In the wake of Sandy, we are reminded of not only the force of mother nature, but, also the tremendous need for good insurance. The power outages, fires and storm damage that we incurred on the East Coast has been catastrophic and devastating. While some escaped with minimum damage such as perishables needing replacement, others faced far worse losses such as lost appliances, water damage and houses completely swept out to sea or washed off foundations or gutted by fire. While some landlords require proof of insurance to rent an apartment often, it is just something spoken about briefly at the initial lease signing. In a recent study it was reported that while 96% of homeowners carry insurance, only 43% of renters do. Tenants often incorrectly think that the landlord’s coverage will bear the responsibility for any losses they may suffer. While some owners require proof on renters coverage at lease signing it is all too often not followed up on. If there is anything that the recent events have taught us it is that being prepared and insured is of the utmost importance.
There are two types of renter’s insurance; liability and content coverage. Liability covers not only the renter but, also his/her guests should anyone sustain an injury or should they need legal defense to defend them in the event of a suit. Content coverage insures the loss of furniture, jewelry, clothing and other items in the rental unit.
Most tenants will tell you that their possessions are not worth anything. You will often hear protests such as “Oh, that card table and chairs are just not worth insuring. This furniture was a hand-me-down from my parent. They just don’t amount to enough to take out insurance on.” Well, I find that often once you scan the apartment and look at the replacement costs for the television, phone, towels, clothing, jewelry and furniture it far exceeds the cost 1/10 of a policy. Most times coverage can be purchased for less than the cost of a couple of lattes a month. As a renter, it is foolish to gamble with all your earthly possessions.
According to the Insurance Information Institute the average cost of a renter’s insurance policy is $150-300. As a landlord it is one more layer of protection to enforce the Renters Insurance provision in our lease. You should require an updated Declaration Page yearly at renewal to insure that the policy is in effect during the full term of tenancy. As a responsible multi-family owner you should always be looking to have tenants share responsibility for the costs of applicable loses.
While renters insurance does not cover floods, many losses can be mitigated with this very valuable insurance coverage for a very nominal fee.