When renting a property, it’s important to know what type of insurance should be put in place. If you were living in a home and then decided to move out and rent it, make sure that you change your homeowner’s policy to a landlord’s policy. It makes a big difference when it comes to liability. But what about your tenant? What type of insurance should your tenant carry? There is renter’s insurance which will cover the tenant’s personal property in case of damage. This is a smart move for a tenant. I know this first hand when years ago, my NYC apartment was broken into and I didn’t have renter’s insurance. It’s possible your renter’s insurance policy will even cover your personal belongings that are stolen from your car. So I highly recommend to any renter to get a renter’s policy. However, can a landlord require it?
Renter’s Insurance Cannot Be Required
In fact, a landlord or an HOA cannot require a tenant to carry renter’s insurance to cover the loss of his or her personal property. In reality, it is not that the landlord doesn’t have the right to require it, but the landlord is not the beneficiary. Because California courts have ruled that the failure of the tenant to carry renter’s insurance is not a material breach of the lease, it is assumed that the requirement to procure the insurance policy is no longer enforceable in California.
Liability Insurance is Another Story
However, a landlord or an HOA can require renter’s liability insurance as is addressed in paragraph 29 of the California Assoc. of Realtor’s (CAR’s) Residential Lease Agreement. A landlord may additionally want to request to be listed as an “Additional Interest” on that policy so that he or she will be notified if the liability policy lapses or is cancelled. Don’t confuse this with the term “Additional Insured” which is for someone who lives with the tenant and wants to be covered under the same policy. It’s important to note that if a landlord is named on the policy, it would preclude him or her from being able to make a claim against the liability coverage which is not what the landlord is looking for.
As a landlord you should think about your own insurance coverage as well as the potential liability the tenant may incur that could be insured BEFORE renting out your property.