Renters insurance is a great investment… for your tenants. But what can renters insurance do for you?
Here are four reasons why requiring renters insurance at lease signing is a smart business decision that can actually benefit you just as much as it benefits your residents.
1. Protect your tenants (all of them)
Educating your tenants about renters insurance is great, particularly if you’re dealing with students or first time renters who may be under the impression that the property’s insurance will cover their possessions. But simply suggesting renters insurance as an option is not enough to reduce your risk. Adding a renters insurance requirement to your lease will ensure that all tenants are enrolled in a policy that will provide complete coverage for damages caused by the resident’s negligence, in addition to covering their personal property. When you set and enforce the standard, you level the playing field, so the blame game becomes a non issue.
2. Look more professional
Adding a liability insurance requirement to your lease makes you look more professional — both in the eyes of prospective tenants, and in the eyes of prospective property owners. When you adopt a company policy that requires all tenants to purchase and maintain renters insurance throughout their lease, you give property owners added confidence that their investment will be safe in your hands.
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3. Minimize conflict
One of the biggest reasons for enforcing a renters insurance requirement is that it allows you to minimize conflict. Imagine a scenario where an electrical fire starts on one side of a two-family home, and spreads to the adjacent unit. Who’s at fault? Is the property owner at fault for having outdated wiring in their home? Maybe the property manager is at fault for failing to maintain safety standards. Or is it the tenant who’s at fault for having way too many things plugged into a faulty power strip? It’s a stressful situation, but with renters insurance, it’s a lot less stressful. Everyone can rest assured that they won’t be forced to pay 100% out of pocket for any damages sustained by the property.
4. Reduce Financial Risk
Ultimately, you’re in this business to make money, and requiring renters insurance at lease signing helps ensure that you continue to do so. Not only does a renters insurance requirement protect you from having to pay out of pocket for damages caused by your resident’s negligence, but it also helps ensure that you can keep great tenants in your units for longer. Here’s why: When your residents experience loss due to burglary, fire, or other disasters, it can put a huge financial burden on them. Without insurance, they need to pay out of pocket to replace everything that was lost. Renters insurance helps provides financial stability so residents can stay on top of their bills and pay their rent on time despite unexpected damages.
Mandating renters insurance can be a challenge: there’s added paperwork and a few extra steps you’ll have to take to ensure that your residents are maintaining compliance. But when you contrast it with the massive headaches that can occur by not having renters insurance, many property managers are opting to make it a requirement. Are you ready to make renters insurance a requirement? Leave us a comment below.Read more on Legal Considerations