According to the U.S. Census, the number of households renting their primary residence has been steadily increasing from about 34 percent in 2009 to 37 percent in 2014. Of those renting their home, only 40 percent carry renters’ insurance, according to a 2015 survey conducted by the Insurance Information Institute. By comparison, 95 percent of homeowners have a homeowners’ insurance policy.
The Insurance Information Institute poll does indicate a gradual increase in the percentage of tenants carrying renters’ insurance over recent years, but a majority of tenants do not seem to understand the importance of having this particular type of insurance.
Why so few tenants have renters’ insurance
The main reason is that they are not required to carry a renters’ insurance policy. Many homeowners still have a mortgage on their primary residence, and the lender requires they maintain homeowners’ insurance. To attract new tenants and compete with other apartment complexes, many landlords try to keep the initial costs of moving into one of their properties as low as possible. Even though renters’ insurance is easily affordable, few people make it part of their budget.
Another reason many renters skip this important coverage is that they assume the landlord has all needed insurance. These tenants do not realize that the typical landlord and owner’s policy does not cover possessions of the tenants, only the structures and other buildings. In most cases, landlords are not responsible for providing accommodations to tenants should their unit become uninhabitable due to a fire or storm. Many renters just don’t understand the importance of protecting themselves with adequate coverage.
Help empower your tenants
The National Association of Insurance Commissioners says renters’ insurance can help protect tenants financially if someone is injured in their home or files a lawsuit; helps cover the costs of living elsewhere if a covered loss leaves their residence uninhabitable; and provides personal property protection for about $15 to $30 per month.
Other things you can do
Requiring all tenants to have renters’ insurance can lower the premiums for your owner’s policy. This reduces the need for any across-the-board rent increases. You can further lower premiums for yourself and your tenants with smoke detectors, sufficient exterior lighting, and a security system for the property. Requiring all tenants to have coverage translates into a safer and more economical residence for everyone on the property.
Disaster can strike any time. Help your tenants be prepared with proper coverage.
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