Although tenant insurance is widely known as being useful, there are still many misconceptions held by renters when it comes to its importance. The first is that many believe their landlord will cover them in the event of an accident, the second is they believe it’s too expensive, and the third is that they don’t believe their possessions are worth a lot. As a landlord, you probably know these misconceptions aren’t entirely true!
With that said, let’s dive into how making tenant insurance a requirement in your building can protect you as a landlord, and how you can encourage your tenants to get covered!
What is tenant insurance?
Tenant insurance, also known as renter’s insurance or content insurance, is designed to cover those who rent your property. It helps ensure that your tenant’s belongings and your property are protected from your tenant’s liability; thus, reducing the risk exposure associated with your tenants.
How much does tenant insurance cost?
Tenant insurance can cost as little as $12 a month, depending on your tenant’s credit history and previous insurance claims. Insurance prices vary according to the type of coverage, contents limits, and deductibles. There’s a plan to suit every budget!
What does tenant insurance cover?
At the minimum, a basic tenant insurance policy should cover the following:
1. Additional Living Expenses
This is money your tenant can use to pay for the additional cost of alternate accommodations if their unit is uninhabitable due to extensive damage (a claim/covered loss). For example, if there was a fire at your property and your tenants are forced to move out to an Airbnb for a few weeks during repairs, additional living expenses coverage is designed to cover the costs.
2. Personal Liability
Imagine your tenant accidentally causes damage to their unit and you, or your insurance company after having paid for your claim, seek to recover the cost of repairs that they are responsible for. Their liability policy is designed to cover the portion of the repair costs they’re responsible for, that way, they can avoid paying out of pocket. This part of a tenant insurance policy also applies to the damage they may have caused to another tenant’s property, along with injuries they may have caused to another.
3. Contents Coverage
Let’s say your tenant’s apartment was broken into while they were out for the day, and everything from their new bike to their flat-screen television was stolen. Contents coverage is money your tenants can use to replace their stuff in the event it gets stolen or damaged.
How can you encourage your tenant to get covered?
An obstacle many landlords face is their tenants resisting or questioning the need for tenant insurance. Their reasons can vary from thinking it’s too expensive or that their possessions aren’t worth insuring; but with costs being as little as $12 a month, it can be easily factored into most tenants’ budgets.
With that price in mind, tenant insurance really isn’t a large expense at all, and could very well be one of the lower monthly payments tenants would make. After factoring in the cost to replace all the items in a tenant’s home (think furniture, electronics, clothes), accommodation fees if they can’t stay at home for a few nights because of damage (think hotel room/Airbnb, food, toiletries) and the amount you could be responsible to pay if your tenant accidentally causes damage to the building or injures somebody, $12 is chump change!
If you’re looking for a few simple steps to help you get started on encouraging your tenants to get covered, here’s what we recommend:
- Make it required. Depending on what province you’re in (ie. Ontario), you may have the right to legally require it as part of the lease agreement.
- Make it easy. Include information about the benefits of tenant insurance and where to get it in your leasing package. Here’s a downloadable one-pager from our friends at Duuo.
- Partner with an insurance provider to get your tenants a preferred partner discount.
Our final thoughts
Tenant insurance provides landlords with the ability to manage the risks that come with renting. Unintentional damage caused by tenants can, for lack of better words, really be a bummer. By making insurance a requirement, you’d be able to better avoid costly accidents and have the ultimate protection needed for tenants that live in your rental properties.
Making tenant insurance a requirement doesn’t need to mean more paperwork for you. SingleKey has partnered with Duuo to provide your tenants with easy access to affordable coverage. Within our SingleKey products, your tenants are guided straight to it, making it an easy and obvious part of the leasing process.
