You just signed a lease and found out that a requirement to move in is that you obtain renter’s insurance. You may be wondering why this is a requirement and you may prefer not to spend the extra money on something you did not want in the first place. The purpose of this article is to explain why your landlord is requiring renters insurance and then give you 3 steps to take to minimize or eliminate the additional cost.
REASON 1: To protect you.
If there’s a fire or other major catastrophe on the property, the property manager knows that you could literally lose everything. The property owner’s insurance will not replace your items and will not put you up in another place temporarily. We have seen a situation in an apartment fire where the entire building’s residents were displaced and everything they had was burned up in a fire. Each resident received 2-3 nights in a hotel and a couple hundred dollars to purchase necessities from a local charity and then they were on their own. Every one of them had to start over whether they had the financial resources or not… including the ones who didn’t cause the fire! Also, even though it was an accident, the person who started the fire could be sued by the insurance company and could be paying for the loss the rest of their lives. All of these problems could have been resolved simply by the residents spending $10-15 per month on renters insurance.
REASON 2: To protect the property owner.
If you accidentally start a fire or create some other situation, the owner has insurance to protect their interests… but not your interest. However, in the example of a fire, the problem is that the owner still needs to file a claim due to your negligence. When an owner has to file a claim, the owner has to pay a deductible which can be up to thousands of dollars. In addition to paying a deductible, the owner’s insurance could be cancelled or their cost may go up as a result of the claim. By requiring renters insurance, the building owner is able to have a resident’s insurance pay when the resident is negligent.
REASON 3: To protect themselves.
Let’s face it, residents who have no renters insurance when something happens tend to be very upset, especially when it’s not their fault and often the residents will file complaints against the property management company or give them bad reviews. Property owners also tend to be very unhappy when something happens to the property, at no fault of their own, and a claim must be filed against their insurance. Unhappy owners may take their property elsewhere to be managed by somebody else.
The bottom line is that renters insurance is very inexpensive and protects you, the property owner and the property manager! Even still, if your goal is to minimize or eliminate the additional cost, there are four things you can do:
FIRST: Carry only the amount of property coverage that you need to replace your items. Carry extra coverage costs you but the insurance company is only going to give you a check to replace what you actually had, not for the total amount of insurance. Perform a household inventory by going room by room and recording what you have and adding up the amount it will take to replace those items following a loss. That’s how much insurance you need.
SECOND: Carry a high deductible. The more you raise your deductible, the lower your cost becomes. Consider a $1000 or $2500 deductible if you can afford to pay that much out of pocket after a loss.
THIRD: Bundle by purchasing auto and renters insurance from the same company. At The Choice Insurance Agency, it’s not uncommon for us to be able to insure somebody’s auto and renters insurance for less than what the person was paying for just car insurance. In that situation, it’s like getting free renters insurance. But not every auto company insures tenants and not every renter’s insurance company insures cars. In order to get the bundle benefit, you have to talk with a company that does both things well and gives big bundle discounts, like The Choice Insurance Agency.
FOURTH: Don’t skimp on the liability coverage. You won’t save very much money by lowering your liability coverage from $500,000 or $300,000 to $100,000 even if that’s all the landlord requires. Plus, this is the coverage that protects you from having to pay the rebuilding cost if you’re negligent and also the coverage if you accidentally hurt somebody. It’s your most important coverage and savings is minimal by cutting it, so don’t.
The Choice Insurance Agency proudly insures thousands of households and small businesses throughout Hampton Roads including the cities of Virginia Beach, Norfolk, Chesapeake, Hampton, Newport News, Suffolk, Portsmouth and beyond! To obtain a proposal on renters insurance, start here.
The Choice Insurance Agency’s mission is to help you get from where you are to where you want to be financially by planning, achieving your plan and protecting your plan from unexpected events. In the process, our goal is to deliver insurance services in a manner that exceeds your expectations. See what The Choice Insurance Agency can do for you today. Give us a call at 757-416-5100 to speak with one of the licensed, professional members of our team or request a contact here. The Choice Insurance Agency. We’re on YOUR side. 757-416-5100.