The Benefit of Renter’s Insurance for the Landlord

Posted in Blog  
  on Jun 06, 2016

You have a landlord's insurance policy on your rental property, but its coverage handles the building itself and your on-site equipment. Your tenants don't get coverage for their personal property or liability, but they can pick up a renter's insurance policy for this protection.

The Insurance Information Institute reports only 35 percent of tenants hold a policy, which leaves millions of people uncovered in a disaster or accident. Your renters are the ones picking up this coverage, but you get plenty of value from it too.

Avoid Tenant Lawsuits

Your tenants may not have the resources to replace their furniture, electronics, and other personal items following a flood or a house fire. You aren't personally responsible for replacement costs or their living arrangements during repairs, but that doesn't stop some renters from suing you when they can't afford these expenses.

When your tenants have renter's insurance, they get money to replace their property and pay for their hotel costs while they're displaced. They won't waste your time and money by dragging you into court, so everybody wins.

No Attempted Claims on Your Landlord's Insurance

Your landlord's insurance policy costs more than a typical homeowner's policy to account for greater risks and different types of coverage. Your average annual cost is $986, according to House Logic, but your premium increases if you get claims filed on it.

Renter's insurance acts as the tenant's first option for addressing costly issues, so you don't have to worry about any claims on your own policy. This includes liability claims when the tenant is considered legally liable for injuries or damages.

They won't try to get your landlord's policy to cover it since the renter's insurance makes the process simple.

Tenant Happiness and Financial Security

Happy tenants stick around in your rental properties, refer potential renters to your listings and maintain a good relationship with you.

Your tenants won't maintain this satisfaction level if they don't know how they're going to replace essential household goods, where they're going to live during the rebuilding process and other stressful considerations. Renter's insurance not only covers their apartment contents, but it also offers money for hotel and food costs incurred while their apartment is uninhabitable. You don't have to look like the bad guy if you can't offer them alternative living arrangements or money to cover these expenses, as your legal liability is limited in this respect.

They won't be over the moon from losing all their stuff and living in a hotel for a few weeks, but they will be much happier with those logistical and financial issues handled. Renter's insurance lets them maintain their financial stability even when the unexpected happens, so your rent still gets paid on time.

Insurance Company Handles Issues

You don't want to play go-between with your tenant and your insurance company, but you run the risk of getting put in that position if your tenant lacks other options for financial recovery. This position strains your relationship with your renters, especially if they lack a valid claim. They may try to pursue their financial losses with you personally, which causes further damage. Renter's insurance lets you take a step back so the tenant and their insurance company deal directly with each other. You don't risk your solid connection with the tenant, and they get the help they need.

Accelerated Cleanup After Disasters

Your insurance covers repairs or replacement of your rental property, but it may not necessarily cover moving damaged personal property. You don't want a water-logged couch or burnt nightstand hanging around in your apartment. The smell and mold can potentially lead to long-term concerns for your current and future renters. Renter's insurance also covers the costs of removing and disposing of damaged and destroyed house contents. You avoid the tattered couch in the backyard or the driveway, and your tenants get back to their normal lives faster.

Inexpensive

Renter's insurance does not place an unreasonable cost burden on your tenants, so you don't impact their ability to pay rent or other bills. Insurance companies offer flexible payment options to accommodate their clients' needs, from monthly payments to annual options.

How to Encourage Tenants to Get Renter's Insurance

You gain a lot when your tenants maintain a renter's insurance policy.

Educate your tenants about the benefits of this insurance product. They may not know exactly how much coverage they get with a typical policy, as well as what your landlord's policy actually covers.

Make it easy for tenants to research this information by providing information sheets from insurance providers and share the average costs for your region.

Other ways to help the tenant is by explaining how to create a house inventory in case they need to file a claim, as well as what the differences between coverage options are.

Renter's insurance doesn't cost a lot, but it saves you a major headache when it comes to damages, accidents, natural disasters and theft. Your tenants work with their insurance company to replace their stuff and pay for damages while you focus on running your property management business and maintaining excellent relations with your renters.


Related

Fair Housing Legislation: A Primer

The Fair Housing Act was first adopted in 1968 and covers most housing in the United States. In 1988, the U.S. Department of Housing and Urban Development increased its power to enforce the... More


How to Write a Lease Covering All Bases

When it comes to writing a lease, every state and locality has its own set of rules and regulations. Nonetheless, there are certain general guidelines which you should follow to protect your interests... More


How to Write a Lease Covering All Bases

When it comes to writing a lease, every state and locality has its own set of rules and regulations. Nonetheless, there are certain general guidelines which you should follow to protect your interests... More


5 Home Repairs To Handle for Your Tenants

Your tenants have needs -- including maintenance on the space that they rent from you. If you’re lucky, you have reliable contractors who are always available when your tenants need them.... More


What Makes a Good Landlord Insurance Policy?

  Before renting out your property, you should purchase a landlord insurance policy. Unlike a homeowner's insurance policy, a landlord insurance policy will protect you from common... More


What Makes a Good Landlord Insurance Policy?

  Before renting out your property, you should purchase a landlord insurance policy. Unlike a homeowner's insurance policy, a landlord insurance policy will protect you from common... More


The Millennial Rental Market Trend Report

Millennials now make up just under one quarter of the total population of the United States. Compared with previous generations, millennials are much more likely to rent their homes rather than owning... More


Rental Property Deductions

Owning a rental property means that you are a business owner and property owner at the same time. Because of this, the owner must be aware of key rental property deductions that you can take every... More


Rental Property Deductions

Owning a rental property means that you are a business owner and property owner at the same time. Because of this, the owner must be aware of key rental property deductions that you can take every... More


Section 179 Deduction Rental Property?

Depreciation is one of the nicest aspects of owning a rental property. Over the course of 27.5 years, you can take out the true value of your investment until you completely recover the amount you... More