Renters insurance is an important precaution not only for your resident’s personal belongings, but for your property’s and community’s well-being. However, what if your residents don’t have it? According to the Insurance Information Institute, a 2015 poll conducted by ORC International found that “among renters, only 40% said they had renters insurance.” While this percentage is a far cry from the 29% of renters with renters insurance in 2011, the amount of uninsured residents (and most likely applicants) is outrageously low. In order to protect yourself and your residents, you should be requiring renters insurance.
There are a lot of common misconceptions surrounding renters insurance, but one of the biggest ones for property managers is the idea that requiring renters insurance will cut down the amount of applicants. Although the fear of reduced applicants is valid, letting residents go assumedly uninsured can hurt you in the long run. It just takes one natural disaster or heavy rainstorm to regret making renters insurance optional.
Gets Rid of Misunderstandings
A lot of residents who don’t have renters insurance assume that if their personal belongings get ruined, then it’s covered under the property’s insurance. Typically that’s not true. While property insurance usually only covers structural damage, if your renter’s electronics get ruined because of a big storm, guess who they’re going to go to for damage reimbursement? You! Not requiring renters insurance makes it possible for misunderstandings to occur and creates a strain on you and your resident’s relationship, so be sure to tell applicants that renters insurance is a requirement to lease. This avoids any further misunderstanding.
Avoids Strain on your Resident Relationships
By requiring renters insurance, your resident goes to their insurance provider if something happens to their belongings. If they don’t have renters insurance and end up going to you for reimbursement, your relationship is going to be strained. Add a handful of other uninsured residents who are already stressed about suddenly replacing their belongings and your relationship with your entire community will be tense. This could deal a significant loss for your community’s reputation and you might lose future applicants and referrals due to word-of-mouth and bad online reviews.
With your current residents, encourage them to stay insured by throwing a contest or including discounts. Have your residents come to your leasing office with their proof of rental insurance, as well as name and unit number, to be entered to win a gift card or an amount (like $50) off rent. This will not only encourage your renters to stay insured, but avoid potential discontent within your community later on.
Advise your Residents to Protect Themselves
Ultimately you want to protect your community, and renters insurance does just that. While requiring renters insurance might mean an additional expense on them, it pales in comparison to the financial burden a natural disaster or broken pipe can cause. For example, my own annual renters insurance costs only $180.77 ($15.62 a month) for $100,000 of personal liability, and many other insurance providers have a similarly low cost.
Additionally, it covers a lot more than the resident’s damaged property. Guest injuries like dog bites, theft, and even accidental damage to their neighbor’s property are covered, so requiring insurance can also ward off any potential disputes between neighboring residents. When dealing with current residents or potential applicants, be sure to describe the different ways renters insurance covers them. They might be unaware of the benefits.
One of the key ways to make applicants more inclined to apply to your property while requiring renters insurance is by spreading awareness. There are a lot of misunderstandings surrounding renters insurance on the renter’s part, including coverage and cost, which can be ramified. No matter if the applicant chooses your property or not, if they do not have renters insurance then they are ultimately vulnerable.
You already protect your community with tenant screening, but why stop there? Avoid a distraught community due to insurance misunderstandings by requiring renters insurance now. To fight any misconceptions that the property insurance covers personal property, be sure to notify existing residents (those without leases requiring renters insurance) of what is covered. Nothing strains community relationships more than unexpected surprises.
Do you currently require renters insurance? Why or why not? Let us know in the comments section below and be sure to subscribe!