How tenant insurance helps landlords lower their risk
Should a landlord require renters insurance from their tenants? To best protect their valuables and liability, it's essential. Here's how to reinforce it.
As a property manager, you want to create the best living space possible for your tenants. That includes a clean and well-maintained building, regular fire inspections, and meeting or exceeding safety standards.
For tenants, safety is critical. A fire or flood can put them in financial ruin as they try to replace their stuff and fork over more money to live elsewhere during lengthy repairs. So, it’s surprising that only about 50% of renters in Canada have tenant insurance.
Tenants may resist purchasing insurance for many reasons: for example, they think it’s too expensive, or their possessions aren’t worth insuring. However, the truth is that tenant insurance can easily factor into a tenant’s budget and can help them out of many financial disasters. Let’s bust some of these myths.
Tenant insurance myths, busted
MYTH: Tenant insurance is expensive
FACT: Tenant insurance can cost as little as $12 a month, depending on your credit history and experience with insurance claims. That’s less than most people spend on coffee. And while coffee can help you get through a day, tenant insurance can help you if you ever face unexpected loss or damages. Insurance prices vary on the type of coverage, your contents limits, and deductibles, so there’s a plan to suit every budget.
MYTH: My possessions aren’t worth much, so they’re not worth insuring.
FACT: While the immediate value of your goods might not be much, it’s the replacement cost that matters. Say you have an old laptop that’s working just fine. If that laptop gets damaged or stolen, and you need to replace it, chances are you’ll be looking at spending a pretty penny on getting a new one. Tenant insurance can help numb the sting of having to replace your everyday valuables.
MYTH: I don’t need insurance because the building is insured.
FACT: The building has insurance, but your unit and its contents do not. Most building insurance only covers common areas and the structure itself. If a guest visiting your apartment has an accident in your place, you’ll be liable should they choose to sue – not the building.
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Should a landlord require renters insurance?
You may have required your tenants to show proof of insurance in your tenant lease agreement. Despite your best efforts, a tenant might purchase it for one month, show you the certificate, and then cancel their policy.
Keeping track of certificates of insurance (COI) can be complicated. With people moving in and out of your building and policies stopping and starting regularly, it can be easy to lose sight of which units currently have protections in place. Duuo’s new property management tool removes the headache and worry and assures compliance. Whether you’re a first-time landlord or manage multiple properties, this tool is for you.
In the tool, you create a project for each rental building, ask your tenants to submit insurance through a project link, and then you can see who’s purchased insurance and when it expires. It’s that simple. You can login to the tool at any time to confirm that insurance is still active.
A word of caution: By law, tenants don’t require renters’ insurance. Putting it into your lease agreement as a condition of the rental, however, allows you to terminate their tenancy because they are in breach of contract.
Spreading the good word to your tenants
So how do you get the word out about the benefits of tenant insurance? Here are a few suggestions that can help you get the info out.
Include information on your website
Including an easy-to-find link to information on your homepage is a great way to keep your residents informed, especially if you use your website to provide tenants with access to forms and building information. Whenever they log on, they’ll see information regarding renters’ insurance, learn about the benefits, and (hopefully) buy it on the spot.
A quick tip: When communicating with renters about tenant insurance, focus on the benefits to them. Scare-tactics set the wrong precedence. Instead, focus on how tenant insurance is affordable, along with outlining the many benefits.
Create a brochure
A simple brochure is a great way to communicate the benefits of tenant insurance. Highlight the key features of insurance policies and provide your contact information should they want to discuss it further. Make these brochures available in the building’s lobby and include them with every lease agreement. Your renters will be able to review the document on their time and reach out should they have any further questions. A prospective tenant is likely to comply when it looks like the building’s standard practice or set of rules. A rising tide raises many ships.
A quick tip: Include the name and contact information of an affordable insurance provider in any literature you create. If people don’t have to do much legwork themselves, they’re more likely to take action.
Work with an insurance company
Insurance companies and brokers are always looking for new customers, and most will be happy to help educate individuals about the benefits of their product. Reach out to a company to determine if they’ll partner with you to launch an informative education & awareness campaign directed at residents in your building.
By working directly with an insurance provider, you can ensure that your message is delivered clearly and effectively. Partnering with a company also means that your tenants have easy access to a support team that can directly answer their questions and concerns. Duuo insurance provides exceptional customer support, breaking down what tenant insurance actually means and relating it specifically to your tenants’ situations.
A quick tip: When you approach a company and ask them to partner with you, ask if they can offer special rates for your residents. If you arrange a special discount, your tenants are more likely to see the value in purchasing insurance.
The bottom line
Tenants insurance is mutually beneficial for both the tenant and the landlord. If, after all the leg work, they’re still avoiding getting insurance, here’s one last tip. With many people working from home these days, they may write-off tenant insurance costs on their tax returns. Be sure to highlight this in whatever way you choose to communicate with your tenants.