By Oretta Croushore, Property Manager for Home Rental Services
I recently read a statistic that only about a third of renters nationwide have renters insurance. I find this a little shocking. It’s one of the least expensive forms of insurance and takes almost nothing to qualify for. The main purpose of renters insurance is to cover the belongings the renter brings into the home. Additionally, it provides the renter with protection against personal liability.
The coverage most of us think of initially is covering a renter’s personal belongings in the event of an accident. Confession time. I never had renters insurance when I was a renter. It sounded like a good idea to me. First, I was young and struggling. The thought of adding another bill to my monthly didn’t seem very attractive to me. I played the odds and figured the chances of a big fire in my rental, that took out everything I owned, was slim. Ah, the confidence of youth. If I knew then what I know now, I would have made a different choice. Look around the room you are in and think about the amount of stuff you have in that room alone. Start to do a quick calculation in your head of what it would cost to replace everything in that room. How long did it take you to get over $1,000? If you have any electronics in there, I bet it didn’t take long at all. What would it cost you to replace your wardrobe?
The other piece of the renters policy is personal liability. In general terms, personal liability covers the renter if someone brings a claim or lawsuit against them, for injury or loss of personal property. Think of this as the “oopsie” part of the policy. The number one “oopsie” we see each year is someone driving into the garage door. It could happen to anyone. Though it is most certainly an accident, the renter will be held responsible for the cost of all repairs to return the door back to the original condition. That can include replacing the entire door, if it’s not repairable or parts are not available. This can benefit the homeowner in a couple of ways. First, slapping the renter with an unexpected repair bill could tap into their rent paying funds. They could be robbing Peter to pay Peter. On the flip side of that, we could be chasing them for the remainder of the lease and beyond to collect. The repairs to the house have to be handled and you, the homeowner, end up paying the price.
Here’s a few more examples of liability claims we have seen from renters:
- A child overflowed a toilet in his en suite bathroom but didn’t report it to mom and dad for several days. The water continued to leak behind the walls on the second floor and eventually into the main floor and the basement. Walls had to be cut out on the second floor. Hardwoods had to be removed on the first floor and all the carpet removed from the basement. Total cost of plumbing visits to diagnose, dry out of all water, removal of everything contaminated by sewage water, and build back $12,000.
- A small kitchen fire which melted a few track lights and left smoke stains on the ceiling. Total cost to replace the lights, clean the ceiling beams, prep and paint the ceiling $3,000.
- Renter owned, and installed, washing machine on the second floor. The water hose popped off during the fill cycle. The floor on the second floor was saturated, as was the ceiling below. Cost to remediate the water, repair, and repaint the ceiling below, approximately $1500.
Some renters policies help with relocation expenses in the event of certain major events in the home. This can keep the homeowner from coming out of pocket for that expense. No one wants to see their renters displaced. The loss of rent during the displacement in addition to dealing with your own claims to repair the home can be overwhelming.
Many times a renter doesn’t understand why they are held liable for accidental damage caused to the house. They often comment that the owner has insurance so he should file with his owners policy. We all know a claim will almost certainly guarantee a premium increase or even denial of renewal. If the renter has a policy they can file against it’s a much better deal for the owner. Fun fact, most renters policies do not have a deductible!
We require renters insurance for all renters with a pet. This gives the homeowner some peace of mind that should Fido damage the home, there is coverage in place. It also allows the owner to feel better about renting to pet owners, which opens up a much wider pool of potential renters. In addition to requiring renters insurance, our lease requires that Home Rental Services be listed as an additional interest on the policy. This ensures we receive notification if the policy is cancelled or the premium is late. Also, it allows HRS to file a claim on the policy if the renter chooses not to do so. It’s always best for the renter to take this action on their own. In the event they refuse to accept their liability, we have another course of action.
I have become a big advocate for renters insurance. Friends probably think I get a commission on each policy I encourage. I don’t. Like the folks on that one insurance ad, I have seen a thing or two.