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Can a Landlord Take Out a Policy in a Renter’s Name?

A landlord asked if he could purchase a renters policy for his renters. However, he requires them to purchase insurance when they sign the lease. Is that possible?
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Q: We have an insured who is a landlord and asked if he could purchase a renters policy for his renters. However, he requires them to purchase insurance when they sign the lease. Is that possible?

Response 1: I do not believe he can take out the policy for a renter but I think he could pay for it. However, a renter could still cancel the policy and get a refund. Maybe offering a discount on the rent when they show the landlord a copy of the policy at each lease renewal would work.

Response 2: Renters policies are contracts between a renter and an insurance company. The application supplies information provided by the tenant and attested to by them with their signature. A contract is issued based on this application. Therefore, a landlord cannot do that.

Maybe offer them a specialty commercial policy for landlords that will provide liability coverage if the tenant negligently damages the landlord's property. 

Response 3: The landlord can make it a condition of the lease that a tenant obtains and maintains tenant insurance. Other than requiring proof that coverage is in effect at the time the lease is signed, I would advise the landlord to stay out of the insurance process.

Response 4: The landlord cannot arrange a renters policy for a tenant. If the lease includes a requisite for renters insurance, then he should enforce that lease provision. If the landlord wants to pay for the insurance, he could tell them he will reimburse the cost of the policy when the renter's insurance agent produces evidence of coverage directly to the landlord.

Response 5: A landlord cannot take out a policy in a tenant's name. Also, premium payment is normally one of the conditions of the rental contract and the landlord is not a party to the contract. Check on an additional interest endorsement that gives the landlord advance notice of cancellation. 

Response 6: A better solution would be for the renter to take out their own policy and list the billing address as the landlord. This could be made a requirement to obtain the rental lease. 

Response 7: An additional interest endorsement will ensure the landlord will get notice of cancellation and, if the lease and the law permit it, the tenants can be evicted unless they renew.

Response 8: If the landlord is only worried about fire and damage to the property in the tenant's care, custody and control, an additional interest endorsement is one way to track it. He could also just require that they provide a copy of their policy on an annual basis. 

A mutual waiver of subrogation is also an option. Review your state laws along with the lease. Make sure the landlord is not expecting to be a party to the contract in any form.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

Friday, March 12, 2021
Personal Lines