One of the main issues that landlords deal with is damage arising to tenants’ possession due to an unforeseen problem with the property. What NYC property managers should do is put a provision in the lease agreement that advises the tenant to carry renter’s insurance to protect tenants from any such loss or damage. But this suggestion does not often get follow-up on and may not help fully protect the landlord or tenant.
A reputable and experienced property management company will often present an additional term that requires the tenant to obtain renters insurance and that the landlords be named as an “additionally insured” on the policy. It is also beneficial to have the tenant show proof of such insurance coverage within days of the date of signature of the Rental Agreement. Protecting the tenant and landlord with insurance is a smart expenditure for piece of mind.
Best of all, renters insurance is very affordable, typically about $15-$20 a month, and is available from all major insurance companies.
However, some municipalities do prohibit owners from mandating renters insurance policies for tenants in rent-controlled buildings. In that case, requiring renters insurance might be more trouble than it’s worth. However, you certainly could still recommend it and make the tenant sign a liability waiver if they choose not to obtain it.
For renters insurance to cover your tenant’s stolen property, you apartment building management company, property management company or landlord must provide at least the minimum security measures for your locale – such as locking doors and windows. If you don’t, you might be responsible for your tenant’s stolen property.
So what is protected in renters insurance?
Personal Property Coverage
Think of everything you own. The value of your belongings can quickly add up. Personal property coverage, a typical component of renters insurance, may help cover the cost of replacing your stuff if it’s unexpectedly damaged or ruined. That protection generally applies to certain risks (also referred to as “perils”), such as fire and theft, the Insurance Information Institute (III) explains. So, if your computer and television are stolen, or your furniture and clothing are destroyed by a fire, this coverage may help you pay for the cost of replacing them. It’s important to know that coverage limits — the maximum amount your policy will pay for personal property losses — will apply. Read your policy carefully or contact your agent for information on what may or may not be covered.
When purchasing a renters insurance policy, you may face a few different choices. For instance:
You’ll want to set coverage limits that are appropriate for your situation. Creating a home inventory may help you assess the value of your belongings and help you decide how much personal property coverage is right for you.
You may also have to decide what kind of personal property coverage to purchase, the III says. A policy that provides actual cash value protection typically covers belongings up to their current market value (taking depreciation into account). Meanwhile, a policy that includes replacement cost coverage may help you pay to replace your items at today’s retail prices after a covered loss.
Liability coverage is another protection typically offered in a renters insurance policy. This coverage may help protect you from paying out of pocket for certain costs if you are found legally responsible for injuries to other people or damage to their property.
You probably don’t expect an accident to occur, but if, for instance, your child throws a ball through a neighbor’s window or you’re held responsible for medical bills after a guest trips and falls over something in your home, liability coverage may help cover the costs.
As with other coverages, limits apply to the amount a policy will pay out after a covered loss. Read your policy to brush up on how much coverage it provides and make sure it fits your needs. Your insurance agent can help you adjust the limits if you decide you may benefit from additional coverage.
Additional Living Expenses
If you’re renting a house or apartment, you typically have a place to call home until your lease expires. But what if your rented home were to be damaged by fire, for instance, and you were unable to live in it? That’s where renters insurance may help.
Renters insurance usually includes coverage for additional living expenses, says the III. This coverage may help pay for additional costs you incur, such as hotel bills, or for the increased costs you incur on food that are above the amount you would typically spend, because you are unable to live in the home you’re renting. Check your policy to learn how much coverage you have in place for additional living expenses and to review the risks your policy may cover.
In the end, renters insurance is a must for NYC property management companies to consider when implementing their protocol with prospective tenants. NYC apartment building management companies will only benefit in the long run by creating a healthy relationship with their landlords and tenants who would otherwise be disgruntled should damage occur.