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Renters Insurance Is Mandated By Many Rental Management Firms
By Mike Heuer

A growing trend when renting apartments and other types of home units is rental management companies requiring renters carry renters insurance coverage to live in them. The idea isn’t so much to protect renters against potential financial loss as much as it is to protect landlords and owners of rental property units against losses caused by renters.

A majority of property management companies now require renters to have insurance coverage in place in order to sign a lease. Nearly 85 percent of property management companies require the coverage. Yet, even though the renters insurance is mandated as part of the rental contract, nearly a third of all such policies are canceled before the lease term has expired, and about 20 percent of renters cannot prove they have renters insurance policies in place.

To help alleviate the problem of renters lacking insurance coverage, many property management companies are partnering with insurers to provide group-like coverage and even more affordable rates on renters insurance policies. Individual plans generally cost between $10 and $20 per month. But with the group-like coverage offered when properties require their renters to purchase insurance, buying the insurance protection from the partnering insurer can reduced the rates by 25 percent or more.

Boosting compliance with mandatory renters insurance is helped when the property management company makes certain the insurance company with whom it has chosen to partner offers good policies at reasonable rates. If the insurer simply is looking to sell policies that aren’t really backed by actual coverage, neither the renter nor the property owner benefits. But when reasonable rates are combined with good insurance plans that will cover legitimate claims, both the renter and the property management firm are protected against possible mishaps.

Renters insurance provides liability coverage for the damages caused by renters, such as accidentally starting a fire that causes a great deal of damage. But if that renter does not carry renters insurance coverage, the property owner winds up paying for the repairs to make the unit whole and inhabitable. And while renters insurance can protect the actions of the policyholder, it does not necessarily apply to others in the unit.

A renters insurance plan underwritten for one policyholder will not provide coverage for anyone other than family members. So if there were a roommate who is not a direct relative of the policyholder, the renters insurance would not apply if that person does something that results in damage and financial loss. The same goes for visitors who might cause damage for which the renter either is not covered or cannot be held liable. But if property management companies can keep compliance rates high among renters when it comes to insurance coverage, the odds of suffering steep losses are lessened by a great extent.

Mike Heuer is a former insurance producer in Nevada with expertise in Property & Casualty and Life and Health insurance. He also is a former newspaper reporter with 20 years’ experience in print media.