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 renter’s 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 renter’s insurance you should make sure your tenant understands:
Renter’s insurance 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, you won’t have to worry about them and you’ll be fully protected. If your rental property gets damaged, the damage can be paid for by the renter’s insurance. This keeps the cost of your own policy low by lowering the number of claims against it. It also saves you time and keeps you from having to pay expensive legal fees. Also, renters’ insurance is very important if you want to keep a good relationship with your tenants after a big loss or damage.
Renter’s insurance provides liability coverage:
Liability coverage is also included in the 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 the renter’s clothes, jewelry, luggage, computers, furniture, and electronics from being stolen or lost. Even if you don’t have that many things, it can quickly add up to a lot more than you think, 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 benefits of a renter’s policy that may surprise you. Unless your tenant lives with family or a spouse, they will also be covered by his or her renter’s insurance. When a renter adds other people to the policy, he or she should make sure that those people know what kind of coverage they need. Even when your renter lives with other people, he or she will need to add an “Additional Insured” policy. It’s important to keep in mind that a renter’s insurance policy does not cover roommates. They should get one for themselves.
Do help your tenants with the right kind of renter’s insurance:
As a responsible landlord, you can give your tenants advice on what kind of insurance they need based on how they live. In a few states, the landlord can buy renters insurance for the tenants. A survey found that nearly 85% of landlords who required insurance saw the effect as either positive or neutral. 91 percent, on the other hand, said that the administrative burden was easy to handle. You can pay for your tenants’ insurance and add the cost to their rent. But if you don’t make insurance a requirement in the rental contract, make sure to tell them why they should get it.
Conclusion:
Undoubtedly, there are a number of advantages of requiring insurance for your tenants. Encouraging your tenants to an 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.
