Our topic today is renters insurance. The latest lease agreement written by the San Francisco Apartment Association now has a clause in it that requires tenants to obtain renters insurance. That’s the lease we use and most of the San Francisco landlords we work with use it.

What does renters insurance really get you? We aren’t sure it provides all that much. First of all, it’s hard to enforce. Often, tenants cannot realistically get renters insurance before they have moved into a property. After they are moved into the unit, they might get the insurance and they might not. They can get it and then cancel it, and you won’t know. They can get a policy that protects their unit specifically but does not protect you if the tenant leaves the water running and other units get damaged.

Renters insurance is one of those things that are now part of the lease, but landlords should know that it’s not a panacea. It doesn’t cover everything. When your renters do get insurance, that’s great. However, it’s important that you’re aware of its limitations. It probably will not cover you – the landlord – in any case that a tenant damages the unit. If their possessions are damaged and it’s your fault, their renters insurance company will go after your property insurance company and your insurance record might suffer.

This was a controversial clause when the San Francisco Apartment Association added it to their lease. We all have mixed feelings about it as property managers. At Gordon Property Management, we have the renters insurance requirement in our lease agreements. We do require it. However, in our management agreements, we don’t guarantee to our property owners that the tenants will keep it.

This is something to be aware of when you’re deciding whether or not to require renters insurance from your own tenants. If you have any questions, or you’d like to discuss the pros and cons of renters insurance further, please contact us at Gordon Property Management.