Renter’s insurance is an important and valuable component of successful property management business. It has enormous benefits for both the tenant and landlord. Renter’s insurance provides coverage of the tenant’s property in cases of theft, fire, storm and water damage.
While the benefits to the tenant are substantial, the value that renter’s insurance provides to the landlord should not be overlooked. Renter’s insurance can cover costs of damage to the leased property caused by the tenant. For this reason, requiring renter’s insurance is in every landlord’s best interest.
Renter’s insurance reduces risks of having to cover repair and replacement costs of damage to the lease property the tenant is responsible for. These incidents may not be very common, but they can prove to be very expensive and something the landlord (or their building insurance) shouldn’t have to pay for. Furthermore, renter’s insurance minimizes the risk of being sued by a tenant. If damage occurs because of faulty wiring or flooding, a tenant without insurance is likely to blame the landlord and possibly bring them to court. If the damage is covered by insurance, the tenant has little reason to ask the landlord to pay.
Having this third party coverage keeps your relationship with your tenants healthy, even at times when a major loss has occurred. Regardless of if the loss your property or theirs, disputes over who has to cover costs are completely avoided by having insurance in place.
Renter’s insurance helps to increase an owner’s profitability by transferring risk away from the owner. It prevents costly claims from being filed on the owner’s building policy, which generally would cause steep rate increases and has a high deductible.
Requiring renter’s insurance is in any landlord’s best interest because it a tool for maximizing profits, supports relationships with renters, and avoids legal liability being placed on the landlord. Rates can be very reasonable, so there is reason for residents not to carry it.