When a renter has to be evicted from a property, it costs the tenant, the property management company, and the property owner money. It doesn’t seem fair for the property owner to lose more money because an eviction had to take place. This is why property management companies have the option of collecting what’s often known as “eviction insurance” to help cover the additional costs incurred because of the eviction process. Understandably, this comes with questions, but they can be easily answered.
Defining Eviction Insurance
There has been a great deal of discussion over what type of fund this “eviction insurance” is, but to keep things simple, it is a collection paid into monthly by property owners. Property management companies control the money and in the event of a resident’s eviction, it is returned to owners. It is simply a means of keeping money in reserve for unforeseen events. That sounds pretty simple, right?
How Much Does it Cost?
Since providing “eviction insurance” is an agreement that’s reached between property owners and their property management companies, the amount varies. Property owners can add as little as $7 per month to their payment. Sometimes the amount is as high as $25, but for the peace of mind that comes from knowing there is money available in an emergency, it’s worth it. Making the payment doesn’t even have to be a hassle if the property management company uses an online payment system. An online system makes it even easier for the management company to return the money to the property owner in the event that it’s needed, too.
How to Use the Money
Although “eviction insurance” is money to be used after a resident’s eviction, it’s still important to use it wisely. One of the best uses for this insurance money is to pay any unpaid utility bills, as well as make sure there are no financial or legal ramifications for the owner because of the resident’s negligence. If there is money left, the owner can then use it in combination with the resident’s security deposit to repair any damage done to the property. This helps to prepare the property for a new, hopefully more responsible resident.