Owning an apartment building comes with risks, and having something disastrous happen to your property is one of them. While you have insurance in place in order to get the building rebuilt, restored, and ready for residence again, your tenants need somewhere to live in the interim. This is where renters insurance comes into play. Insisting that every single one of your residents carry a valid renters insurance policy is the key to making sure that none of them are left out in the cold should the unexpected happen.
Wondering what kind of renters insurance is necessary? Let’s explore the options.
What Renters Insurance Covers
There are two important types of insurance at play here: yours and your tenants. Your insurance, as the property owner, covers the exterior of the building, as well as any common areas and shared commodities, like plumbing. When disaster strikes, your building policy will usually pay for the repairs to the building itself, making it structurally sound and livable again. In some cases, your insurance will also pay for any lost income while construction is going on, allowing you to pay the bills with this temporary replacement income.
However, it will not pay for your tenants’ belongings or the costs of their temporary housing. Renters insurance is designed for this specific purpose. It will pay for their temporary housing, as well as for everything that they lost in the disaster, minus depreciation, of course. You won’t have to worry about paying for these housing costs as you would if a simple pipe or heating element broke.
How the Process Works
After a fire, severe storm, or other covered disaster makes your building uninhabitable, the first step is to contact your insurance agent—and your tenants should do the same with theirs. While your policy will help you start the process of rebuilding and recovering lost rental income, your tenants will need to rely on their renters insurance to cover their personal losses and temporary living arrangements.
Most renters policies include Loss of Use or Additional Living Expenses (ALE) coverage, which helps pay for hotel stays, short-term rentals, meals, and other necessary expenses while repairs are underway. However, it’s usually up to the tenant to find suitable temporary housing. Their insurance company may reimburse them for these costs, or in some cases, pay housing providers directly—but they’ll still need to coordinate the logistics themselves.
To be reimbursed for personal belongings, tenants must also provide an inventory of everything that was lost or damaged. Once approved, their policy will cover the cost to replace those items—helping them refurnish and get back to normal life once the building is ready for occupancy again.
By requiring renters insurance, you’re helping ensure your tenants won’t be left stranded or financially devastated. And that peace of mind goes a long way for both you and your residents.
Taking the Pressure Off of Landlords
Good landlords care about their tenants, and they want to ensure that they have a place to land if the building is damaged in some way. Insisting that every resident has renters insurance takes some of this pressure off of you and your bank account because you won’t have to pay for their temporary housing or help them find a place. This frees you up to worry about the repairs being made to your building.
Have Questions? Contact Charlotte Insurance
Want to learn more about renters insurance for your properties? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan your business needs.