At the beginning of June, we had to present a big problem to an owner: A tenant in an upper-level unit caused a kitchen drain to leak, resulting in significant damage to the unit below that was vacant and being shown to lease out.
This isn’t a rental horror story — but it could’ve been. Without renters insurance in place with the upper tenant, this owner might have involved his homeowners insurance (potentially causing his premium to rise) or tried to chase the tenant for reimbursement or absorb the costs himself. Instead, we were able to get him a significant payment from the renters insurance policy, which will cover both the damage and the vacancy loss for the unit being off the market while the repairs are made.
That’s just one example of how this small requirement can deliver big benefits — not just for the owner, but also for the property and the tenant.
Renters insurance reduces liability risk
Renters insurance usually includes liability coverage, which can protect tenants (and by extension, you) if they accidentally cause damage or someone gets injured on the property. At Nickel City Property Management, we require policies which have $100,000 per tenant of liability insurance.
Renters insurance protects tenants’ belongings…
Many tenants don’t understand that your homeowners insurance or landlord policy covers the structure, not their personal belongings. So, if a fire, flood or break-in occurred, they might be surprised and frustrated to face the out-of-pocket costs of repairing damages or replacing belongings. With renters insurance, a tenant has peace of mind: If something unexpected did happen, they know they could be reimbursed by the insurer.
… and your relationship with tenants
In addition to mitigating emotional and financial strain, renters insurance preserves the relationship between you and your tenant. Consider, in the example above, that our owner had to try to collect thousands of dollars from his tenant directly. Those difficult circumstances can cause a relationship to go south, leading to eviction or an early move out.
Renters insurance encourages responsibility
Requiring renters insurance sets a professional tone and communicates to the tenant that renting is a serious commitment. Tenants who take the time to understand and purchase insurance tend to be more responsible overall — a helpful signal when selecting long-term, reliable renters.
Renter insurance is affordable and easy to purchase
Typically, renters insurance policies cost $10-12 per month. At Nickel City Property Management, we make it easy for tenants to enroll, too: Tenants have the option to enroll on their own, potentially bundling the policy with their auto insurance to save money. If a tenant isn’t enrolled in a policy, they’re automatically enrolled in our comprehensive master policy. We do monitor the policies throughout the tenancy, so we’re able to guarantee owners that their tenants are insured.
No one likes to think about the “what if’s” that come with property ownership. But requiring renters insurance is a simple step that protects not only your property, but your tenants’ belongings and your relationship with them. To me, it’s a no-brainer.
