Owning rental property is a great investment. And dealing with tenants can be just as pleasant as long as you take some precautions when selecting them. It’s also best to protect yourself from frivolous lawsuits and misunderstandings by asking your renters to carry insurance. Here are some important things to know about renters insurance in New Jersey.
What does renters insurance cover?
There are various types of policies that cover various things. For example, if you live in cooperative housing, you can speak to your agent about co-op insurance in New Jersey. But most renters insurance in New Jersey covers the following:
- Personal property: covers renter’s property if it is damaged, stolen, or destroyed.
- Loss of use: covers renter’s cost of living if misplaced due to a disaster. These costs might include temporary housing, food, and other essentials.
- Liability: covers court costs renters might incur if found legally liable for injuring someone else or damaging another person’s property.
- Medical: covers certain medical costs of people injured on the insured’s property or residence. It could also cover things that happen off the property in some instances, such as if the renter’s dog happens to bite someone in the park.
Renters insurance caveats
It’s important to note that not all insurance is the same. Policies and companies vary on what they will and will not cover, and some offer additional coverages for higher premiums. For example, some policies do not cover earthquake insurance but might offer it as an add-on to their regular premium. They also might not cover personal luxury items or non-essentials such as jewelry, artwork or fine furs, but again, may offer add-on endorsements for them. It’s important to let your renter know that they are responsible for finding out what their policy will and will not cover.
Why landlords should require their tenants to have renters insurance
People often assume their security deposits will cover any damages, but in many cases, it’s not nearly enough. And as a landlord, you probably already have some type of coverage to protect your property, but most policies do not protect renters’ property. And even though you are usually not required by law to replace damaged items, you could still wind up in court if the renters try to fight it. If they have their own insurance, however, they will be able to replace any damaged or stolen possessions without any inconvenience to you. It will also help to give you peace of mind knowing that their insurance will help them pay for lodging should they be misplaced due to a natural disaster or fire.
Another good reason to require renters insurance is to weed out bad renters. Most landlords now use software which helps them advertise their properties online easily, thus increasing interest from potential tenants. Therefore, it’s best to include the requirement of renters insurance on your listings, to steer away those who refuse the charge from the start. If a potential tenant balks at having to pay such a small fee, it could be a sign that they will also have trouble coming up with the rent. Just like running a detailed tenant screening report free, renters insurance requirements will cut down on applicants who can’t afford to pay their expenses.
You might meet some resistance when requiring renters insurance from your tenants because they just view it as an added expense. But the fact is that it could save them and you both from potential disasters and misunderstandings for very little money. Most renters insurance policies cost less than $20 and can save them thousands of dollars if they ever need to use it. Take, for example, a home that is badly damaged by a flood. More than likely, a renter would have to replace every item in their home, especially electronics and furniture. Those costs can be astronomical compared to what a simple renters insurance policy would cost.