Property Managers: 4 Reasons to Demand Renters Insurance

Renters insurance can be a barrier to entry for most tenants. However, it’s also a great way to protect yourself from liability and a nightmarish expense. This post will explain what renters insurance is and why you should require it at your apartment management rental property.

What Is Renters Insurance?

If you're not familiar with renters insurance, it’s a form of property insurance specifically for property managers. This insurance generally protects you from losses incurred by your tenants and other liability claims — such as injuries and theft — that happened within your property. You have to note, though, that these losses and liabilities shouldn’t come as a result of a structural problem on your property. In that case, liability claims will be charged on your own insurance instead.

What Does Renters Insurance Cover?

Given its importance, you need to ensure that your tenants’ renters insurance can protect you from an array of liabilities. What’s the coverage that apartment insurance can provide?

There are three main coverage types that renters insurance can cover:

1. Damages to personal property: Renters insurance can cover the repairs and replacement of furniture, electronics, and even personal belongings. However, renters insurance has a limit on personal property that it can cover. All items that exceed this limit will no longer be paid for by tenants insurance.
2. Third-party liability: For instance, there may have been accidental damage to your tenant’s property or an injury. In that case, renters insurance can also pay for these damages and your tenant’s medical bills in the event of injury. However, renters insurance will also have a liability coverage limit similar to personal property coverage.
3. Additional living expenses: If your property was left uninhabitable after an accident, renters insurance would cover your tenant's hotel bills. However, renters insurance cannot cover the damage to the building.

While renters insurance coverage can vary from one region to another, these are the general types of coverage you and your tenants can get when using this policy.

Given these insurance coverage types, why should you require renters insurance as a property manager?

1. Protect Yourself From Lawsuits

You don’t want to be the subject of a lawsuit when your tenant’s properties are lost or damaged. Renters insurance can be an excellent way to keep yourself out of court. While you may think that it’s unlikely that a theft or accident will happen within your premises, renters insurance will be a safe bet for you.

For instance, in the event of a fire or theft, your tenants can sue you for negligence. Maybe your security measures weren’t enough to keep robbers out of your property. Perhaps your property’s quality control led to the destruction of personal belongings. While you can still win cases like these, it’s undeniable that lawsuits can be expensive and time-consuming.

Renters insurance can cover the expenses of repairing and replacing your tenant’s lost properties. Covering these expenses is a great way to reduce both resentment and the likelihood of getting sued and losing your case in court. After all, no one wants to spend a lot of time in court trying to satisfy their tenants.

There are many reasons that your tenants can file a lawsuit for you. Therefore, it’s important to know these things to prevent yourself from getting sued beyond property damage. We have a collection of lifesaving tips that will help you address tenant disputes and complaints.

However, modern, cloud-based property management software can only improve security and tenant satisfaction. ExactEstate’s property management software can help you make your properties more secure and improve the quality of life in your units.

2. Reduce Your Damage Liability

Accidents can inevitably happen within your properties, especially if you have quite a large population of tenants. Consequently, your tenants might get hurt or acquire a condition because of your property. You’ll have difficulty managing your tenants and your property without a decent property management system like ExactEstate. 

Aside from the risk of getting sued is the possible responsibility to pay for your tenant’s bills, including their hospitalization, treatment, and property repairs.

Covering all these expenses can be cumbersome for property managers. That’s why we highly recommend requiring renters insurance since it can cover third-party liabilities. In fact, annual liability coverage for renters insurance can be as high as $100,000 with a monthly insurance premium of $31. That’s a significant investment to prepare for the unforeseeable future.

While renters insurance can be a great safety net for property managers, it’s undeniable that you need to ensure that your properties are free from structural damage. Furthermore, you also have to ensure that your properties are safe and friendly for seniors and pets. Your properties will be less likely to inflict injuries on your most vulnerable tenants by doing this. Cloud-based property management software like ExactEstate can help you achieve these things with very little investment.

3. Relocation Expense Is One Less Thing off Your Mind

The harsh reality that everyone faces is that natural disasters can happen anytime. Your tenants always face the possibility of displacement due to fire, flood, or earthquake. While policies from regions and states may differ, you may be mandated to pay for their relocation if your apartments are rendered uninhabitable by these natural disasters. Of course, even if you’re not legally mandated by your government to pay for them, a compassionate property manager will want to help them get back on their feet.

Renters insurance can pay for these relocation expenses. Therefore, you no longer need to worry about where your tenants will sleep after being hit by a disaster.

While some may say that these things are unlikely to happen, renters insurance ensures that you’ll pay the least expenses to help your tenants. In fact, renters insurance can also pay for their hotel bills as long as the coverage limit hasn’t been exhausted yet.

4. Filter Your Tenants Better

Finally, tenants insurance is a great filter for property managers to determine if the tenants can meet the income requirements of your property. For instance, if they refuse to get renters insurance because they can’t afford it, they probably can’t afford your rent. In these cases, you’ll be welcoming tenants that will possibly not pay the rent on time or not pay at all.

Renters insurance will give you peace of mind that your tenants have enough income to afford your unit. After all, if they can pay for their insurance, they can most likely pay their rent.

Manage Your Properties Better With ExactEstate

While requiring apartment renters insurance can give you peace of mind, it’s also crucial that your properties can give as much value to your tenants as possible. You can do this by digitizing your property management system. As a result, you'll make it easier to monitor and clarify communications with your tenants.

ExactEstate is a modern, customizable, and fully cloud-based property management software. This software will help you grow your business with less complexity and stress. Contact our team today for a free demonstration of the software.