As a homeowner, you're likely aware of how homeowners' insurance safeguards your property, and as a landlord, you understand the importance of Landlord Insurance in protecting your investment. However, it's crucial to remember that your tenants' well-being is also your responsibility. Unfortunately, many tenants misunderstand or underestimate the benefits of renters Insurance, leaving them vulnerable to financial loss in case of an incident.
According to Insuranceopedia, only 55% of renters have renters' insurance, and most tenants will only purchase it if the landlord requires it. Perhaps that's because the law does not require tenants to do so. Or tenants may underestimate the value of their possessions or assume the landlord is responsible. "57% of renters either didn't know who was responsible for theft or property damage or thought that it was the responsibility of the landlord or property management company [which it is not]." Tenants must understand their responsibility to protect their possessions.
Thankfully, in Pennsylvania (and most other states), landlords have the power to change this. By requiring proof of renters insurance from their tenants, landlords can take control of their tenants' and their investments' protection. Renters insurance is not only affordable but also offers a host of benefits for both the renter and the landlord, making it a powerful addition to any lease agreement.
What is Renters' Insurance?
"If you rent a house or apartment and think that your landlord is financially responsible when there is a fire, theft or other catastrophe—think again," the Insurance Information Institute (III) explains, "Your landlord may have insurance to protect the building you are living in. But your landlord's policy won't replace your personal possessions or pay for your living expenses while the building is being repaired. The only way to protect yourself financially against disasters is to buy a renters insurance policy."
Renters insurance (Aka tenants' insurance) typically provides three types of protection:
- Personal Possessions are protected against damage from fire, smoke, lightning, vandalism, theft, explosion, windstorms, water, and other disasters listed in the policy.
- Liability – Standard renters insurance protects you against lawsuits for bodily injury or property damage that you or your pets cause to other people.
- Additional Living Expenses (ALE) coverage is included in most renters' insurance policies, so if your home is destroyed by a disaster covered under your policy, it will help pay for hotel bills, temporary rentals, restaurant meals, and other expenses incurred until you can return to your home.
What Are the Benefits of Renters' Insurance
The benefits of renters' insurance for tenants are pretty obvious. It can help replace or repair damaged personal property and protect them against lawsuits.
However, renters' insurance offers many benefits for landlords as well:
- Reduced liability risks and lawsuits – You can't always control the actions of your tenants or their pets, which can expose you to liability risks, and often, your landlord policy won't cover injuries or property damage due to a tenant's carelessness. A renters insurance policy can cover incidents such as a tenant's dog biting someone or a guest of a tenant being injured while visiting. Furthermore, if damage occurs to a tenant's personal property through no fault of their own, if they have renters' insurance to help cover the cost of repairing or replacing that property, they're less likely to sue you for damages.
- Lowered chance of increasing insurance premiums
Filing too many claims can increase your insurance premiums (or even cause it to be canceled). If your tenant has renters' insurance that covers all or a portion of any loss, it can lower the chance of your landlord insurance premiums increasing.
- Makes it a little easier to be pet-friendly
"Pet ownership in the U.S. has jumped significantly over the past three decades," according to Forbes. "As of 2023, 66% of U.S. households (86.9 million homes) own a pet." As a landlord, refusing to accept pets could eliminate more than half of your potential tenants. On the other hand, pets can create additional risks – damage, liability issues, etc., but requiring renters' insurance can help minimize those risks.
Don't Overpay For Landlord Insurance!
At American Insuring Group, we offer renters' insurance and comprehensive landlord insurance policies that cover a range of risks, from property damage to liability claims. Our affordable policies are designed to protect your investment and give you peace of mind.
Call us today at (800) 947-1270 or (610) 775-3848, or connect with us online.