Why You Should Encourage Tenants to Get Renters Insurance
Some landlords require renters insurance, but some don’t. Even if you don’t, it’s a good idea to encourage your renters to have it. As a landlord, you already know anything can happen at anytime -- including accidents that create major insurance claims and lots of headaches. Renters insurance protects your tenant, but it also benefits you as a landlord.
Replace Personal Belongings
You know that your policy only covers the building and property, but your tenant might not realize it. Help them understand that if something happens, a renters insurance policy will help them replace all their personal belongings. Most people don’t realize how much they really have, but if asked to imagine buying all new furniture, new cell phones, new computers, and new televisions, they realize how quickly it adds up.
A tenant who is unable to afford replacing their property, may also be unable or unwilling to take basic care of the property. Whether through negligence or accident, your rental property could be the worse for wear, even after repairs are made from the covered peril. With a renters insurance policy, that risk is reduced.
Reduce Your Chance of Lawsuits
Renters insurance includes liability coverage for your tenant. This means that if a guest or visitor gets hurt in your rental or your tenant hurts someone, their policy will pay any liability claims up to the policy limits. This includes medical payments, property damage, and/or court settlement fees.
What this means for you is that you’re less likely to be sued when someone gets hurt. Without insurance, when faced with their own liability lawsuit, your tenant may decide to find a way to blame you. Even if you’re ultimately found not liable, you’ll still have to go through the process. With a renters insurance policy, your tenant doesn’t have to worry, and you have less to worry about.
Your tenants may be willing to have renters insurance but they might also fear the cost. The cost of a policy depends on the policy limits, but on average, it’s around $20 per month, at most. In some cases, it’s closer to $12 or $15 per month. This won’t break the bank for your tenant.
Once a renter understands the benefits of renters insurance and how inexpensive it is, it’s usually easier for them to be willing to buy. You may even want to incentivize their purchase by offering a small discount on their monthly rent while they can show they’ve got renters insurance. That’s completely up to you, but it might be worth the extra cost to you in order to have peace of mind.
Help While Property is Repaired
It might be rare, but the possibility that a storm or accident can do major damage to your rental is very real. If you’re rebuilding or making major repairs, where will your tenants live in the meantime? You might not be legally obligated to help them figure it out, but you’ll likely still feel a responsibility to help.
Some renters insurance policies include help with living accommodations until the repairs are made and the rental can be lived in again. You won’t have to worry about your tenants. They can use their policy to get the help they need, and they’ll be in a good position to move back in and start paying rent again once the repairs are made.
Your Deductible May Be Covered
In the event your tenant damages your rental or a storm or accident occurs, your insurance policy will cover any damage to the property up to your policy limits. You already know that. But what you might not realize is that it may be possible for your tenant’s renters insurance to cover your deductible.
It doesn’t fix the problem of the repair, of course. But depending on the size of your deductible, it can be one less expense you have to deal with. Maybe your tenant won’t care about that, but it’s another reason to encourage renter’s insurance for every tenant you have.
There have been some questions of liability for landlords who require their tenants to have renters insurance. Which is just further proof that anyone will sue over anything. But encouraging renters insurance helps both you and your tenants. If you can point out the benefits to them, it’ll be an easy yes for many responsible tenants -- which are the best kinds of tenants to have.
Struggling to find qualified tenants? Don’t know how to talk about the benefits of renters insurance? You need a skilled, professional property manager to help you out. At ERA American Real Estate, we know how to screen tenants, manage properties, and answer questions about renters insurance. Let us help you manage your rental properties.