If you are a landlord, it’s a good idea to require your tenants to have renter’s insurance. While you have landlord insurance that protects your rental property, your insurance doesn’t cover your renter’s possessions and injury.

Here are the reasons why you should require tenants to have renter’s insurance:

Liability Claims

As a landlord and property owner, could be found liable for injuries that occur on your property—even if you’re renting it. A renter’s insurance policy will potentially cover your tenant and other injured parties. The renter’s policy could also cover potential medical costs and legal fees.

Damage

Whether the damage is caused by a pet or party, rental insurance can help cover the financial loss to your property. Additionally, if your tenant experiences damage or loss to their possessions (furniture, electronics, etc.) due to a natural disaster or another issue, there is no question as to who is responsible for the loss.

Negligence

Even though tenants are supposed to report damages and maintenance issues, they don’t always act. Negligence from your tenants might look like water damage or a mechanical issue with an appliance, and renter’s insurance can cover the damage incurred by your tenant. While a landlord can keep the security deposit to cover damages and loss, it is oftentimes not enough to cover the total repair or replacement.

Temporary Housing

If there is a fire, extensive water damage, or a natural disaster renter’s insurance will potentially cover the cost of temporary housing for your tenant. While you’re not responsible for rehoming your tenant or securing temporary housing, the renter’s insurance will provide shelter.

While it’s not mandatory for a landlord to require tenants to have renter’s insurance, the policy provides liability protection for you and the tenant. Proof of insurance should be collected before move-in and can be requested at lease renewal signings. Not only does rental insurance offer a smooth resolution to accidents and loss, it further secures your property and provides you with peace of mind.