Is Your Tenant Covered?

by Mina V. Garrey, Commercial Capital Properties

House in hands photoJust recently I was reading through one of my residential leases to make sure that every paragraph is up to date and to see if there is anything I need to include due to changes and updates of local rental laws.

I came across the paragraph talking about Renter’s Insurance and it made me wonder how many of my tenant actually have this type of insurance coverage.

I know that when a Lease is signed, I make sure to point that out to the prospective tenant and go over the importance of having the insurance. At the end of the day however, people can choose whether they are going to purchase the coverage.

As a landlord/property manager, I believe that it is important go over that with your tenant, because if something happened and you never mentioned it, you will have lots of explaining to do. Guess what, if something happened and your building burned down, the tenants will be knocking on your door asking “So who’s going to replace all my stuff?” Well, your answer should hopefully be, “Remember the Renter’s Insurance we talked about when you signed the Lease, did you get that?”

Here are a few facts about Renter’s Insurance:

1. Most people think that they can’t afford it – The truth is, Renter’s Insurance is quite affordable. You can be paying as little as just over $100/year or a couple of hundred dollars a year, based on the size of your unit, deductible etc. So the coverage you will receive could be in the $20,000+ range. I think that’s worth the small upfront expense and peace of mind.

2. But my landlord has insurance – That is correct, however the landlord’s policy only covers the structure, not the tenant’s belongings. In fact, if the tenant is the one who caused the damage due to negligence, they may be held liable for not just fixing the problem, but replacing the belongings of others if any were damaged.

3. I am not worried about security, my building’s pretty safe – Well, surprise, Renter’s Insurance goes beyond covering just your belongings. Most tenants don’t have their own garage, they probably park in a parking area. If items get stolen from your car while you are parked there, the insurance is probably going to cover those. If someone slips and falls while visiting you, guess what? The insurance has coverage for that also. Some policies even cover your suitcases while you are on vacation, in case they get stolen.

4. I don’t really own anything of value – You would be surprised how quickly $20,000 + of items accumulate. According to an article I read online, found that most people own well over $20,000 worth of property. So all those electronics, appliances, books, CD’s, furniture, jewelry etc. you have, if you lost all of it tomorrow, would you still say that it’s worthless?

So, please encourage your tenants to get this voluntary coverage. It is both, for the protection of the tenant as well as the landlord. Above all, it buys you a peace of mind. And the minimal fees associated with the coverage are definitely worth it.

A friend of mine had his apartment broken in twice in 6 months. Prior to both times, I asked him if he had a chance to purchase the Renter’s Insurance. Unfortunately, he didn’t. He had to pay the heft price of replacing three computers (his and the two roommates) as well as all other valuables that were stolen. Now, isn’t that worth the couple of hundred bucks?

Commercial Capital Properties specializes in commercial (office and retail) and multi-family (apartments) real estate management throughout the Greater Los Angeles area and the San Fernando Valley.

American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing. Find out more

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