How Landlords Benefit from Renters Insurance

Investing in a rental property and becoming a landlord can be a great idea due to its monetary benefits. However, it comes with a lot of duties and responsibilities. The question is: Are you able to handle all of these?

Think of house damages due to fire, flood, earthquake, and other natural calamities. Consider lost possessions due to thievery cases. What about personal injuries due to accidents having occurred within your property?

Enter renters insurance, a type of insurance for individuals dwelling in rental properties. About 57% of all tenants have some form of renters insurance—the highest ever recorded. But did you know that this insurance doesn’t only benefit the tenants themselves but also the landlords?

This article covers what you need to know about renters insurance from a landlord’s perspective. Read on to learn how it can benefit you and how to take advantage of it.

What Is Renters Insurance?

Renters insurance is a type of property insurance that protects tenants living in rental properties, such as apartments, condominiums, and even single-family houses. 

Just like landlord insurance is a thing, renters insurance exists for tenants as well. This insurance type varies from one policy to another, but it provides the following:

• Personal property coverage: The insurance covers the possessions of the rented property. Have your tenants’ belongings been damaged by a fire outbreak? The insurance carrier pays for the financial losses so your tenants can replace their stuff.

• Liability claims: The insurance protects tenants financially and legally if injuries or damages occur within the rented property. Have some visitors had an accident inside the condo, or have their pets bitten the neighbors? The insurance pays for the medical costs and legal expenses involved.

• Additional living expenses: The insurance covers tenants when the rented property becomes uninhabitable due to one of the covered circumstances. Have they stayed in a hotel for a few days due to flooding in the area? The insurance will pay for the hotel bills and restaurant meals.

According to Verified Market Reports, the global renters insurance market could grow from $100.2 billion in 2023 to $152 billion by 2030. It’s forecasted to expand at a 5.96% compound annual growth rate (CAGR). Take a look at the market segmentation below:

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Learn how renters insurance can benefit you as a landlord in the next section.

The Benefits of Renters Insurance for Landlords

It’s no secret that renters insurance is important for tenants. However, it is equally beneficial to landlords as well. 

As a landlord, you probably have your tenants’ best interests in mind to maintain a peaceful relationship. As such, the argument is simple: Your tenant protection equates to your protection as the property owner. 

That said, here’s how renters insurance proves beneficial to you:

1. It provides financial protection for your property

Dealing with house damages and personal injuries can be quite costly. However, your tenant’s personal property coverage can pay for damaged possessions or lost belongings. Meanwhile, their liability claims can cover all the medical costs required to treat injuries and the legal expenses involved.

Jeffrey Zhou, CEO and Founder of Fig Loans, claims that renters insurance also benefits property owners. 

Zhou argues, “Landlords and tenants are often caught off guard about whose insurance carriers should cover for the property damages and personal injuries. However, the tenant’s financial protection also extends to the landlord—A win-win for both parties!”

2. It promotes tenant responsibility and accountability

Getting renters insurance is a good reflection of your tenants. It means they are responsible for taking good care of your property. Likewise, it shows that they will be accountable for any untoward incidents that may occur within your property.

Grant Aldrich, Founder of Preppy, believes that renters insurance all the more fosters responsibility and accountability among tenants.

Aldrich explains, “When looking for potential tenants, ask them if they already have renters insurance or planning to get one. It’s a sign that they are financially and legally prepared for unexpected circumstances. More importantly, it makes them more responsible as renters and accountable for their actions.”

3. It improves your landlord-tenant relationships

Nothing is more peaceful in a rental agreement than having property insurance for both parties. While you can have your landlord insurance as a property owner, your tenants should also have renters insurance. This insurance coverage helps prevent issues and avoid conflict between both parties.

It’s inevitable for landlords and tenants to get into serious arguments due to various property issues. These arguments can translate to lawsuits and end up in court. So, what better way to prevent this from happening than to have insurance coverage in place?

4. It boosts your overall property value

Requiring potential tenants to have renters insurance can positively impact your home value. For one, it attracts high-quality renters that align with the value of your property. Likewise, it sends a clear message to your property appraiser: That your property comes with financial and legal protection.

Reyansh Mestry, Head of Marketing at TopSource Worldwide, recommends getting landlord insurance and requiring renters insurance.

Mestry believes, “Property insurance can indirectly influence your home value. Not only are you responsible for its aesthetic appeal and overall functionality, but you also value the protection you and your tenant can get. Ultimately, insurance coverage guarantees this protection.”

5. It helps reduce your insurance costs

Insurance coverage is necessary for most property owners. However, paying for monthly premiums can be quite expensive in the long run. Renters insurance can be your best solution for keeping your insurance costs down.

Roman Zrazhevskiy, Founder & CEO at MIRA Safety, suggests requiring renters insurance.

Zrazhevskiy argues, “Most insurance carriers are quite critical in their coverage. There are some things they cover and some things they don’t. It’s best to have landlord insurance while your tenants have their renters insurance. That way, both parties can ensure 100% financial and legal protection in emergency situations.”

How To Capitalize on the Renters Insurance

Many tenants see the value of renters insurance due to several potential benefits. However, some are a bit hesitant to get insurance coverage due to its costly premium. The average cost of renters insurance is $173 per year, which varies from one state to another:

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It’s best to encourage your tenants to take advantage of renters insurance. Their coverage can extend to you as a landlord. But here’s how to capitalize on it:

• Educate yourself on renters insurance. Learn more about the different policy types, including their scope of coverage and benefits.

• Require renters insurance on your rental policy. Only get qualified tenants with insurance policies for their protection and yours as well.

• Verify your tenant’s insurance policy. Ask for proof of coverage or get in touch with their insurance carriers.

• Discuss the policy with your tenants. It’s best to sit down with your renters to talk about what the coverage entails and how it can benefit both parties.  

• Encourage your tenants to utilize the insurance. What better way to maximize the renters insurance than to convince your tenants to utilize them during unexpected circumstances?

Final Words

The renters insurance proves beneficial in more ways than one. It offers personal property, liability, and loss-of-use coverage. Not only does it help the tenants themselves, but it also benefits the landlords.

As discussed above, renters insurance provides financial protection and liability coverage. It also fosters responsibility and accountability as well as enhances relationships with tenants. Not only does it increase property value, but it also helps decrease insurance costs.

Consider requiring your tenants to have such coverage for your utmost peace of mind. What are you waiting for? Encourage them to get renters insurance though RentRedi!