Rental Management: Should I Make Renters Insurance Mandatory?

Property owners often find themselves facing the question of whether or not to make renters insurance mandatory for their tenants. While it is not a legal requirement in Virginia, there are several compelling reasons why property owners should consider making it mandatory in addition to having landlord insurance. 

However, handling this requirement in a way that doesn't violate landlord-tenant laws is crucial. So, today our rental management experts talk about the benefits of requiring renters insurance and why it is a wise decision for Virginia Beach property owners!

What is Renters Insurance?

Renters insurance is a form of coverage designed specifically for tenants renting a property. It provides protection for their personal belongings and liability coverage, which can be crucial in case of unforeseen events such as theft, fire, water damage, or accidents.

This insurance policy typically covers the cost of replacing or repairing personal property in the home, medical expenses resulting from accidents, and even temporary living arrangements if the rental unit becomes uninhabitable due to covered events.

Yes, Property Owners Should Require It

While Virginia does not require tenants to have renters insurance, property owners have the authority to make it a requirement as part of their tenant criteria. By implementing this requirement, property owners can protect themselves and their tenants from potential financial losses and liability issues.

What are the Benefits of Mandatory Renters Insurance? 

Virginia Beach home rental companies recommend requiring this type of coverage for all renters because doing this offers several benefits for property owners, too! Here are a few. 

It Doesn't Cost You Anything

One of the main concerns for property owners when considering mandatory renters insurance is the cost. 

However, it's important to note that requiring renters insurance doesn't involve any direct cost for landlords. The insurance policy is paid for by the tenant, who assumes the responsibility of purchasing and maintaining the coverage. 

The landlord's role is simply to enforce the requirement and request proof of insurance from tenants.

It Protects Owners and Renters

Renters insurance offers protection to both the landlord and the tenant. 

For tenants, it provides coverage for their personal belongings in case of damage or theft. This can be especially valuable for tenants who own expensive electronics, furniture, or other valuable items. Additionally, renters insurance includes liability coverage, which protects tenants if someone is injured on the premises and they are found to be at fault.

While a renters insurance policy doesn't directly protect a rental property or property owners, from the landlord's perspective, requiring renters insurance minimizes the risk of being held financially responsible for damage caused by tenants, events like a fire or storm, or an emergency maintenance situation. 

For example, if a fire damages the rental property or if water damage occurs due to a tenant's negligence, the landlord's property insurance won't cover the tenant's cost to repair or replace personal items. However, if the tenant has renters insurance, their policy can help cover the costs and deter tenants from requesting financial help from the property's owner. 

The Cost of Coverage is Low for Tenants

One of the reasons renters often opt not to retain renters insurance is the assumption that it will be costly. 

However, compared to other forms of insurance, such as auto or homeowners insurance, renters insurance is relatively affordable. It's also far less costly for tenants than paying out of pocket for damage to personal property during a tenancy. 

The cost of renters insurance varies depending on factors such as the location, coverage limits, and deductibles chosen by the tenant. On average, renters insurance can cost anywhere from $95 to $160 per year, making it an affordable option for most tenants.

How Should Property Owners Make It a Requirement? 

Implementing renters insurance requirements can sometimes be confusing or overwhelming for property owners. The best property managers recommend making it a standard part of your renter criteria. 

By doing this, every prospective tenant understands they must maintain an active renters insurance policy to live in your property. Including this requirement in your tenant criteria also makes it a fair policy for all residents and rental properties and helps you avoid potential claims of discrimination. 

However, if you're not sure how to handle renters insurance requirements for tenants, reach out to investment property management experts in Virginia Beach! 

Renters Insurance for Tenants is Part of Rental Management Best Practices

Making renters insurance mandatory for tenants can be a beneficial decision for property owners in Virginia Beach. While not legally required, requiring renters insurance offers numerous advantages for property owners and tenants. 

If you are unsure about the best approach to take or need assistance with investment property management in the Virginia Beach area, consider contacting Osprey Property Management. Our team of experts can provide guidance and support to ensure that you have the necessary policies and procedures in place to protect your property and interests.

Get more of our expert insights into managing a successful rental property portfolio in our free resource, "Real Estate Investing: How to Grow Your Portfolio!"