Rent Sense: Renter Insurance

September 21, 2012by melissad

By Neil Fjellestad and Chris De Marco

Renter insurance is an ounce of prevention that every renter should have. It is an inexpensive method to safeguard their finances and lifestyle. Renters can start with their existing auto carrier for best rates. Rental owners wonder whether renter insurance is something that they should make mandatory. We tell them that most national apartment operators are going to mandatory renter insurance; many have had such requirements in place for years. It is smaller property management companies and independent rental owners that have been less aggressive to make the coverage mandatory as a condition of move-in and renewal.
There are always “unforeseen events” that take place at an apartment community or in the rental neighborhood. How does requiring renter insurance protect a property owner and/or management company from losses?

Your rental business is adding a new and valuable layer of risk protection for the property owner and/or agent. Implementers have found that the accumulated recoveries from these carriers has mitigated losses formerly being charged to repair and maintenance, concessions or were lost due to the property deductible and therefore were not being reimbursed prior to the liability requirement.

Properties have been able to reduce costs of coverage by raising deductibles. Mandatory renter liability coverage has reduced claims and losses at properties which lowers insurance premiums.
An unexpected finding is that residents actually prefer communities that have an insurance requirement and may be more likely to rent. Implementing a mandatory approach seems to have a positive effect on occupancy, rent collection and the competitive position of the property. Increased income, decreased operating expenses and lower contingencies for uninsured losses will increase NOI. In addition, a lower likelihood of incurring insured losses often directly or indirectly increases the value of the real estate asset. Renter insurance makes rent sense to both residents and rental owners.

Promote housing opportunities for all persons regardless of race, religion, sex, marital status, ancestry, national origin, color, familial status, or disability (Government Code Section 65583(c)(5)).

San Diego Metro Office
6398 Del Cerro Blvd., Ste 8.
San Diego, CA 92120
(619) 286-7600

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