Let's picture this: Sunday evening, end of a relaxing weekend... And, you get a phone call. Turns out, there's a fire at your rental property.
The good news is: the tenants are OK. You agreed to accommodate them in a hotel. What's not resolved is: who pays for their accommodation for the next six weeks? After all, they just paid for this month's rent.
Most of their furniture and personal belongings have been damaged. There's also the issue of what was the cause of the fire. If the tenants don’t have renter’s insurance it is a huge mess that could end up in court.
If the tenants have renter’s insurance it is a much more manageable problem. You wouldn't have to worry about their accommodation during settlement or the replacement cost of their personal property. Also, not to be concerned about who caused the fire or if your insurance company is going to cancel you or not. You may not be worried about whether you have a court date or not. Because with insurance, it's all handled.
Tenant's Perspective: Why They Need Renter's Insurance
Tenants often feel like they don't really need it. And then, when they're at a loss, they must replace everything they have. As opposed to having the renter's insurance, their belongings will be replaced. From their point of view, they're getting everything brand new, and so does you on the settlement. If there's no insurance, they're in a place of loss and crisis.
Renter's insurance is also favorable with tenants that are financially in a less favorable position. It's those that will probably benefit the most.
It's only human nature that neither party will feel like they might not need it. But, it's your job (as a landlord) to make sure that they have it.
5 Essential Landlord Tips for Renter's Insurance
Tip #1: Require Insurance
Make sure that you include in your lease agreement that the tenants are required to have renter's insurance.
Tip #2: Proof of Insurance
Make sure that you don't turn over the keys until they've provided you a proof of insurance.
Tip #3: Additional Interest
Make sure that you're included as an additional interest on the insurance policy. So if they let their policy lapse or cancel it, you get noticed by the insurance company.
Tip #4: Combine Insurance
Renter's insurance isn't that expensive. And it can often be reasonable if you combine it with your other insurances. By bundling them, you'll find that they're less expensive than you may have thought.
Tip #5: Document Belongings
Document your belongings using videos o photos. In case you do have to make a claim, it'll be convenient to have documented your belongings.
Why Renter's Insurance?
For me, as a landlord and property manager, the most important reason for a tenant to have renter's insurance is that both the landlord and the tenant can be on the same side of the table. You're both working together, not against each other. Friction or conflicts between them just adds extra stress where is not needed.
We're Here to Help
If you don't want to manage this, hire a professional property manager who does. At The Mike Dunfee Group, my team and I will follow up on and make sure that your tenant has renter's insurance and that you, as a landlord, are taken care of.
Mike Dunfee Real Estate Services, INC DRE # 02026232