In 2016, the Insurance Information Institute conducted a poll of homeowners and renters through ORC International about their insurance coverage. What they found showed a drastic contrast between the two groups: While 93 percent of homeowners surveyed had some kind of coverage, only 41 percent of renters had insurance.
As a property manager, if you don’t encourage—or require—renters insurance, there’s a good chance your residents haven’t looked into coverage themselves.
The solution? Offer renters insurance as a part of your management services.
Offering renters insurance is a win for everyone involved. Your residents get coverage, sometimes for a discounted price; and you and the property owner are protected from covering repair bills (for renter-caused damages) or replacing damaged property that the renter can’t afford.
Renters Insurance 101 for Property Managers and Residents
Before you decide to offer renters insurance, it’s a good idea to have a handle on your options. What does a typical policy cover? How much does it cost? And how can you get the best possible deal for your residents?
What Does Renters Insurance Cover?
There are different types of renters insurance that cover a variety of things, but the two most common policies are personal property and liability—each with a long list of benefits.
Personal Property Coverage
Personal property coverage will protect against theft of or damage to your residents’ personal possessions within their unit. If an electrical surge shorts out their coffee maker, it’s covered. If a thief makes off with their grandmother’s jewelry, that’s covered, too.
In some cases, personal property insurance will cover other people’s property that’s damaged or stolen within the apartment. So, if that power surge damages a guest’s smartphone or laptop, that’s covered, too.
According to Esurance, most policies will cover damage caused by theft, leaks, snow, freezing, smoke, explosions, vandalism, and even volcanic eruptions.
Depending on where you live, some companies will let you add on earthquake or sewer/drain backup insurance to your policy as well.
What personal property coverage insurance policies won’t assist with, no matter where you live, is damage caused by floods. If you live in a flood-prone area, you can look into flood insurance from a private company, or go through the National Flood Insurance Program, provided by FEMA.
Liability insurance covers unintentional injuries or other harm done to someone in or near the resident’s unit. If a visitor trips on the stairs and hurts themselves, they could sue the resident for damages. Liability insurance will pay for that.
Now, we say ‘unintentional’ because it won’t cover harm that your resident inflicts intentionally (not that any of your residents would do such a thing). Some policies, however, will cover intentional harm done by children under the age of 13.
In addition, renters insurance protects against liability regarding your owners’ properties and potential repairs related to renter-inflicted damage.
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Finally, renters insurance can cover cost-of-living expenses if your resident needs to move out. If, say, lightning strikes your complex and starts a fire, your residents are covered for things like temporary relocation and related expenses.
Plus, if they’re covered while you clean up the damage, they’re more likely to come back when you’re done.
Do the homework and look into all the options. Being well-informed on your options will help you find the right company and coverage to fit your needs and those of your residents.
How Much Does It Cost?
The cost of renters insurance depends on the kind of coverage that you or your resident chooses. It can vary by the state you’re in, and even by ZIP code. If your property is in an area that an insurance company considers to be relatively safe, renters insurance will be less expensive.
Other variables that affect the cost of insurance include the type of unit (apartment, duplex, single-family, etc.), the size of the building or complex the unit is in, whether your resident has a pet, and your resident’s credit score.
That said, renters insurance is still pretty inexpensive. The average policy, which includes personal property coverage, liability, and relocation, costs between $15 and $20 a month, according to Business Insider—and can be as low as $12 a month with Buildium’s Renters Insurance, powered by MSI. A policy in that range will usually include enough coverage without a huge deductible.
Should I Require Renters Insurance?
It is within your rights to require your residents carry renters insurance before they sign a lease. This can set the tone with a renter right from the start—and safeguard the owner’s property. As we mentioned above, there are very real benefits to renters insurance, including protection of personal property as well as liability in regards to others affected by a renters’ missteps.
Talk to your property owner clients to get their input; but in general, it’s a best practice to require your residents to get renters insurance as part of the leasing process. Guidelines on this can vary by state, so make sure you check your state and local laws before making the change.
For example, the San Francisco Gate points out that landlords and property managers can’t require renters insurance in the middle of a lease, where there was no requirement before. If you want to require renters insurance of current residents, you may have to wait until the old lease ends, then add a clause to the new lease.
How To Implement Renters Insurance
If you’ve decided to offer renters insurance to your residents, here are 4 steps that will get you on your way:
- Understand the characteristics of your property and your residents: Do you live in an area that is at risk of flooding? Do you have any restrictions on the pets that you’ll allow? Are your residents mostly single, or do they have families? How much are residents willing to spend? All of these variables will affect the cost and type of coverage they’ll need. You’ll want to go into discussions with insurance companies prepared with this information.
- Shop around: You can look at the national brands, but there are usually smaller companies in your area that may offer a better deal. You should get a variety of quotes before making a decision.
- Make it easy: Give residents the option to sign up for insurance through property management software as part of their onboarding process. Your residents will appreciate how easy the process is, and you’ll benefit from being able to track which residents are enrolled.
- Educate your residents: Invite residents to a meeting or workshop to learn about your new service. If you’re working with an insurance company, invite a representative to speak to your renters. They can highlight the importance of renters insurance, discuss cost and coverage, and answer any questions that your residents have.
Offering renters insurance to your residents shows them that you care about their possessions and well-being—and it protects you and your property owner from unnecessary headaches.
To find out more about how Buildium can help property managers offer renters insurance to residents—without adding more to their to-do list—click here.Read more on Resident Management