Renters insurance is an important precaution not only for your tenant’s personal belongings, but for your property’s well-being. However, what if your tenants don’t have it? According to the Insurance Information Institute, a 2015 poll conducted by ORC International found that “among renters, only 40% said they had renters insurance.” While this percentage is a far cry from the 29% of renters with renters insurance in 2011, the amount of uninsured tenants (and most likely applicants) is outrageously low. In order to protect your property, you should be requiring renters insurance.
There are a lot of common misconceptions surrounding renters insurance, but one of the biggest ones for landlords is the idea that requiring renters insurance will cut down the amount of applicants. Although the fear of reduced applicants is valid, letting tenants go assumedly uninsured can hurt you in the long run. It just takes one natural disaster or heavy rainstorm to regret making renters insurance optional.
Gets Rid of Misunderstandings
A lot of tenants who don’t have renters insurance assume that if their personal belongings get ruined, then it’s covered under the property’s insurance. Typically that’s not true. While property insurance usually only covers structural damage, if your tenant’s electronics get ruined because of a big storm, guess who they’re going to go to for damage reimbursement? You! Not requiring renters insurance makes it possible for misunderstandings to occur and creates a strain on you and your tenant’s good relationship, so be sure to tell applicants that renters insurance is a requirement to lease. This avoids any further misunderstanding.
Avoids Strain on your Relationship with your Tenants
By requiring renters insurance, your tenant goes to their insurance provider if something happens to their belongings. If they don’t have renters insurance and end up going to you for reimbursement, your relationship is going to be strained. If they believed your insurance covers them as well, they could feel like they were lied to when they find out it doesn’t. This could deal a significant loss for your property’s reputation and you might lose future applicants and referrals due to word-of-mouth and bad online reviews.
Advise your Tenants to Protect Themselves
Ultimately you want your tenants to feel safe, and renters insurance does just that. While requiring renters insurance might mean an additional expense on them, it pales in comparison to the financial burden a natural disaster or broken pipe can cause. For example, my own annual renters insurance costs only $180.77 ($15.62 a month) for $100,000 of personal liability, and many other insurance providers have a similarly low cost.
Additionally, it covers a lot more than the tenant’s damaged property. Guest injuries like dog bites, theft, and even accidental damage to their neighbor’s property are covered, so requiring insurance can also ward off any potential disputes with your property’s neighbors. When dealing with current tenants or potential applicants, be sure to describe the different ways renters insurance covers them. They might be unaware of the benefits.
One of the key ways to make applicants more inclined to apply to your property while requiring renters insurance is by spreading awareness. There are a lot of misunderstandings surrounding renters insurance on the renter’s part, including coverage and cost, which can be ramified. No matter if the applicant chooses your property or not, if they do not have renters insurance then they are ultimately vulnerable.
You already protect your property with tenant screening, but why stop there? Avoid misunderstandings with your tenants by requiring renters insurance now. To fight any misconceptions that the property insurance covers personal property, be sure to notify your existing tenants (without lease requiring renters insurance) of what is covered. Nothing strains tenant relationships more than unexpected surprises.
Do you currently require renters insurance? Why or why not? Let us know in the comments section below and be sure to subscribe!