Insurance certainly has its place in the world. Hopefully, you wouldn’t drive your car without proper insurance, and if you’ve ever taken an impromptu trip to the emergency room, you know how valuable health insurance can be. As a property owner, doesn’t it only make sense to take measures to protect your investment just as you would your car or body? Some landlords overlook the importance of renters insurance, but if you have tenants living in the space you own, a solid insurance policy not only protects you and your property—it protects your tenants, as well.
With that said, let’s dive into the details of renters insurance in Baltimore, MD!
What Does Renters Insurance Cover?
For obvious reasons, most people think renters insurance is something that’s meant to protect tenants. While that’s certainly true, it also protects property managers and landlords. Just like car insurance, the items that are protected by renters insurance vary from policy to policy. The following are some items that may be protected, along with the benefits they offer landlords and property managers:
Protection of Renters’ Contents
The most basic renters insurance policies protect tenants’ personal belongs from situations such as:
- Non-flood water damage
This is an essential protection because you don’t want your renters coming after you in court if a natural disaster or unforeseen accident occurs and damages or ruins their property. Many renters are under the impression that their landlords’ insurance policies automatically protect their belongings, but that’s typically not the case. The contents of the unit they’re renting belong to them, and as such, it’s their responsibility to ensure they’re covered, should something bad happen down the road.
Protection of Landlords’ Properties
Unfortunately, sometimes, bad tenants happen. Unsavory people can damage your property before you even know it’s happening. In these cases, renters insurance can help you recover the cost of the damages so you can repair your place and get another renter in the unit as soon as possible.
Medical & Financial Protection
If someone accidentally injures themselves in your tenant’s unit, his or her renters insurance policy helps protect the lessee from financial losses that may be associated with related wounds. This, in turn, is good for the landlord, too, as it helps ensure the existing tenant’s bank account isn’t stretched to the point that he or she won’t be able to pay the rent.
Structural Loss Protection
If something tragic, such as a fire, breaks out, it won’t just be your tenant’s belongings that are affected—the structure of your property will likely be damaged, as well. Accidents or negligence caused by your tenants can cost you a lot of money if your property isn’t properly protected. But renters insurance helps prevent unnecessary out-of-pocket expenses if you need to rebuild the structure.
How to Offer Renters Insurance to Tenants
It’s best to discuss renters insurance upfront, especially if it’s a requirement of a tenant’s lease. Renters insurance is relatively inexpensive, but renters who have never had this type of coverage may be afraid of the extra cost if you’re not prepared to explain it to them when you bring it up. To mitigate the possibility of sending qualified candidates running, have the base cost available when you begin the discussion. It’s also helpful to be prepared to answer potential tenants’ questions that might arise, such as:
- Why the cost of rental insurance varies by type of dwelling (single-family versus apartment) and region.
- Which additional riders may be beneficial above and beyond the basic coverage (and why).
If you’re able to tie the cost of renters insurance into your tenants’ monthly rental fees, the process is usually a lot less confusing for renters. Of course, you’ll want to be sure you discuss why the cost of rent is a little higher than the base rent. Besides making it easier for your tenants to have coverage without incurring an additional bill, this method enables you to ensure your tenants always have renters insurance. The last thing you want to do is find out your lessees’ renters insurance policies have lapsed after a devastating event occurs.
If you’re not tying the cost of renters insurance into the lease, it’s helpful to offer a list of reputable companies your tenants can call to get coverage on their own. This helps reduce the stress and anxiety of having yet another task on the to-do list when they’re already looking for a new place to live and getting ready to move. Even if your tenants will be seeking their own rental insurance, it’s a good idea to have an estimated cost ready, so they can see that they probably won’t be facing sticker shock when they call.
It’s important to present renters insurance as a protection for your tenants, rather than an obligation. They should see this as a gesture that shows you care about their well-being, safety, and security. Framing the conversation in this way helps reduce the idea that you’re merely trying to get them to pay more money each month.
If your current tenants don’t have renters insurance, you should approach the topic upon lease renewal. Again, it’s best to arm yourself with the positive benefits of insurance protection, as well as the estimated cost so your renters can be as informed as possible.
The Cost of Renters Insurance
Renters insurance is typically inexpensive, and it will be well worth it if a catastrophe occurs. There are plenty of factors that can contribute to variations in price, but many monthly premiums are around $15 a month, if not less. There are some situations that will typically cause rates to be higher or lower, including:
- Local crime rates.
- Regionally costly catastrophes.
- The addition of other renters on the same policy.
- Credit scores.
- Discounts offered to bulk properties (this is a great item to explore if you’re the owner of multiple units or wish to benefit from the many advantages of hiring a property management company to take care of your investment on your behalf).
- Bundling with other types of insurance, such as vehicle insurance.
- The addition of extra riders (for example increased coverage limits, natural disasters not covered in the basic policy, pet damage, property or identity theft).
Renters insurance is essential protection for all parties involved. As a landlord or property manager, you want to be sure your investment is taken care of, should something unforeseen occur. You also want to make sure your tenants have security so they can recover from any damages that may happen in the future. When your lessees carry proper coverage, everyone’s risks are mitigated.
Are you unsure how to navigate conversations revolving around renters insurance? Our team at Bay Management Group is happy to help. Whether you have questions about the type of coverage you’re allowed to require your tenants to carry, or you need help ensuring your lease agreements are written in a way that best protects your investments, you can count on our team of expert property management professionals to guide the way. Touch base with us so we can talk about renters insurance policy best practices today!