What You Need To Know About Renters Insurance
As the number of renters in America has increased in recent years, so has the number of people buying renters insurance. According to a 2016 Insurance Information Institute poll, 41 percent of renters said they have insurance – a small number compared to the 95 percent of homeowners who have homeowners insurance, but a notable increase from 29 percent of renters in 2011. Renters insurance is on the rise for a reason: not only does it protect renters, but it also protects property managers and landlords. Requiring your tenants to get insured can save a lot of trouble for the both of you down the road.
Why Should Your Tenants Have Renters Insurance?
Renters insurance is likely the most neglected and misunderstood type of insurance out there. A Rent.com survey found that over 60% of American renters identified cost as most important factor in their decision not to purchase insurance. The actual cost is likely far less than these renters expect: the average cost for a plan is around $15 a month. In fact, some plans are as low as $5 per month. And these plans are as surprisingly cheap as they are broad. Standard policies cover damages or lost property resulting from fire to theft to accidents. If you live in an area susceptible to flooding or forest fires, the policy should reflect it as such.
Tenants’ Policies Will Also Help You
As a landlord, you already have your own insurance plan in place for your property, so you might assume that your tenants’ insurance won’t mean much for you. But it actually does. In the event of accidental damage to your property, whether it be from fire or storm water, your tenants’ insurance will kick in first, saving you the time, money, and energy of having to oversee repairs and furnishing replacements on your own, as well as having to deal with your own insurance company. Just as important, having everyone insured in some way or another helps prevent breakdowns in your relationships with your tenants and even litigation if an accident occurs. Tenants are far less likely to sue their landlord – something that is increasingly common nowadays – if the damages incurred are insured under their plan.
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Require Renters Insurance in Your Lease
The possibility of preventing a costly court case should be reason enough to require your tenants to purchase renters insurance. Check to see if you can require renters insurance as part of your lease agreement, since the ability to mandate such terms in your lease vary by state. This may mean consulting your local landlord’s association and asking around to see what language like-minded landlords use in their lease. If you use property management software, you can even offer your tenants a renters insurance package that you recommend right on the platform. But if you find that prospective tenants are uneasy or reluctant about the prospect of getting renters insurance, sell them on it. There are a wide variety of policies to accommodate their needs. This means the benefits and protections they’d be under are surprisingly broad. For just $15 a month, having a policy is a wise investment even if you only need to make a claim once all year.
Additional Reading: 3 Overlooked Lease Items You Should Include
More and more landlords are beginning to require their tenants to purchase renters insurance, and there’s a number of great reasons why. It’s inexpensive, effective, and offers security for you and your tenants. Don’t miss out!
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