Operating a building with condos offers stability from the tenants and a steady stream of rent. However, if the tenants are allowed to rent the condos instead of own them, they are not required to have renter’s insurance on their property. In that case, you and the other tenants could be exposed to increased risk. To lessen this risk from uninsured condo owners, there are a few strategies that you can deploy. Learn more about why this situation is a cause for concern and what you can do with this guide from Muller Insurance.
Why Uninsured Tenants Are Problematic
As a landlord, your dwelling insurance policy will provide comprehensive coverage over a number of areas, with some slight differences depending on if you live on the premises or not. Regardless, the insurance will cover damage or loss to the building’s structure due to weather, fire, vandalism, and more. It will also protect you from injury liability, but only in common areas like hallways and lobbies, which is an important distinction.
Anything that is inside the walls of an individual unit will not be covered unless the tenant has their own insurance. So, if you provided furnished units with appliances and furniture, those are at risk of being lost without compensation if you don’t take advantage of an optional add-on available to tenant-occupied insurance policies.
In addition, damage that happens in a unit without coverage can quickly spread to other units and cause more havoc. If a unit floods or catches fire, tenants without insurance may try to handle the situation themselves instead of notifying the authorities because they don’t want to be held financially liable. But soon, water or fire damage can spread to other areas, putting other tenants and property at risk.
Explain the Risks
One way you can attempt to convince tenants to get renters insurance is by explaining to them the risk they pose to themselves and others by remaining uninsured. Besides the potential for spreading damage to other units, their own belongings and finances are at stake. They would also have to pay for repairs to any damaged property if your landlord insurance does not cover it, as well as replacements for stolen items.
Renters insurance also provides liability coverage if someone gets injured while in their individual unit. If that person were to file a suit against them, then they would be personally responsible to pay awarded damages and legal fees out of pocket without insurance. Often, the cost of a renters insurance policy will pale in comparison to a lawsuit or furnishing repair, something you should highlight to every renter.
Require Insurance on Your Property
While state law does not require tenants to have renters insurance, you can require that anyone applying to live in your condos shows proof of insurance at closing. This will prevent any uninsured condo owners from living in your building, nipping problems in the bud before they have a chance to surface. This may decrease your pool of candidates slightly, but the peace of mind and potential savings on repairs will more than make up for it.
Contact Us to Learn More
Being a landlord takes a lot of responsibility and attention to detail. You can alleviate some of your concerns by having all your tenants take out a renters insurance policy. If you own a building in Hoboken or anywhere in Hudson and Bergen counties, refer them to Muller Insurance. Our comprehensive renters insurance will provide extensive protection over their belongings. Contact us to learn more about your insurance options as the owner of a property as well. Our experienced staff members will consult with you to determine the best policy.