Understanding Property Management and Renter's Insurance

10/23/2019 (Permalink)

Even with renter's insurance, flood damage is typically not covered

In areas prone to flooding, such as Kensington, MN, business and property owners likely have additional flood coverage to ensure full protection against Mother Nature. If that property has residential tenants, it can be confusing to know what insurance policies cover. As the owner, your flood insurance covers the building and related belongings, including assistance with professional storm cleanup and remediation repairs. A tenant’s belongings are their own responsibility. Even with renter's insurance, flood damage is typically not covered.

Know What Insurance for Renters Covers

Water damage from pipes and sewer issues are generally covered by the renter’s policy. If that water comes from flooding, the tenant may typically be out of luck. While not all renters need extra coverage, those in areas frequently hit with flooding should consider added flood coverage for their own items:

• Clothes
  
• Electronics
  
• Furniture
  
• Draperies
  
• Small appliances
  
  

Consider Location

An important factor in insurance coverage is the location of the unit. A basement unit, which is more likely to receive flood damage, often means fewer belongings will be covered. This may only include washers, dryers, freezers and air conditioners.

Encourage Tenant Coverage

As the property owner, encouraging tenants to get renter's insurance, and possibly flood coverage, could lead to fewer hassles down the road. These are a few benefits of reminding tenants to consider insurance:

It reduces the possibility of lawsuits. If anyone is injured in a tenant’s unit, the renter is responsible. If the tenant has no insurance, the injured person may come after the property owner.
It gives you peace of mind. If a fire or other catastrophe ruins a tenant’s possessions, you know the belongings are covered.
It covers potential landlord liability for the tenant's pets. A renter's personal insurance generally covers dog bites or other situations.
Insured renters often mean lower premiums for the property owner. When tenants are insured, there are typically fewer claims on the owner's insurance.

Working with tenants and encouraging them to acquire renter’s insurance offers an additional layer of protection. Hopefully making a claim won't happen, but if it does, it can make the process easier for everyone.