Only one third of renters in America have renter’s insurance. Who’s fault is that? Surprisingly, the answer in the state of Utah (check your specific state) might be the landlord’s. That’s because state laws allow landlords to require renter’s insurance. Most professional companies do. Mortgage companies require property owners to carry insurance if there is a loan so the property is protected from potential loss. Landlords can do the same thing.

Why require insurance? There are two reasons. First, if a renter is negligent, the renter’s insurance pays the claim so the landlord’s policy won’t have to. Recently a renter in West Jordan left a candle burning. The fire it started caused $15,000 damage. The renter’s policy paid the claim. Renter’s policies cover damage caused by tenant negligence.

Second, landlords who require renter’s insurance also become a hero to tenants who have a loss due to a fire or flood that was no one’s fault. One tenant tearfully told their landlord that they just got a $22,000 check from their insurance company and they were so grateful the landlord required them to carry insurance because they would never have done it on their own and they would have lost all their stuff with no money to replace it if it weren’t for the landlord.

So what should you require of tenants?

Professional companies that require insurance do not give keys to the property until the tenant provides them a copy of a policy that the landlord’s name has been added to. The landlord’s name should be on the policy in case a tenant is unavailable or uncooperative in filing a claim. With their name on the policy, the landlord could file a claim themselves.

Also, requiring your name be on the policy as an “additional insured” or a “party of interest” has the added benefit of assuring that if the policy is cancelled or not paid that notice will be sent to the landlord. Landlords then serve a “Three Day Notice to Perform Covenants of Lease or Vacate” to the tenant which requires premiums be paid to avoid eviction.

Photo by Jay Adan

Previous articleKeep Your Contractors Out of the Danger Zone
Next articleCleaning Green: Part 2
L. Paul Smith is the executive director of the Utah Apartment Association, a non-profit trade association with a membership of over 1,900. He has a Bachelor of Science in Business Management from Utah Valley University and is a Certified Association Executive, accredited by the American Society of Association Executives. In 2010 Mr. Smith received the Paragon Award from the National Apartment Association and is a current member and past president of the Utah Society of Association Executives. He is currently licensed by the Utah Division of Real Estate as a Sales Agent and Continuing Education Instructor and a current landlord himself here in Utah. His first exposure to the apartment industry was in 1996 as a leasing agent in the Salt Lake Valley.