Whether to require your renters to have renters insurance (or not) is a big decision. On the one hand, it's another hoop that tenants have to jump through to rent your rental property. However, on the other hand, it could wind up saving both you and your renter a lot of lost time and money.
Understandably, many people are on the fence about this issue because it seems like a lot of responsibility with little reward, but there are some excellent reasons why landlords should require tenants to have insurance. Protecting and growing your real estate investment portfolio requires best practices and the right protections for success! Today, the best property management Atlanta offers takes a look at some of the reasons why experts recommend that rental property owners should make renters insurance mandatory.
What is Renters Insurance?
Renters insurance is a policy that provides coverage for a renter's personal property in the event of theft, fire or smoke damage, vandalism, and water damage from AC or plumbing issues. Renters insurance also covers damage to a tenant's personal property from disasters like earthquakes and hurricanes.
Residential property managers recommend that an effective renters insurance policy covers these areas for your residents:
- Personal property coverage. If a renter's personal belongings are stolen or destroyed due to a fire or other risk covered by the policy, renters insurance will pay to replace them. Renters insurance typically covers things like clothing, furniture, and laptop, and other electronics. In addition, if a tenant has costly items, they can purchase additional coverage to protect those items, such as expensive artwork or collections.
- Reimbursed living expenses. If a covered loss makes your rental house unhabitable, renters insurance helps your resident cover additional living expenses, like food and a temporary place to stay until your property is repaired and ready for them to move back in.
- Liability protection. If a resident's guest is hurt at your rental property and sues the renter, this policy may help cover their legal fees, medical expenses, and other damages.
- Compensation for belongings away from the rental. Even if their belongings are not inside the rental when something goes wrong, a tenant's belongings may be covered under certain policies. For example, coverage could extend to items stolen while left in a car or taken on a trip.
- Damage caused by a tenant's child. If a tenant's kid causes damage to the rental, repairs could be covered by a renters insurance policy.
A property manager can tell you that coverage varies depending on the policy and best practices in the Atlanta, GA, area. Property management companies can help you and your renters determine what items are typically covered in your area.
Why Should a Landlord Require a Tenant to Carry Renters Insurance?
Even though property owners don't receive specific benefits from a renter's insurance policy, landlords do experience some protection against financial disaster when renters have renters insurance. When your renters have coverage, they're less likely to seek damages from you when their belongings are damaged if something happens in your real estate investment property.
Landlords benefit from tenant insurance policies in a few ways, including:
- Not being financially responsible if a tenant's property is stolen or damaged without renters insurance.
- Focusing on your landlord's insurance claim and repairs to get the property habitable again—instead of also dealing with tenants trying to recover compensation from you, too.
- In some cases, receiving compensation from your tenant's renters policy if their pet damages the property.
Even when renters have their own coverage, a property owner should still carry a landlord's insurance policy on the rental property. However, owners can reduce the costs for landlord insurance by requiring residents also to have renters insurance because there is less risk to the property owner.
How Much Does Renters Insurance Cost?
Renters insurance costs vary depending on where your rental property is and the type of policy your renters choose. However, it's not hard to find a basic renters insurance policy for between $15-20 per month (or less). The cost of renters insurance is inexpensive compared to the potential costs of losing belongings or covering temporary losing expenses if your rental becomes uninhabitable. The low cost of renters insurance is a selling point when talking to a potential tenant about the requirement for your properties.
Remember: your landlord's insurance coverage does not extend to any renter protections. However, sometimes renters think property owners must pay up if their personal belongings suffer damage during their tenancy. An Atlanta property management company helps you learn how landlord and renters insurance works and why both are critical to protecting your real estate investment properties!
Renters Insurance and An Atlanta Property Management Group Protect Rental Properties!
Making renters insurance part of the standard criteria for renters in your rental properties is a small way to improve your peace of mind and protection for your rental property. Revolution Rental Management is a certified residential management company. We're here to talk more about why requiring renters insurance is important and the best ways to implement this requirement while following the law! Reach out to learn more about our professional property management services and how we help real estate investors grow their portfolios.