Your Guide to Renters Insurance

explain renters insurance

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Every renter has a wishlist of must-have’s to purchase when they rent their new unit. As a real estate professional invested in getting your client results, make sure that they know that renters insurance should be on that list (alongside cookware, a comfy couch, and a cat palace.) Much like homeowners insurance, renter’s insurance protects renters and provides invaluable peace of mind. Even if your client doesn’t decide to buy renter’s insurance, always over-educate them! Here’s some basic questions I get asked about renters insurance. Read this guide to renters insurance and get ready for that important client meeting!

What is Renters Insurance? 

Renters insurance is similar to homeowners insurance. It guarantees that if things go wrong, the renter and their possessions are safe and sound. For a fee every month, the renter is guaranteed three things— protection of personal property, liability, and loss-of-use.

Personal Property Protection

First, let’s talk about personal property protection. These are the 16 categories that renters insurance covers damage from:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riot or civil commotion
  • Damage caused by aircraft
  • Damage caused by vehicles
  • Smoke
  • Vandalism or malicious mischief
  • Theft
  • Volcanic eruption
  • A falling object
  • The weight of ice, snow or sleet
  • Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
  • Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning system or an automatic fire-protective system
  • Freezing of a plumbing, heating, air conditioning or automatic fire-protective system, or of a household appliance
  • Sudden and accidental damage from artificially generated electric current (does not include loss to a tube, transistor or similar electronic component)

Note here that earthquakes and flooding are not on this list. Losses that you incur from these events you will have to pay for out of pocket, or contact National Flood Emergency to get relief. 

Liability

The liability part of renters insurance guarantees that the renter will not be held responsible for personal damage that happens on their property. Some nightmare scenarios for you to chew on–a tenant crashes their car into the garage; a guest suffers a fall in their apartment and needs to spend time at the hospital; the family pet gets snippy and bites a friend. Renters insurances covers injuries that happen in your apartment, and caused by your children and pets. 

Loss of Use

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The last thing that renters insurance covers is loss of use. This is for really big, really catastrophic events that make the whole apartment uninhabitable. In the case that you make your way home from work to find the building caught in a blaze, your insurance policy will not only pay out to replace any lost items but also cover your living expenses when you lose the use of your home. Handy.  

Does Your Client You Need it? 

Most landlords and property owners will include the necessity to have renters insurance on the lease. Not only do most landlords require their tenants to have insurance, but it’s worth every cent. Natural disasters, accidents, and loss of personal damage are stressful and scary enough without worrying how you’re going to cobble together the money to replace all your lost goods!

Help! My Client Doesn’t Want to Purchase Renters Insurance

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Even after you educate your client on the benefits of renters insurance, a client strapped for cash and with few worldly possessions might not think it’s worth shelling out a monthly fee to replace their goods. Or, your client might feel comfortable enough that they’ve got an emergency fund robust enough to weather the worst of storms. If it’s not stipulated in the lease that it’s needed, and you’ve explained what renter’s insurance is thoroughly enough, it’s up to the renter.

Why Do Landlords Care?

Renters insurance is valuable for the landlord because damage to the apartment can be paid for by the tenants insurance company, not out of the landlord’s pocket. This is why it’s often stipulated as necessary in the lease. It helps make sure that landlord and tenant relationships stay strong. 

Which Renters Insurance Should I Advise My Clients to Get?

This can depend on the renter and their particular circumstances. Renters insurance happens to be most expensive in places that are prone to nature disasters, such as the Gulf Coast or places on fault lines. However, it’s also important to know that some companies can offer clients bundles on different types of insurances, including car insurance. These bundles come in handy for clients, so make sure you inform them of them! It’s also worth noting that renters insurance is one of the cheapest types of insurance that can be purchased. 

Help! My Client Has Asked a Tough, Super Specific Question About Renters Insurance

This guide to renters insurance is a great starting place to your questions about renter’s insurance, but keep in mind that getting the insight of an expert when you’re faced with a tough question is always good idea. Never wing it with something this important. Also, keep in mind that vendors of insurance can be potential partners for real estate agents looking to grow their books of business. You can refer customers to each other, and help tenants make smart decisions about their interactions with real estate— It’s a win-win relationship!

In Summary:

Educating your renters on what renters insurance does and why they need it is an important part of being a real estate professional, so learn up on this guide to renters insurance. Renters insurance is financial protection that makes sure your renters are protected if anything happens to goods or people in their apartment. Many landlords require it because it keeps the landlord (and their pockets!) safe, too. Its cost is dependent upon the renters location; however, can be bundled with other types of insurance and is relatively an inexpensive investment in keeping your belongings safe and sound!

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