tenant for it via fees, but there are restrictions on the cost. You can’t require that the tenant pay for the policy if the annual cost including the security deposit is more than two months’ rent.
However, if you have rental properties in Washington, DC, you can only recommend that a tenant obtain a renter’s insurance policy, not require or enforce that they do so.
Renters vs. Landlord Insurance
Renter’s insurance is not the same as having landlord insurance. Many property owners and tenants get these confused.
Renter’s insurance is relatively cheap and covers liability and personal property. A renter’s insurance policy may also help cover costs for rent elsewhere if something is wrong with the rental unit and it’s being repaired.
Landlord insurance is more expensive but covers the actual structure or dwelling and is the responsibility of the property owner. Landlord insurance typically has minimal personal property coverage, which may include things such as appliances that the landlord provided.
Landlord insurance also provides liability coverage and loss-of-use coverage. Your policy may include damage from fire, theft, or flood, but every policy differs and so you’ll need to double-check what yours will cover.
It’s important for tenants to understand that even though their landlord may have insurance, the tenant’s personal items won’t be covered under this policy. Most tenants don’t object to having their own policy and understand why they need to have it.
Benefits of Having Tenants Get Renter’s Insurance
Having tenants obtain renter’s insurance benefits them as well as you, the property owner.
Many renter’s insurance policies cover damage on the property that the tenants caused; therefore, a good policy will reduce your risk of having to repair damage or replace items out-of-pocket or through your own insurance policy.
When your tenants have renter’s insurance, you also reduce your risk of being sued by your tenants. In the event that their personal items were damaged, tenants who have insurance for their items usually have no reason to seek compensation for the landlord in court.
Many disputes between tenants and landlords can be avoided simply by requiring that your tenants have a renter’s insurance policy!
When to Ask a Professional
When you have a property that has a swimming pool or other amenities that require additional insurance coverage, we recommend the landlord get advice from an appropriate insurance agent because renter’s insurance will not relieve the owner of the risk responsibility in some of these cases.
The point is that you want to make sure your policy covers everything you need it to even in the event that the tenants have renter’s insurance.
Why Renter’s Insurance Is Important
Having your tenants get renter’s insurance can help you minimize risk and see the best return on your investment property.
Renter’s insurance can provide additional coverage for property damage, help prevent disputes between landlord and tenant, and keep your tenants happy. By requiring that your tenants have a policy, you’re protecting both them and you.
At Circle Property Management, we require all tenants in Virginia to have renter’s insurance prior to moving in. We handle all insurance requirements for you so you have peace of mind knowing your income property is protected.
Give us a call today at (703) 349-0144 to see if we can help you see your best return on your rental property!
About The Author
Eric Guggenheimer - SFR, ARM ® » Principal Broker, Certified Property Manager, IREM, ARM, NARPM, NVAR, NAR, VAR
