By Envy Property Management - Tuesday, December 22, 2020
Hi, this is Tanya with Envy Property Management. Today’s video is going to be part 1 of our 3 part video series on the various forms of insurance in property management. Today’s topic will be the difference between renter’s insurance and tenant liability insurance. There is a lot of confusion around these 2 policies, many people may believe that renters insurance IS tenant liability insurance, however, this is not the case. Today I’m going to clear up the confusion surrounding these 2 types of insurances.
First off, I want to be clear that I am not an insurance agent, nor do I sell insurance. For more specific questions regarding insurance, I encourage you to contact your licensed insurance agent.
RENTER’S INSURANCE
Many tenants may believe that the landlord’s property insurance will cover their personal property if any damage occurs due to an accident. However, the landlord's insurance only covers the building’s structure and the damage caused. It won’t cover damage to the tenant’s personal property. This is where the renter’s insurance will kick in.
Renter’s insurance has numerous benefits for both tenants and landlords. As with any insurance, coverage depends on the policy taken out and the terms and conditions. Generally, renters insurance will cover things like damages to tenant’s personal property, liability for injuries, losses caused by theft, natural disasters, and relocation expenses if the rental unit is uninhabitable.
For example, say there was a fire in the property, and neither the landlord nor the tenant was to blame. The landlords insurance would cover the damage to things pertaining to the structure of the property—but none of the tenant’s personal possessions. However, renters insurance would cover the damage to everything the tenants own up to the policy’s limit.
Liability coverage is another great reason why renters insurance is so important. Liability coverage protects tenants against people who claim to have been injured near or on the property. It can also protect the tenant from damage claims to other people’s property. For example, a tenant could unintentionally leave a faucet on and cause water damage to the property below. The liable tenant would file a claim to their insurance policy to pay for the damage they caused.
Another benefit found in some renters insurance policies is additional living expense coverage. This could help cover unexpected costs from staying in a hotel if the property is inhabitable because of the damage caused.
TENANT LIABILITY INSURANCE
Tenant liability insurance is yet another form of coverage offered to tenants. However, the difference between tenant liability insurance, as opposed to renters insurance, is, this policy will cover damage done to the landlord's property due to negligence from the tenant.
For example, just a few weeks ago in one of our rental properties a broken water pipe was found to be flooding the basem*nt. It caused significant damage, including walls, baseboards, and the ceiling damage. When we went to determine the cause of the broken water pipe, it was discovered that the tenants had left the exterior water hose attached to the hose bib connected to the home. The water in the hose froze and subsequently caused the water pipe to freeze and ultimately break from the pressure.
The tenant is liable for the damage done to the property. However, because this tenant has tenant liability insurance coverage, we are able to file a claim through their policy to cover the damages done to the property due to the flood.
So to sum up, the main difference between renters insurance and tenant liability insurance is, renter’s insurance will cover the tenant’s personal property in case of a disaster. Tenant liabilty insurance will cover damages done to the landlords property that was directly caused by the tenants.
Thanks for watching today’s video on the difference between renter’s insurance and tenant liability insurance. My name is Tanya with Envy Property Management, make sure you subscribe to receive more valuable information about your investment properties. If you have any questions about property management or what we can do to help you increase your return on investment, please call us at 801-337-4337, or visit our website at envypm.com.
FAQs
Tenant liability insurance covers legal fees and medical expenses if you're found liable for injuries or damage to your landlord's property. Renters insurance protects your personal belongings and covers additional living expenses during unforeseen displacement.
What does renters insurance liability coverage protect you against? ›
Liability coverage for renters
Liability coverage is another protection typically included in a renters insurance policy. This coverage may help protect you from paying out of pocket for certain costs if you are found legally responsible for injuries to other people or damage to their property.
Which of the following is a benefit of renters insurance? ›
Renters insurance protects your belongings from loss, damage, or destruction following things like burglaries, fires, tornadoes and other covered events.
