Don’t Assume They’re Covered, Verify Insurance
Barbara is a law student, renting an apartment as she finishes up her degree. After a particularly grueling week of classes, she heads back to her apartment and lights a candle to relax while she finishes studying for the night.
As often happens when studying those long, boring briefs, she falls asleep while reading, forgetting to put out her candle. The candle continues to burn, accidentally catching a window shade and starting a fire that ends up damaging her apartment and causing smoke damage to several other apartments, ruining the personal property of others and requiring evacuations.
Despite costing less than $200 on average annually, Barbara was not carrying a renters insurance policy, and therefore the entire cost for the damage to the property, other renters’ possessions, alternative housing, and any potential liability fell to the landlord.
That kind of incident could easily end up costing six figures, as recently happened in a California incident where a landlord was responsible to cover $216K in relocation costs for tenants who needed to vacate their apartments following a tenant-initiated fire.
You may think the risks of that kind of catastrophe hitting one of your rental units is low, but the cost to you as a landlord could be substantial if your residents aren’t properly covered.
And that coverage doesn’t stop at requiring that your residents have renters insurance, but also monitoring to make sure those policies remain active and adequate throughout the term of the lease.
With Modives, you can verify that your residents carry active and adequate insurance to cover their risks, removing the burden of responsibility for tenant-generated losses from landlords.
In addition to verifying that insurance is active and adequate at the beginning of a lease, with its monitoring option for landlords Modives will check regularly whether your resident’s insurance is still in place and at appropriate coverage limits. If it isn’t, Modives notifies you and your resident, providing them with embedded coverage options to get them back on track.
That monitoring is more important now than ever before. According to data collected by RealPage, 45% of residents who are required to hold a renters insurance policy by their landlord or property management company cancel their coverage before the end of their lease, breaching their rental agreement.
Facing a loss without knowing that your residents’ coverage is both active and adequate carries substantial risks. Renters insurance can help protect the landlord from lawsuits if a tenant is injured in the property. For example, if a tenant slips and falls on a wet floor in the common area, the landlord’s insurance may not cover the tenant’s medical expenses. However, if the tenant has renters insurance, the tenant’s insurance may cover the medical expenses.
Additionally, if a renter has insurance their policy will cover other expenses that could be the responsibility of the landlord if a renters policy is not in place, including:
- Damage to the property as a result of actions by the resident
- The cost to rehouse residents if the property is damaged in such a way that it is uninhabitable
- Loss of resident property due to the actions of another resident
By ensuring that residents carry renters insurance, a landlord decreases his or her risk exposures, both in terms of lost property, damage to the structure, and liability. Verify and monitor your residents’ insurance with Modives to get the transparency you need for your peace of mind, and to protect your business.