Renting out personal property is a lucrative way to raise your income, and real estate investments remain one of the top finance ventures. More and more landlords are choosing to require renter’s insurance in their lease provisions; one 2015 study showed that 84 percent of the apartment companies surveyed require some sort of renter’s insurance before allowing tenants to inhabit their properties.
In contrast, smaller landlords with singular properties have failed to require these same stipulations. A mere 37 percent of renters claim they own any sort of renter’s insurance. While some property owners still hesitate to stipulate an extra cost, the benefits far outweigh the cost. From legal protection to fewer responsibilities, writing in a renter’s insurance provision in your lease might be your best decision as a landlord to date.
Landlords unfortunately are at a disadvantage when it comes to legality issues involved in a renter’s dispute, and knowing this, it’s essential that you put up as many safeguards as possible to keep yourself out of court should anything happen. In many cases, should something happen that causes damage, a tenant without renter’s insurance will attempt to claim landlord responsibility to cover the costs. Should it head to court, you’ll be responsible for legal fees on top of repair costs in the event that you lose the legal battle.
A Reduction in Responsibility
Landlords are faced with heaps of responsibility when renter’s insurance isn’t present. Should a natural disaster push tenants out of their home, you might be charged with housing them even when your rental has been damaged. In some states, the landlord is required to cover the costs of their living arrangements elsewhere. If your tenants were to have renter’s insurance, the responsibility for relocating would fall to the insurance company, not to you.
Paying Off Your Deductibles
While your personal insurance policy might cover the cost of repairing any damages that arise from accidents or natural disasters, you’ll still be responsible for a deductible. If your tenant has renter’s insurance, their policy and coverage should be able to handle the costs of your deductible, saving you money and protecting both parties from exorbitant costs.
Another Form of Screening
There are few things more important than extensively screening potential renters. Just as renters want to rent from a fair landlord, landlords need to take the time to find the perfect tenants. It’s important to use a service that checks for all of the essential information you need to make an informed decision about allowing a stranger to live in your house, and services like those at www.mysmartmove.com give you access to credit scores, and criminal and eviction histories. Beyond this however, requiring renter’s insurance serves as another safeguard against terrible tenants. If you stipulate that it’s required and a potential candidate balks at your suggestion, a warning light should come on in your head immediately. Renter’s insurance is shockingly affordable, and if a tenant doesn’t think they can handle those low rates, how can you be assured they will have rent to you on time, every time?
Stay On Top of Insurance Claims
Unfortunately we can’t take everything at face value these days. Require proof of renter’s insurance when your new tenant moves in, and pay attention to the effective policy dates. If they want to renew their lease with you, require they provide proof of insurance renewal to ensure you and your tenants are always covered no matter what comes your way. It’s also a good idea to find out exactly what is covered under the policy so you’re not dealt any unsatisfactory surprises as time goes on.
Costs for property insurance continuously raise, and deductibles continue to skyrocket. Landlords are increasingly requiring their tenants to pick up the liability slack, and it’s a win for both parties. The landlord is protected from legal action and excessive monetary responsibilities, and for a small monthly fee renters are assured peace of mind that they will be taken care of should the worst happen. Even if you decide against requiring renter’s insurance before letting your property out, make sure you still advise your tenants to invest—it’s a good idea for everyone involved.