Mandatory Renters' Insurance

Q.Should we make it a rule that all tenants must carry renters’ insurance?

A.No. Requiring this as a covenant of the lease would be practically impossible to enforce. I cannot imagine a successful eviction in San Francisco based on the fact that the tenant, who otherwise has always paid rent on time and obeyed the laws, failed to maintain renters’ insurance—a policy that would only serve to benefit the tenant in the event of a loss. Make sure your tenants are responsible for looking after themselves. What I recommend instead is the adoption of the same disclosure set forth in the 2002 PPMA Lease Agreement. According to Paragraph 30 regarding insurance, “Owner’s insurance does not provide for coverage of Tenant’s personal belongings or personal liability unless as a dire and proximate result of Owner’s negligence. Therefore, Owner strongly urges and recommends to each Tenant that Tenant secure sufficient insurance to protect against losses such as fire, flood, theft, vandalism, personal injury or other casualty.” Remember to make sure that your tenant(s) separately initials this paragraph. This disclosure puts the tenants on actual notice that any damage to the tenants’ possessions are not covered by the building’s policy unless directly caused by the landlord. The tenants are clearly advised to carry their own insurance. With this disclosure in place, a tenant is hard pressed to seek indemnity from the owner when the apartment’s contents are damaged or destroyed. In addition, the landlord does not have to constantly monitor insurance policies (and renewals), and further does not have to contend with difficult eviction issues when tenants refuse to procure coverage that will protect them from loss.

– David Wasserman