One Thing That Will Save Investors From Misunderstandings. Do You Require Your Tenants To Buy It?

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Something that seems to fly under the radar with renting is the idea that tenants should  invest in renter’s insurance. As a landlord investor, I recommend that you have a discussion with your tenants up front about what is covered under your policy, as an investor, if anything were to happen to the property.

I know that with our tenants we require them to purchase renter’s insurance and provide us with proof that they have done so.  Maybe a little over the top, but we want to make sure that documentation exists in the event of something major happening while they are living there.

According to a survey completed in May 2012 by the Insurance Information Institute, only about 31% of renters buy this insurance.  That’s a pretty low number.  Why?

    •  I think most people don’t realize it exists.
    • Renters think that the landlord’s policy covers their belongings.

As a landlord investor, we purchase insurance; however, in most cases it only covers the building, our personal property, and any damages that are done due to negligence of the tenant.  Our policies do not cover a renter’s belongings.

This is important for you to know as the owner of the property and you should most definitely have a conversation with your tenants about this up front. In the event that something catastrohpic happens to your property and the tenant’s things, they will have been aware and had the opportunity to protect their belongings.

The Best Part

Renter’s insurance is actually pretty cheap, averaging around $15 a month.  Cut back on a few lattes a month and your renters will have prepared to save their most valuable possessions.  Unfortunately, most renters think that something major will never happen to them, the invincibility belief. That is why we make it a requirement.  We want tenants to be fully aware of their responsibilities and our responsibilities from the beginning.

Many of the big name insurance companies, State Farm, Geico, etc., offer renter’s insurance.  And if renters already have policies with a company encourage them to check with their providers first for the opportunity to bundle their policies and save even more.

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