What Is the Tenant's Responsibility?
Homeowner's and landlords' insurance policies do not cover the contents of a tenant's unit. Your policies will pay for damage to the apartment and fixtures, but not the tenant's possessions. Nor will your policy cover a tenant's losses because of criminal acts — theft, damage, or break-ins that you couldn't anticipate — and acts of God.
If your tenant refuses to get renter's insurance even though you require it, you can protect yourself by having a paragraph in the lease that states he will not hold the landlord responsible for any personal property losses. When it is time for the tenant to sign the lease, be sure you read that section and have him sign or initial it before turning over the keys.
If a tornado takes off the roof and strews contents of the apartment for miles, the tenant has to pay to replace them. Your policy will replace the roof. If your water pipes freeze and your tenant's property is subsequently damaged by water, your insurance does not cover their personal losses. However, some policies will pay for a tenant's lodgings for a limited time — for “loss of use” — if he plans to return to the apartment after it is repaired. Talk to your insurance agent for more information.
Careless Smoking
Fires caused by careless smoking are responsible for a lot of property damage, injuries, and deaths. Don't assume it won't happen to you simply because you are renting a smoke-free unit. Property losses caused by a tenant's careless smoking are covered in your homeowner's policy, as are your personal property losses. Your tenant's possessions, however, will be excluded.
Your insurance company will pay for repairs to the walls, floors, fixtures, appliances — anything that belongs to you. After covering your losses, your company will then turn to your tenant's renter's policy to get reimbursed for expenses.
Renter's Insurance
Encourage your tenants to get a renter's insurance policy so that their personal possessions can be replaced if they are damaged or stolen. Premiums are low and the policy reduces their loss for criminal acts and acts of God. It usually covers losses from their cars and even pays legal fees should they be sued.
Do everything you can to encourage your tenant to take out renter's insurance. If your insurer has to pay for damage caused by a tenant's carelessness, your own premiums very likely will be increased or the policy will be dropped, especially if you've had a lot of claims in the last few years.
