TENANT – Tenant is the one who is leasing\renting a dwelling\house for a certain duration from the property owner\landlord at some agreed amount. It is possible to have a month-to-month lease or a yearly lease.
TENANT INSURANCE – It is insurance which protects tenants for any potential loss of their belongings from any unknown happening or it may protect them from any lawsuits for damaging the property.
DOES A LANDLORD HAVE PROPERTY INSURANCE?
Yes, every landlord must buy property insurance if they have a mortgage with the bank. Every bank has their requirement, and the landlord must buy property insurance which protects them from lawsuits, water damage, fire damage, sewage backup or earthquake.
Landlords may decide to not have property insurance if there is no mortgage or loans on the property at their own risk, but I doubt any landlord takes such risk.
DOES PROPERTY INSURANCE COVERS TENANT’S BELONGING?
No, Property insurance does not cover anything other than property itself. Insurance property bought by the landlord covers the property from water, flood, theft damage, earthquake, Sewage backup or machinery breakdown. But it will not cover anything that belongs to tenants living at the property.
Normally Tenants have expensive furniture, TV, Laptops, phones, Fridge, stove, and their clothing which may cost thousands to replace. But it will not be covered under landlord policy, they must buy their own Tenant policy to cover all their belongings.
IS IT COSTLY TO GET TENANT INSURANCE?
This is one of the cheapest insurances, it can be used for a couple of hundred dollars a year depending on the amount of value of your belongings. I have a car and tenant insurance that I bought in a bundle and it is just costing me around $200 a year.
WHAT ARE THE RISKS OF NOT GETTING TENANT INSURANCE?
EVERYTHING AT YOUR HOME
Your belongings like TV, Beds, Laptops, clothing, etc. are not covered. You may spend years’ worth of savings to buy nice things, but nothing is covered if you do not have tenant insurance. These days, a TV, Laptop or iPhone can cost thousands of dollars and imagine buying every single item at your home again. Furniture is one of the costliest items at home, it’s not easy to just go out there and be able to buy all that again if it is damaged in the fire or water leakage.
This is not something imaginary. Such damage does happen , it may not be something that happens often but that does not mean that it can never happen.
You may lose access to your dwelling in case of water damage or fire, and you will have to find your own place to stay at your own cost if you do not have tenant insurance.
LIABILITY IS BIGGEST RISK OF ALL
Property insurance will pay for any fire or water damage to the property owner without any problem, but they will dig further to find out if it was the tenant’s negligence that caused this problem. They will sue the tenant for the whole damage, and they will make them pay if it is their fault.
Insurance companies may not go after the tenant if tenants do not have any savings or assets. I am not sure what their criteria are but who knows. Tenant insurance can protect you during such situations. Protecting yourself is your own responsibility. It can protect you from possible bankruptcy.
MAKE SURE TO GET TENANT INSURANCE IF YOU HAVE LOT OF ASSETS OR INVESTMENTS
There are people who build a lot of investments while living on rent. We normally think there is no risk to our investments while living on rent. But it can all change if the tenant ends up damaging the property by mistake. Shit happens and we always think it cannot happen to us. We see accidents or shootings on the news, it may not have happened to you, but it is happening out in the world. Similarly, there are cases when the damage was caused due to the tenant’s negligence and to avoid being in that position, we must act responsible and insure ourselves well.
WHY I BOUGHT TENANT INSURANCE WHILE LIVING IN ONE OF MY OWN RENTAL PROPERTIES?
Currently when I am writing this article, I am living in one of the units of my own 8 units rental property. There are two insurance policies in effect to protect property and myself, it means I have one insurance policy for the property and another insurance policy for me as a tenant.
DOES TENANT INSURANCE COVER ANY RENT PAYMENTS?
It can cover temporary stay at a hotel if you must move out temporarily because of any damage to the property. But it will not cover any rent due in case of loss of a job or you are not able to pay rent for any financial situation.
Disclaimer: I am not a certified insurance broker\professional; this article is written based on my personal experience. You must consult with a professional broker to discuss specific situations.