Please note: This article is not legal advice. For up-to-date information and guidance, reach out to your attorney or Real Property Associates.
Owning a profitable Seattle rental property requires the right strategies for success while avoiding common mistakes. One of the biggest mistakes property owners make is allowing renters to live in their properties without an active renters insurance policy.
- Renters insurance helps protect residents from loss of personal property if something happens during their lease term.
- However, rental property owners don't provide it for their renters.
- Your residents must purchase their own policies and keep them active to maintain coverage.
In Seattle, real estate investors can require residents to have an active renters insurance policy—but is it a smart idea to require it? Here are our expert property management recommendations for your home rentals in Seattle!
Make It Part of Your Renter Criteria
- Requiring renters insurance can be as simple as making it part of your criteria to qualify for your rental properties.
- Just like your required deposits, fees, and monthly rent amount, your renters should provide proof of a valid renters insurance policy that remains active throughout their lease term.
- When it's time to renew, ask for updated proof that your residents maintain their insurance coverage.
Insurance requirements don't discriminate against any potential residents. It's the same requirement for any applicant and does not violate any fair housing regulations.
When residents have renters insurance, it's a winning situation for property owners, too! Everyone has the coverage they need if something goes wrong with one of your Seattle properties.
Your Insurance Doesn't Cover Your Renters
The insurance you have as an investor doesn't cover damage to a resident's personal property while they live in your investment home. Your rental property insurance only covers your costs to repair or replace rental-property-related damage during an event. Coverage does not extend to anyone living in your properties.
However, if there's a fire or some other disaster that harms your rental property and a resident's belongings, they might seek compensation from you if they don't have insurance coverage of their own.
- A renters insurance policy protects renters and provides compensation if anything happens to your home rentals in Seattle.
- Renters can file a claim with their insurance coverage to recover the costs of lost personal items and temporary housing arrangements if they are displaced from the home during repairs.
- Without a valid policy, your residents might try to hold you responsible for damages after they lose everything due to circumstances out of everyone's control.
What Happens Without Renters Insurance?
- When renters don't have an active policy, they can suffer significant loss if theft or disaster occurs.
- They could lose everything in a fire without any way to start over except with their income and savings.
- A renters insurance policy helps renters recover when things go wrong.
A good policy also helps them seek assistance from their insurance company while you recover from damage to your Seattle property. You don't need to deal with the hassles of a renter trying to claim compensation from you while you work with your insurance company to repair property damage, deal with police reports, and minimize the impact on your income.
Renters Insurance Is Smart and Affordable
Renters who aren't willing to activate an insurance policy are putting themselves and their property at risk. Most renters insurance coverage is affordable—often as low as a few dollars per month—and well worth the minimal expense to have this protection in place.
When renters aren't willing to pay for the small cost of a renters insurance policy, they aren't a good match for your properties. Refusing to purchase this valuable insurance coverage could be a warning sign against potentially difficult renters. Good renters insurance is far less expensive than the expense of replacing clothing, furniture, and other personal property after a loss.
Renters insurance is widely available and simple for renters to set up. It's one of the best ways to protect your properties and income with trustworthy residents who understand the importance of coverage for their personal property. When a resident cares enough about their income and property to set up critical insurance coverage, they're more likely to take good care of your property and be an excellent renter.
Encourage Renters to Get Insurance
When you find an excellent potential resident for your home rentals in Seattle, but they don't yet have an active renters insurance policy, encourage them to get one before allowing them into your property. In some cases, until you point out the perks, renters might not understand the benefits of this type of coverage or the minimal cost for this critical protection.
Enjoy Peace of Mind With Insurance Requirements
A Seattle property manager helps investors hold renters accountable to maintain an active renters insurance policy. When your renters have this essential coverage, you experience peace of mind from knowing that they're protected in the event of a major disaster.
Real Property Associates understands the importance of requiring renters to secure renters insurance. We're here to help you set up the criteria for your home rentals in Seattle and enforce them. It's just one of the many critical pieces of the real estate investment puzzle that investors need to have secured to grow their long-term wealth.
You can learn more crucial real estate investment insights for growing your portfolio in the Seattle area when you download your free copy of our guide!