Renters insurance shouldn’t be an option for your residents. It should be a requirement.
Homeowners insurance only covers your property structure. Renters insurance is what covers possessions inside of the house and tenant accommodations if they’re displaced due to property damage. For example, if your tenants can’t live in your house after a severe flood, renters insurance will pay for their temporary housing while it’s repaired.
How We Protect Our Renters and Our Investors
All of our residents are required to keep an active renters insurance policy — for the benefit of the renter and the investor. We know our residents have valuable possessions and we want to make sure they’re protected. We also want our investors to be 100% clear of financial responsibility if an unexpected event occurs that damages personal property.
So how do we enforce this requirement?
From the moment a tenant shows interest in a property we tell them that renters insurance is mandatory – no exceptions. Each prospective tenant receives the Terms and Conditions of our lease during the application process and renters insurance is included. We also have a special provision in the lease stating that the tenant will maintain renters insurance at all times and the landlord will not pay for tenant displacement due to a repair.
What Happens If Renters Insurance Isn’t a Requirement?
If your tenants don’t have renters insurance they’ll ask you to pay for damage — even if it’s their fault. For instance, your tenant may request money to cover personal damages after they cause the washing machine to flood. If you require insurance, you can show them where they agreed to maintain a policy and instruct them to reach out to their insurance company for compensation. It’s that easy.
On the other hand, if you don’t require insurance tenants assume all financial responsibility lies with you. Let’s say a pipe bursts at the property, displacing your residents. They’ll ask you for money to pay for temporary accommodations since the damage wasn’t their fault. Now, you’re looking at $120 to $150 per night for a hotel and they may even request money for food if they don’t have a place to cook.
You can deny their request, but most tenants don’t like hearing the word “no”. Refuse to pay and you could find yourself responding to attorney letters and fighting over these expenses in court. Again, all of this can be avoided by simply requiring renters insurance.
The Cost of Renters Insurance
Renters insurance is so inexpensive and easy to obtain that it only makes sense that everyone has it. A standard policy costs between $50 and $70 per year. Often tenants can even bundle renters insurance with their current car policy to receive a discount.
We find that two acknowledgements of the insurance requirement (at application and lease signing) gets the point across that this is a serious matter. Make sure you work with a property management company that sets the insurance expectation from the beginning to save yourself from back and forth with residents.
Interested in learning more about the Tenant Services we provide? Contact us today for a FREE consultation.