It is not uncommon to come across articles in the media telling us the sad story of families or individuals who have lost everything to fire or theft and are unable to recover because they do not have any insurance. It seems to be all too common that renters decide or neglect to obtain a renters insurance package. There can be many reasons for this decision but it is most likely the economic. Tight personal budgets mean that something has to be cut and first on the list might be a renter’s package.
While there are many good reasons why an individual would want to place renter’s insurance, there are also many good reasons why housing providers would also want to create mandatory an obligation for their tenants to obtain rental insurance packages.
Most rental insurance packages are a combination of liability and content coverage. The most important type of coverage that a housing provider would want to see is tenant liability coverage. Content coverage, which usually comes along with the package is of great benefit to the renter as it protects their personal property.
Imposing a mandatory liability insurance requirement better protects the housing providers’ asset. Housing providers, or the housing providers’ insurer, will have an opportunity to recover losses from the renter’s insurance company in the event of an accident or incident. Imposing such a requirement would add an extra layer of protection for the housing provider which in turn might serve to reduce insurance premiums on a go-forward basis for the housing provider.
Housing providers might see losses that were previously charged to their maintenance and repair accounts or losses that were within and under the insurance deductible now being converted to recoverable losses that might be payable by a renter’s insurance policy.
Legally, there should be no problem in imposing a mandatory insurance requirement on tenants on a go-forward basis. Landlords will not be able to impose the requirement on existing tenants if the tenancy agreements do not currently have the insurance requirement, but nothing should prevent the landlord from amending the tenancy agreement and requiring new tenants to obtain the insurance coverage.
Mandatory insurance has faced at least one attack in the Human Rights Tribunal. In that case, the complainant alleged that the mandatory tenants package was discrimination based on religion. The complainant said that obtaining insurance indicated that she was less than faithful and accordingly violated her religious beliefs. The Tribunal noted that the complaint did not seem to have a problem obtaining ICBC insurance coverage to drive her car. Like ICBC insurance, the tenants package was mandatory, contractual and had been in place for some time. The Human Rights complaint was dismissed.
Landlords might also consider marketing matters that could arise when implementing mandatory insurance. Landlords might ask whether the property will continue to attract renters due to mandatory insurance policy protection being implemented. It is often the case that renters take out the renter insurance packages in the absence of a mandatory clause because they understand and realize the value of that purchase without any prodding from a landlord. Those who do not ordinarily take out renter’s packages might understand the benefits of taking out those packages on a personal level and to the building as a whole once it is explained to them.
In the end, it is unknown how a renter will react to a mandatory insurance. No doubt, housing providers will run into renters who are only interested in the bottom line but at the same time, this must be balanced with the housing provider’s desire to protect and manage the asset.
Published online on July 24, 2016.