Renter’s insurance is also known as tenant’s insurance. Now, what exactly is this? As the name states, this specific insurance is designed to cover the needs of tenants. While it is true that every landlord should have insurance, it only covers the building and not any of the renters belongings. A Poll from the III (Insurance Information Institute) found that more than 35% of renters don't have insurance policy, and it is mainly due to the myths and misconceptions around them. This insurance can cover:
- Medical protection in case someone is hurt at the property
- Third party property damage
- Liability protection
- Personal property coverage
- Additional living expenses
Many Americans don't know that renters insurance policy is not a large expense. It is about trying to find an affordable option with amazing coverage and reliable customer service. For example in Chicago, where cost of real estate is increasing significantly and many Chicagoans are forced to rent, you can find renter's insurance for less than $100 a year (Lemonade) and the cost can be divided on a monthly basis which means renter's can pay less than $8 a month! Just think about the cost of buying Cubs season tickets.
Let’s think about a landlord or property manager point of view. Is it convenient to require renter’s insurance?
By adding a clause in the lease that states you should have renter's insurance, you as landlord can avoid several costly situations. It is known that when accidents happen, the first ones to get sued are the owners of the building (or property managers). By requiring tenant's insurance it reduces the chances of being sued. Renter’s insurance covers damages by either replacing house items and personal belongings or with money.
Another major benefit of renters insurance is it can reduce your landlord insurance premium. If there is a claim, Zillow has reported that the owner’s insurance premium can go up or even be cancelled (if there are too many claims). You can lower the chances of this happening as renter’s insurance normally covers all or most of the loss.
If a fire is to happen on a building (knock on wood), having a renter’s insurance is crucial. While it is true that not all states require the landlord to pay the relocation expenses, many may feel obligated to. It will help with the relocation expenses that may arise and you won’t have to worry about anything else but recovering your property.
According to the American Pet Products Association (APPA) today, about 85 million families own a pet. Requiring insurance can motivate you as a landlord to become a pet friendly rental as it can help lower the risks of pets with property damage coverage. Don’t forget that pet-friendly landlords have a greater pool of applicants too!
The reality is that requiring renter’s insurance is not mandatory, and it is up to the landlord to decide. The most important thing is that it provides property managers and owners with peace of mind. At the end of the day, requiring renter’s insurance is in everyone's best interest. Remember it is better to have it and never need it, than to need it and don’t have it.
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