It’s 6:30pm on a Tuesday and you get home from a long day at the office when you get a call from your onsite manager. There’s been a kitchen fire at one of your properties. The manager affirms that nobody is injured, thankfully, but the kitchen is destroyed.
Accidents happen more often than you think
While kitchen fires may seem rare, they are actually a common occurrence. In a 2014 nationwide study, The U.S. Fire Administration reported nearly 1.39 M residential fires in 2011 alone, of which the leading cause was cooking. Keep in mind that figure doesn’t include unreported fires, which can still cause significant damage.
Tenant accidents are costly for owners
Tenants seldom have the means to pay for the severe damages they cause, which leaves an owner with two options: pay for the repairs out-of-pocket or, if tenant caused damage is covered, file a claim with the owner’s property insurance. Considering fire claims have an average loss of $37,153, the later option could negatively impact future premiums or even result in cancellation of the policy altogether. A more appropriate option would be to file a claim under a tenant’s renters or tenant liability insurance policy.
The growing trend of tenant insurance
If you’re not currently requiring insurance, you’re among the minority. According to a National Multi Housing Council’s 2012 Apartment Cost Risk Survey (as reported by multifamilyexecutive.com), 84% of apartment companies say they require residents to buy tenant insurance. At an average monthly cost to the tenant of $12 – $15, the question of whether or not to require insurance is not a difficult one to answer – it’s a no-brainer.
Tenant insurance requirements are easier than ever
For some, managing an insurance requirement may seem like just another menacing task, but property managers and tenants have more options than ever before that are making this practice more attractive. Many insurance companies now offer varying liability and contents coverage, as well as discounts if tenants bundle coverage with their auto insurance. For property managers, companies such as AppFolio offer programs in which tenants can be enrolled in a tenant liability insurance policy should the tenant fail to provide proof of or have lapses in coverage. Force placing tenant liability coverage, which by the way is cheaper than renters insurance, will often times motivate a tenant to obtain renters insurance, which is the ultimate objective.
Tenant insurance requirements are a win-win
Unfortunately, tenant caused accidents are bound to happen, but they no longer have to be the financial setback to tenants and owners they once were. There are smart and affordable options for mitigating this risk while providing peace of mind. So, I have to ask: Why aren’t you requiring tenant insurance?