When it comes to the topic of renters insurance, few investors in the Salt Lake area realize that it’s a benefit to both renters and rental property owners.
Utah law does not mandate that renters are required to be insured. However, just like having any insurance guarantees peace of mind, renters insurance can prove beneficial in several ways that extend beyond peace of mind for investors. As the rental property owner, you should discuss the following benefits with your new renter before you agree to rent your property.
- Renters insurance differs from rental property insurance in that the latter only provides protection against damages to the building structure.
- It primarily addresses the financial damages suffered by you as the investor and does not protect your renters.
- While your renters are responsible for paying the premiums of renters insurance, it’s also something you can include for an additional fee in your lease as part of a resident benefits package.
Utah law also does not restrict Salt Lake rental property owners from making renters insurance a critical inclusion in your lease agreement. As a property management company, we can’t emphasize enough how important it is to make this element of renting part of your standard criteria for accepting a new resident.
While this article isn’t meant as a substitute for legal advice, investors can keep these tips in mind. Consult your attorney, and if you need more insight, reach out to Reeder Asset Management!
The Benefits of Renters Insurance for Renters
Belongings Are Covered
When your renter has adequate coverage, they are insured for the protection of their belongings against the possibility of theft or damage.
For example, in the event of a fire that destroys your rental homes, the property damage (such as structural damage that makes your rental inhabitable) are covered by your property insurance. However, this protection does not extend to your renters’ belongings. Renters insurance provides the financial coverage your residents need to get back on their feet after a disaster.
Protection Against Personal Liability
In the case of an injury while on the property, renters insurance will cover the financial losses associated with medical care.
- The damages covered depend on the type of protection available for your renters.
- They may cover part of or the entire cost of a medical stay or a specified dollar amount.
- Since this also covers injuries experienced by guests, it’s smart to have this kind of coverage.
Given that medical costs and treatments represent a significant source of debt, bankruptcy, and financial hardship, having this kind of protection in the event of a worst-case scenario is crucial. The last thing you or your renters want is to go through litigation due to a slip and fall—especially if you’re not working with property management to help care for your properties.
Housing Coverage in the Event of Inhabitability
Fires, earthquakes, floods, and other extreme acts of nature may require a substantial amount of repair work to bring them back up to speed and safe living conditions. During this time, your rental homes may be deemed uninhabitable. Renters insurance covers part of or the entire cost of moving and housing while your renters are displaced.
As a property management company, this is the last thing we want to see happen to renters who don’t have adequate coverage. It’s heartbreaking to see someone lose their home and everything they own through no fault of their own, only to find no relief or safety net waiting on the other side.
As a property owner, you are not liable for housing your renters in the event that your property is destroyed. Encourage them to safeguard their future and protect themselves with renters insurance coverage by including this as a component of your lease agreement.
A Way to Approach Renters Insurance
- As a rental property owner, you should highlight the requirement for renters insurance from the very start with your online property listing.
- This way, renters already understand that coverage is a requirement for leasing with you. This is going to ensure that qualified renters that understand this arrangement are going to put in applications.
- Going a step further, you may want to specify the policy coverage amount or mention a suitable range like $10,000 to $15,000. You should also ask for proof of insurance renewal every year when you renew the lease with your residents.
- Incorporating the condition for renters insurance makes the requirement enforceable and gives you certain protections as the investor.
Some of your future renters may be sensitive regarding the potential costs involved. Thankfully, renters insurance is incredibly affordable, given the coverage your residents will enjoy in the event of the worst happening to them.
Compared to the Coverage, Cost Is Negligible
- You may want to refer interested renters to a licensed insurance agent for further clarifications about their possible purchase.
- Typically, renters insurance can be bundled with existing coverage through something as simple as their current automobile insurance provider.
- Bundling insurance in this way often serves to reduce the overall costs associated with the coverage as well.
Renters insurance is just one element of growing a portfolio that you need to have locked down as a rental property owner to successfully grow your long-term wealth! You can learn more by downloading your free copy of our guide to growing your portfolio here in the Salt Lake area.