NEW YEAR RESOLUTION

I will require my tenants to obtain rental insurance to insulate myself from liability. 

We like embedding in the lease the requirement that a tenant obtains renters insurance to ensure peace of mind for landlords and tenants alike. Yet even if required in the lease, a tenant cannot be evicted for the failure to get renters insurance because this breach does not rise to the level of an evictable offense.

That’s because in a 2016 case, Boston LLC v. Juarez, a California appellate court ruled that the tenant’s obligation to obtain and pay for renters insurance protected the tenant’s interest, not the landlord’s interest. A tenant’s failure to obtain a policy could not have harmed the landlord, the court reasoned, the breach was not material enough to evict.

Nonetheless, if the landlord is sued after a calamity strikes, we want to create a narrative that the tenant was required to take out a policy that insured their Persian rug, electronics, and other belongings and that the owner is not responsible for damages. Rest assured that when a tenant’s possessions are ruined, they will want to be made whole.

So when a pipe bursts or a drunk driver smashes into a rental unit - whatever the unexpected event - the tenant’s renters insurance policy should have covered it. An added benefit to renters insurance is that typically, the policy will pay for temporary relocation payments if the unit is inhabitable. Otherwise, the tenant will ask their landlord to put them up at a four-star hotel.

Having said that, our strong preference is compliance, not enforcement. What we find is that tenants who care about their belongings and take out a renters insurance policy of their own volition also care about the property they live in. They generally tend to be better tenants. They want to protect and preserve their belongings and give a hoot about their surroundings.

Now, if the damage is caused by the tenant’s negligence, we’ll have to have a different conversation. This negligence can take many forms, be it a kitchen fire while cooking, to water damage from an overflowing tub. When the tenant is the culprit of damage, contact our office.