What is a main difference between renters insurance and homeowners insurance? ›
The main and most obvious distinction between renters insurance and homeowners insurance is that a homeowners policy safeguards the home's physical structure against covered perils while renters insurance won't protect the home or building occupied by the tenant.
How often should you shop around for renters insurance? ›
Shop around for renters insurance at least once a year when you policy renews to ensure you're still getting the best deal. If there is a change that affects your coverage needs, it's a good time to shop around.
What is typically not covered by renters insurance? ›
Flooding, earthquakes and sinkholes are all examples of natural disasters that are not covered by a typical renters insurance policy.
Which of the following is not covered by renter's insurance? ›
Items not covered with renters insurance include: Personal property loss that exceeds the coverage limits on your renters insurance policy. Liability situations that exceed the limits on your policy. Damages caused to the structure of the building you are renting (which is covered by your landlord's homeowners policy).
Is it worth it to get renters insurance? ›
Renters insurance coverage is almost always worth it. It is much more affordable than other policies, including home or auto insurance, and provides valuable financial protection. Even if you can save enough money to cover unexpected loss, renters insurance may be worthwhile.
Which of the following should be covered by renter's insurance? ›
Renters insurance is an insurance policy that can cover theft, water backup damage, certain natural disasters, bodily injuries and more in a rented property.
What is the main reason someone would want to have and need to have renters insurance in Ramsey? ›
Renters insurance is a type of property insurance that pays to replace your things if they're damaged, vandalized or stolen while you're renting. It protects you from dealing with the financial fallout of unexpected catastrophes like fires, electrical surges, sewer backups and explosions.
Does homeowners insurance cover theft from a home? Typical homeowners (including renters and condominium) policies include coverage for your personal property. Loss due to theft is generally included as part of the personal property protection.
Why is renters insurance cheaper than homeowners insurance? ›
In general, you can expect your renters insurance quote to be less than for homeowners insurance. That's because homeowners insurance includes the building structure itself, which isn't the case for renters insurance policies.
Why does renters insurance decrease? ›
Companies calculate your insurance score using information on your credit report and your loss history. Insurers value this information because data suggests a correlation between credit and loss history and insurance risk. Typically, the higher your score, the lower your renters insurance cost.
What is the cheapest renters insurance? ›
| Provider | Monthly Cost | Annual Cost |
|---|
| State Farm | $10.50 | $126 |
| Toggle | $12.59 | $151 |
| Lemonade | $13.33 | $160 |
| Allstate | $14.42 | $173 |
1 more row6 days ago
Renters insurance is relatively inexpensive. According to NerdWallet, the average renters policy costs about $15 per month for up to $30,000 in personal property coverage. That's solid coverage for less than the cost of a few cups of coffee a week.
What are the 3 things renters insurance provides you with and what purpose does each of them have? ›
Renters insurance covers personal property, personal liability, medical payments and additional living expenses or loss of use, up to the limits of your policy. Learn more about what renters insurance covers and the types of renters insurance coverages.
What are three ways that renters insurance protects a renter? ›
Renters insurance protects your personal property from theft, loss, and damage while you are renting an apartment or house. Renters insurance also provides personal liability protection in case someone is injured in your home.
What insurance protects renters from property and liability losses? ›
Renters Insurance
To protect your belongings, you should consider purchasing renter's insurance, also known as “tenant's insurance.” The renter's policy may be used to provide coverage for your personal contents located in the property that you occupy.
Does renters insurance cover pet damage? ›
Renters insurance may cover pet damage as part of your policy's liability coverage. This may help protect your finances if your pet injures someone else or damages their property. However, renters insurance won't cover damage to your own property that's caused by your pet.
Does renters insurance cover broken windows? ›
Broken Windows in Your Home
Renters insurance will not cover a broken window in your own residence. Renters insurance only covers your personal property, not the home. Damage to the physical structure of the building you live in, which includes a broken window, is covered by your landlord insurance.
