When You Have Renters

When you are a landlord of an apartment building, retail location or office building, you are facing greater risks than you do in your own home. There is the danger that a renter or a renter’s guest will get injured and sue you, possibly claiming that some physical defect in your build­ing caused the injury. An additional danger is that a fire or a leak will cause damage to rental property, and you will be held liable.

That’s why many insurance companies require landlords to carry coin­surance ,which you can think of as extra insurance on top of the insurance you already own. Coinsurance is designed to protect the insurance com­pany (and, by extension, you) from large settlements that can result if tenants sue you. You have to pay for this extra coverage even though the insurance company benefits from it as much as you do.

 

One way to minimize or reduce insurance costs in rental prop­erties is to require all tenants to have their own renter’s insurance policies or business policies, if you own a retail or office build­ing, in place.

You simply stipulate in leases the amount of coverage that you require all tenants to maintain and add a clause stating that they will not hold you liable for loss of belongings. Speak with your attorney about these measures; the fact that renters have agreed to have insurance may not prevent them from suing you if some major problem in your building, such as a flood or fire, damages their property. As has often been noted, we live in a litigious society.

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