Tenant insurance

[DianneDachyshyn]

An insurance agent recommended adding a clause to our lease requiring tenants to purchase tenant insurance and indicating that they would cover the $1000 deductible for damage that was caused by them and required us to make a claim. Has anyone done this before?

 

[Dan_Eisenhauer]

QUOTE (DianneDachyshyn @ Sep 10 2008, 08:29 PM) An insurance agent recommended adding a clause to our lease requiring tenants to purchase tenant insurance and indicating that they would cover the $1000 deductible for damage that was caused by them and required us to make a claim. Has anyone done this before?

This is the clause found in Alberta`s Standard Lease:

It shall be the responsibility of the Tenant to:

(a) insure the Tenant`s property on the premises against damage or loss to
such property caused by fire, theft and any other perils which cause such damage or loss.
(b) obtain and carry general comprehensive liability insurance of a
minimum of $1,000,000.00 coverage against wilful or negligent acts or
omissions by the Tenant or persons for whom the Tenant is responsible.
( c) provide a copy of Certificate of Insurance to the Landlord.

 

[GarthChapman]

QUOTE (Dan_Eisenhauer @ Sep 10 2008, 11:04 PM) This is the clause found in Alberta`s Standard Lease:

It shall be the responsibility of the Tenant to:

(a) insure the Tenant`s property on the premises against damage or loss to
such property caused by fire, theft and any other perils which cause such damage or loss.
(b) obtain and carry general comprehensive liability insurance of a
minimum of $1,000,000.00 coverage against wilful or negligent acts or
omissions by the Tenant or persons for whom the Tenant is responsible.
( c) provide a copy of Certificate of Insurance to the Landlord.


Great tip, as always Dan. I find the challenge to get your tenants to actually get the insurance they are required to under this lease term.

I wonder if anyone out there has some tips on how to achieve compliance in a positive way...

 

[TerryF]

We tell applicants at the application stage that obtaining tenant insurance is mandatory. Then we ask for a copy of the "confirmation of insurance" letter from the insurer prior to handing over the keys. The letter spells out the details of the insurance coverage. Our own insurance company actually wants a copy of this so we tell our tenants that without it, our own coverage on the property is at risk. A responsible tenant will understand and appreciate this, especially if you mentioned it at the beginning of the application process. It hasn`t been a problem for us so far.

QUOTE (GarthChapman @ Sep 11 2008, 12:11 AM) Great tip, as always Dan. I find the challenge to get your tenants to actually get the insurance they are required to under this lease term.

I wonder if anyone out there has some tips on how to achieve compliance in a positive way...

 

[GarthChapman]

QUOTE (TerryF @ Sep 11 2008, 04:33 PM) We tell applicants at the application stage that obtaining tenant insurance is mandatory. Then we ask for a copy of the "confirmation of insurance" letter from the insurer prior to handing over the keys. The letter spells out the details of the insurance coverage. Our own insurance company actually wants a copy of this so we tell our tenants that without it, our own coverage on the property is at risk. A responsible tenant will understand and appreciate this, especially if you mentioned it at the beginning of the application process. It hasn`t been a problem for us so far.

I like that approach. Nice and clean - and simple.

Thanks Terry!

 

[SusanPenner]

I think I`m just naive or missing the whole boat on this one. Why do we care if our tenants/clients have insurance or not?

When I was 18-22 and in university I was under my parents insurance...not that there was anything valuable to steal and I really would have liked to torch the second hand couch I had! I didn`t get tenant insurance myself until I owned some "stuff" that was actually worth something in my eyes. So yes, I rented a few years without tenant insurance.

I haven`t encountered a tenant yet who hasn`t agreed to get insurance...on the otherhand if a 25ish potential tenant says they have nothing of value and they are willing to take the chance on theft/fire, I don`t know if I have good logical arguement for them to spend the money.

Please advise...Thanks!

 

[DianneDachyshyn]

QUOTE (SusanPenner @ Sep 11 2008, 09:39 PM) I think I`m just naive or missing the whole boat on this one. Why do we care if our tenants/clients have insurance or not?

When I was 18-22 and in university I was under my parents insurance...not that there was anything valuable to steal and I really would have liked to torch the second hand couch I had! I didn`t get tenant insurance myself until I owned some "stuff" that was actually worth something in my eyes. So yes, I rented a few years without tenant insurance.

I haven`t encountered a tenant yet who hasn`t agreed to get insurance...on the otherhand if a 25ish potential tenant says they have nothing of value and they are willing to take the chance on theft/fire, I don`t know if I have good logical arguement for them to spend the money.

Please advise...Thanks!

