The average premium for renter’s insurance has fallen in recent years. In 2017 alone, it fell by 2.7%. With premiums dropping, now is a great time to consider requiring your tenants to carry a renter’s insurance policy.
This can provide many benefits for both you and your tenants, making it a smart choice to avoid loss while decreasing friction in your relationship. Let’s take a look at why renter’s insurance is beneficial for your rental property.
Reduced Liability
Requiring renter’s insurance shifts the responsibility to the tenant if something were to happen, such as bodily injury or property damage. This can help you avoid costly lawsuits. Plus, you may even qualify for a lower premium on landlord’s insurance.
If a tenant damages a neighboring apartment, your landlord’s insurance may not cover the cost of damage to the other apartment. Having a tenant sued for damages can impact you if they are not able to cover their rent due to the lawsuit.
A standard renter’s insurance policy starts at about $100,000 of liability coverage. This could help pay for the damages and legal expenses in the event of a lawsuit.
In addition, it can greatly protect you in the case that a tenant tries to sue you for an issue. Renter’s insurance can keep the situation out of court. It can also lower your overall chance of financial loss in this situation.
Financial Protection
If there is a natural disaster, flood, or fire, you don’t want to have to replace your tenants’ belongings. Many renters have more possessions than they estimate, meaning the cost could skyrocket quickly.
If your tenant has renter’s insurance, their policy would cover the cost of replacing their personal property. It can even cover the cost of stolen items and possibly even belongings that are stored in a storage unit.
Most landlord’s policies will cover the cost to repair the building structure due to renter damage. You would still have to pay the deductible. However, if they have renter’s insurance, the policy should cover the landlord’s insurance deductible too.
A renter’s insurance policy can also cover the cost of temporary living arrangements if the property is being renovated or repaired. As a landlord, you would not have to worry about covering this cost.
Peace of Mind
Renter’s insurance can actually make the relationship better between you and your tenants. For one, if potential tenants can’t afford renter’s insurance, it may be a red flag they can’t afford rent. Combined with setting a minimum renter credit score, this could save you trouble later on.
There are many options for low-cost, but full coverage policies. It’s even possible to get discounts based on safety and security devices.
Since the coverage may include rental wear and tear, you can fix any damages, while taking less out of tenants’ rental deposits. This could improve your image as a landlord, bringing in more tenant renewals and new tenants.
Both the renter and landlord can feel better that the tenant’s belongings and the landlord’s property are protected. Both also benefit from reduced liability. This can help reduce friction in the relationship and make management easier.
Start Requiring Renter’s Insurance
Renter’s insurance offers benefits to both you and your tenants. Requiring tenants to carry a policy can reduce your liability, protect you financially, and give you more peace of mind.
Contact Avalon Realty and Oaktree Management to make property management easier today.
Bonnie is the visionary that has driven the company and culture of Avalon since 1993. Her passion is improving procedures and practices; incorporating technology and value added services for both our clients and tenants.