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Renter's Insurance

Renters Insurance is an often neglected subject for many landlords mostly because they are just unaware of the need for it because they already have their own "Rental Dwelling" (Landlord's) Policy. Many tenants are also uninformed on the topic of renter's insurance.

Renters's Insurance protects the Landlord because

  • it reduces the possibility of a tenant based lawsuit
  • it will cover the tenant for lodging costs in case your rental becomes uninhabitable due to some unforeseen catastrophe
  • most renter's policies include fire and theft coverage to protect the tenant from any losses
  • Renters Insurance policies are extremely inexpensive because they do not cover the real estate - the landlord's policy covers the rental itself

    I have two short stories to tell you that involved renterís insurance. I have many more, but these two should give you the idea.

    One day a man called on a house we had for rent. He was very eager to rent immediately because the house he was renting was destroyed by fire. We set an appointment for him to see the house and he filled out a rental application on the spot. He needed the rental instantly because this single dad was living in his station wagon with his three kids. It was cold winter. He didnít know he could have had a yearís worth of renterís insurance for under a hundred bucks and he could have been staying in the Marriott Hotel and had all his belongings replaced. Plus the insurance company would pay for his re-rental too. Well, the story doesnít end well for this guy because when I called the landlord reference and asked about the prospective tenant, the landlord laughed and laughed. ďWhatís so funny?Ē I asked. ďThat idiot burned my house down and hasnít paid rent in months! I canít believe he is stupid enough to list me as a reference!Ē

    Another quick story has a happier ending. We rented an apartment in a house to a professional wedding photographer. He came home late one night and left all his expensive camera equipment in his car which was parked in the street in front of the rental. Guess what- His car was broken into and his photography equipment was stolen. He made a police report and reported it to his Renterís Insurance company. They covered him for the total loss because his car was parked at the address of the rental for which he had the renterís insurance! Isnít that awesome? Definitely worth having.

    If you don't already have the LPA Lease Agreement, you may want to pick up a copy here.

    OK, one more quick one. Back in 1994, I had a beautiful house in Merrick, NY that was available at just the wrong time of year.

    At the time, the rent ranged for that place between $2,400. and $2,800. per month. Unfortunately, the wintertime is the worst time on Long Island for a good pool of tenant selection. Itís usually only the unfortunate and people being evicted who are out in the cold looking for a house at that time. I was getting desperate when I got a call from Statefarm Insurance. One of their insured had a house fire in the same town and my place would be perfect for the family.

    We did an application and the tenants were barely qualified, but I was told not to worry because the insurance company is paying the rent, but they wouldnít sign a yearís lease, they would only promise 4 months. Well, they stayed 6 months at $4,400.00 a month. You see, insurance companies realize they have to pay a higher rent on a temporary rental. Very much the way Florida vacation rentals are so expensive during the season.
    This guy got a quality rental home, all his belongings including lawnmower and garden equipment replaced. He made out like the bandit he was!

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