My insurance agent told me that it has to do with claims. If your tenant has insurance, then his policy goes into effect first. She also said to have him sign that he would pay my deductible in the even that damages are caused by him and my insurance pays for it.

 

[EdRenkema]

In my opinion we are overinsured in this country.I think Susan is right, insurance is simply asset protection, hence unnecessary if assets have negligible value.
Life insurance is a real sore spot for me, insurance companies playing on peoples vulnerability and financial illiteracy.
My employer is currently trying to force me to participate in their group insurance `benefit` policy, I have politely declined.
UIC, WCB, OHIP where does it end? All insurance should be part of prudent planning and a choice, we are living in a nanny state.
I pay onerous insurance fees for a student rental that is already insured via inflated condo fees. To me insurance is a necessary evil with evil being the operative term.

 

[GarthChapman]

QUOTE (SusanPenner @ Sep 11 2008, 08:39 PM) I think I`m just naive or missing the whole boat on this one. Why do we care if our tenants/clients have insurance or not?

When I was 18-22 and in university I was under my parents insurance...not that there was anything valuable to steal and I really would have liked to torch the second hand couch I had! I didn`t get tenant insurance myself until I owned some "stuff" that was actually worth something in my eyes. So yes, I rented a few years without tenant insurance.

I haven`t encountered a tenant yet who hasn`t agreed to get insurance...on the otherhand if a 25ish potential tenant says they have nothing of value and they are willing to take the chance on theft/fire, I don`t know if I have good logical arguement for them to spend the money.

Please advise...Thanks!

I understand it allows the Tenants` insurance to come in to play on a claim where warranted, espically if some action or lack of action on the tenant`s part creates a big claim - to protect the Landlord`s policy from being the only avenue for a claimant to pursue.

But maybe you are right and we`re being manipulated by insurers who drive up their sales on our fears. What is the Landlord`s true and realistic risk without their tenants having insurance?

I`d love to hear some experienced views on this subject.

Don? Russell? Thomas? Anyone else?

 

[Dan_Eisenhauer]

Remember that a portion of that clause covers PL & PD. If an invitee of the tenant comes on to your property, and slips on the icy steps that the tenant was to keep clear of ice, and is severely injured, the, now, plaintiff is going to go after the person with the deepest pockets.

The insurance requirement is not just to protect the tenant`s property, but to CYA due to the tenant`s actions, or lack thereof. The tenants` insurance is just one more barrier between you and a claim.

 

[EdRenkema]

QUOTE (Dan_Eisenhauer @ Sep 11 2008, 11:28 PM) Remember that a portion of that clause covers PL & PD. If an invitee of the tenant comes on to your property, and slips on the icy steps that the tenant was to keep clear of ice, and is severely injured, the, now, plaintiff is going to go after the person with the deepest pockets.

The insurance requirement is not just to protect the tenant`s property, but to CYA due to the tenant`s actions, or lack thereof. The tenants` insurance is just one more barrier between you and a claim.


Dan you have a valid point. In the particular case of my student rental liability is an issue that is mitigated through licensing of student rentals in Waterloo, ON. In order to renew the license yearly I must have the unit inspected ensuring smoke detectors and fire extinguishers are up to date, another form of insurance plus my condo fees plus my additional insurance which incidentally is 10x the cost of other condos I have. I believe in adequate insurance which is why I have it, I think it does however overlap in coverage.

 

[Sarnia]

i would encourage the tenant to get insurance, many think your policy covers them, make sure they are aware that they have to buy there own coverage. I do know of a situation where the landlord paid for the insurance policy out of the rent to make sure it was always in force.

If you are worried about your liability limits - talk to your insurance broker about getting an Umbrella policy - that way you are covered for a number of properties for a rather minimal charge, and you can increase your liability limit up to $2 million or $5 million.

One of the benefits of having your tenant have insurance is in the event of a fire, your tenant smokes and doesn`t put out his cigarette, or puts it out in the planter with peat moss. It is nice for your company to be able to go after the tenants insurance for the damages - that way you have no claim on your policy.

Again always take the time to read your wordings, andif it is to much, always read what is excluded and what is limited.

Also another insurance tip, make sure you contact your broker every year to review your renewal - make sure you have adequate coverage in place, and for those of you who own homes, make sure you ask them to reevaluate your homes to make sure they are insured to the proper value. Many companies are now offering guaranteed replacement cost coverage on rentals if you meet the criteria, again check with your broker to see if your homes fit, or if another company offers that coverage. This is important especially in todays markets with rising costs.

Older homes should carry some sort of bylaws coverage - again protect your self in the event of a loss.