When dealing with tenants, you need to spell everything out for them. Simply handing them a lease and asking them to sign may get them in your property quicker, but it will certainly lead to a mess if something happens down the road. You need to take the time and spell out every section of the lease so there are no misunderstandings at all. Even the seemingly obvious ones should be addressed so there is no confusion.
In particular, make sure everyone knows what is covered by insurance and who will pay it. Nobody ever thinks a disaster at the house will happen to them, but these scenarios occur more than we want to admit. In the event of a fire or a flooded basement, you will both be left seeking a remedy and financial relief. Depending on the type of insurance you have, you may not be protected. It is important to acknowledge that your insurance does not cover their personal items. If they want this protection, they need to get their own individual renters insurance. Without it, any items lost with the damage will not be replaced or reimbursed.
It is important to review your insurance every time a new tenant moves in, as you must have the right insurance and enough to cover respective damages. It is also important that you have a strong lease that will protect you if something does happen. You can find leases varying from a generic two page lease to an extravagant 20 page one. The size is not as important as the language that will protect you in the event of property damage, on site injury and tenant eviction. It may take you a little longer to go over the lease with your tenant, but you will be glad you took the time if something goes wrong.
If you have multiple tenants on the lease, make sure everything is signed or initialed. You never want to get lazy with getting these items back or keeping them in a safe place. A signed lease will not ensure that your tenant pays their rent every month, but it will protect you in the event something happens. That signed piece of paper or the updated insurance is all the separate you from having to come out of pocket for the property damage and cover the mortgage payment for as long as it takes to repair the house.
Preparing for the worst does not mean that you are a negative person. Sure, the odds of something happening are rare, but just look at the problems properties on the East coast have had in the past few years. In that time, they faced a hurricane, an October ice storm and a 30+ inch snow storm. Some of these storms caused severe property damage. Without proper insurance, it would have made a tough time that much more difficult.
With every new tenant, you need to review your lease and insurance. This only takes a few minutes every year, but it could be the most important ten minutes you do for your property.