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Brooklyn Property Management Blog of ProRealty

Renter’s Insurance: Why Your Tenant Needs It

Brooklyn Property Management Blog of ProRealty

Renting your property to tenants can be a hassle, and it often involves checking off tasks on a never-ending to-do list. The phone calls, back and forth paperwork, and bureaucracy involved with leasing out your place to temporary tenants is a minor headache, at best.

You should make your tenants’ insurance mandatory in your leasing agreement – in this way, you can increase the coverage on your rental, and lower your costs in the long term. Consider it as another line of defense when there’s an emergency situation.

When your tenants have their own insurance policy, it’s a source of protection for you, the landlord. In case unfortunate things like fire cause damage to your place, their insurance policy can help repair the damage, reducing the amount you or your insurance company would have to pay.

Here are some benefits of renters insurance you should make sure your tenant understands:

It is affordable:

A common misconception about renter’s insurance is that it’s expensive, so communicate with your tenants that the average cost of renters insurance is probably lower than expected and that a very basic renter’s insurance policy can cost as little as $5 a month. Many policies allow you to customize your coverage to fit your lifestyle needs, so renter’s insurance doesn’t have a significant out-of-pocket expense.

It helps landlords:

When your tenants have their own insurance policy, it will give you peace of mind and complete protection. In case of any damage at your rental property, the tenant’s insurance policy can cover the damages. It keeps the premium of your own policy low by reducing the claims on your insurance. Moreover, it prevents you from paying expensive legal fees and also saves your time. Moreover, renters’ insurance also plays a vital role in keeping a healthy relationship with your tenants when a major loss or damage takes place.

Provides liability coverage:

Liability coverage is also included in renter’s insurance policy. This provides complete protection if someone is injured while in your home or if you (or another covered person) accidentally injure someone. It pays any court judgments and legal expenses, up to the policy limit.

You might have to pay a deductible on your policy before coverage kicks in. Most policies provide people at least $100,000 of liability coverage and a smaller amount for medical-payments coverage. You can request them (and pay for) higher coverage limits if needed.

Covers loss to personal property:

A renter’s insurance policy protects against loss to tenant’s personal property, including clothes, jewelry, luggage, computers, furniture, and electronics. Even if you don’t have many belongings, it can quickly add up to a lot more than you realize; and a lot more than you would want to pay to replace everything.

Renter’s policy protects against a surprisingly long list of perils. A standard policy designed for renters, for instance, covers losses to personal property from perils including, damage caused by vehicles or aircraft, explosion, falling objects, fire or lightning, smoke, theft, volcanic eruption, windstorm or hail and damage from water or steam.

Loss resulting from floods and earthquakes is not covered in standard policies. A separate policy or rider is required for these losses.

It covers the family of the tenants:

There are many other surprising benefits of a renter’s policy. If your tenant is living with family members or a spouse, they will also be covered in the renter’s insurance policy of the tenant. If a tenant adds other people in the policy, he/she needs to make sure they understand the type of the coverage they need. If your tenant is living with others, he/she will be needed to add a policy known as ‘Additional Insured.’ It is important to note that roommates are not covered in a renter’s insurance policy. They need to get one of their own.

Do help your tenants with the right kind of renter’s insurance:

As a responsible landlord, you can recommend the kind of insurance for your tenant’s need depending on the lifestyle of your tenant. In a few states, the landlord can purchase renters insurance for the tenants. According to a survey nearly 85% of the landlords requiring insurance defined the impact as positive or neutral. Whereas 91% said that the administrative burden has been manageable. As a landlord, you can pay for your tenant’s policy and include the cost in their rent. However, if you are not making insurance mandatory in the rental contract, make sure to explain to them what makes renters insurance a good idea.

Conclusion:

Undoubtedly, there are a number of advantages of requiring insurance for your tenants. Encouraging your tenants for insurance plan helps them save money and stress during unexpected accidents. Moreover, it protects you as a landlord from being caught in the middle of a liability battle or insurance claim.

 

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