Avoiding Large Premium Increases

November 28, 2017

Yes, we are in the midst of another Christmas season. What does that mean for those of you that have tenants? Think increased fire hazard.

Do your tenants have Christmas trees or at least decorations with strings of lights? Of course they do, and we all know some tenants really don’t know that there actions could lead to a fire. Things like plugging in too many strings of lights together, placing trees/decorations too close to a heating source, Etc. The Holiday season even brings more cooking and a higher likelihood of kitchen fires.

So, what can you do as the property owner to help reduce the chance of having a fire at one of your properties? You can attempt to educate your tenants about these types of exposures, restrict use of decorations or use of live trees, make sure smoke detectors are working, don’t permit smoking on the premises, Etc.

After your have done what you can to reduce the chance and/or severity of a fire the last thing you can do is try to protect yourself from sharp increases in your premiums by requiring your tenants to carry a renter’s insurance policy with at least a $300,000 liability limit. This way if a tenant causes a fire your insurance company can recover the cost of the damage from the tenant’s insurance company and that reduces the loss payout that your insurance company makes, and they are much less likely to increase your premiums or cancel your policy.

I have heard all the excuses why landlords/property owners won’t require tenant’s insurance: It’s against the law (it’s not), my tenants can’t afford it, its too difficult to keep track, blah blah blah.

Let’s address these three excuses:

It’s against the Law! All the big apartment complexes require tenants to carry renter’s insurance and they specify the limit. Oh, and accounts that require tenant’s insurance pay lower insurance premiums.

My tenants can’t afford it! In the past month I have written several tenant policies all under $100 A YEAR! Two of those were in the $50-60 range (I am the one who can’t afford to do a policy that cheaply). HERE IS THE BIG KICKER… those tenants then saved 10-15% on their auto insurance because we placed both policies with the same insurance company and in many of these cases they actually paid less money annually than having just their auto insurance policy!!!

It’s too difficult to keep track of who has insurance! Yes, there will be some additional work on your behalf. However, if you require that the tenant list you, the landlord, as an additional insured on the tenant’s policy then the tenant’s insurance company has to send you notice if the policy cancels for any reason (this is not fool proof as some insurance companies miss sending you the notice). Then just check that they still have the policy at their annual renewal date.

I highly recommend that you begin to require tenants to carry renter’s insurance!

Stay safe this holiday season and if you have any questions about these topics or have questions about your insurance policies I am interested in talking to you.


Joe Hershey, CPCU, CIC 717-537-1104