Why More Landlords are Requiring Renters Insurance
Several years ago, many people had never heard of the widely available and cheap renters insurance. This is despite the fact that tenants can get tens, if not hundreds, of thousands in coverage for as low as five dollars per month. Today, however, the story is different. More landlords are starting to require that tenants have an apartment insurance policy in case of a fire, flood, or another event that could damage the property.
Increasing taxes and staffing costs are making it more expensive to become a landlord. In turn, housing prices are ballooning and less people can afford to rent, let alone take care of potential damages to their apartment or home.
Having a cheap renters insurance policy can save you and your landlord thousands of dollars. It also prevents you from having time-consuming and awkward conversations after a fire or flood.
Why Housing is Becoming Expensive
During 2018, the median property tax across the country was 1.2%. This is how it works: If the apartment complex you live in is worth five million dollars, your landlord pays $60,000 (1.2% of $5,000,000) in taxes each year.
To make things worse, state and local governments collected four percent more in property taxes over the last year alone. All of this doesn’t include the salaries of employees and maintenance staff, which increased by over 12% during the last five years.
To offset these rapidly growing expenses, many landlords are raising rents. According to Apartment List, a two-bedroom apartment’s monthly rental price went up by 1.4% from September of 2018 to the same month in 2019. Since 2015, the increase is almost seven percent.
Unsurprisingly, these higher housing costs are making it more difficult for tenants to afford rent, let alone pay out-of-pocket for fire and flood damages. This translates to more risks that landlords have to bear. Their tenants are less likely to be able to take care of damages while property owners’ own expenses are becoming increasingly burdensome.
The Benefits of Cheap Renters Insurance
Some people may argue that large, multimillion complexes should be able to take care of a damaged apartment very easily. After all, fixing one unit when you own tens of them, if not 100s, is just a drop in the bucket.
This is incorrect for several reasons. First, rising wages and property taxes are already squeezing rental properties’ profit margins. Second, the average monthly rent nationwide of a two-bedroom apartment is almost $1,200. Repairing it after a fire or flood could take several months.
Landlords would have to incur these expenses while losing out on a few thousand dollars until the apartment can be rented out again. Lastly, we can’t forget about homeowners and small landlords who would be devastated by these costs. Even more so than multimillion complexes.
Just as importantly, many companies will give you a discount on your auto and renters insurance when you buy them as one bundle. In turn, you will both save money and not worry about hefty expenses in case of a flood or fire. Many cheap renters insurance policies also protect you if someone steals your belongings.
The Bigger Picture
Ballooning property taxes and increasing wages are making the lives of landlords very expensive. Meanwhile, tenants are also having a hard time affording rent. Because of this, an apartment insurance policy makes things easier for both sides.
Landlords will not have to incur additional costs. Similarly, by purchasing a rental home or apartment insurance policy, tenants can both save money and enjoy protection during emergencies.
If your landlord doesn’t require you to have coverage, it might still be worth it. You are able to get a discount on both your auto and renters insurance so you can enjoy some peace of mind.