The Unique Face of an Insured: Exposures of Landlords and Renters
With over 28 million residential real estate investors in the marketplace, identifying property and liability loss exposures in a residential property can be the difference between a successful and devastating financial year. Landlords and renters are each susceptible to different types of loss exposures, and the first step to protect themselves should be obtaining the proper coverage. The USLI HO6 Condominium Rented to Others and HO4 Renters products were specifically designed to fit the unique needs of both landlords and renters.
Landlords are responsible for the overall maintenance of their rental unit, which includes making any necessary repairs. Not only are property and liability insurance necessary to protect the landlord’s investment property, but they are equally important to protect against loss of income. Imagine if a rental unit is damaged by fire, lightning, or freezing; the unit would most likely become uninhabitable, which means the landlord will be losing out on rental income. With the USLI HO6 Condominium Rented to Others product, these perils are covered, and the landlord would be able to recover up to $50,000 in coverage for loss of income.
Another significant loss exposure that landlords face is an unfavorable tenant. The best defense in preventing an unfavorable tenant would be to obtain a tenant screening report on every prospective tenant. Even though a tenant screening cannot predict the future, it can assist in providing a clear picture of the prospective tenant’s payment habits and amount of debt. This report could also assist in minimizing the risk of renting to a problematic tenant. Every USLI policyholder has access to our Business Resource Center, which offers landlords the ability to obtain tenant screenings at a discounted rate.
Landlords are seeing a rapid increase of rental units over the past few years. According to a recent report released by Harvard University’s Joint Center for Housing Studies, 2004-2014 was the strongest 10-year stretch of rental growth since the 1980s. Many factors influence these numbers, including student loan debt, credit issues and job instability. With the number of rentals on the rise, tenants need to be aware of their loss exposures. Tenants are responsible for taking care of their rented property, which means they are required to repair all of the damage caused by themselves, children, guests and pets.
Tenant insureds are entitled to protection for their possessions, loss of use and third-party liability to others. The USLI HO4 Renters product can consider any residential location, such as a condominium, apartment, mobile home or single-family dwelling. Our product, which is now admitted in Pennsylvania, includes up to $200,000 in Coverage C Contents, $50,000 Coverage D Loss of Use and $1 million in liability coverage. In the event of an unexpected loss, such as a fire, these coverages would assist in providing compensation for alternative shelter if the residence becomes uninhabitable while damages are being repaired. This product also provides renters with the coverage they need to replace their contents if destroyed by the fire.
Renters also need to consider theft of property. According to the Federal Bureau of Justice Statistics, theft at a rental property occurs twice as often at owned locations. The FBJS cited anonymity, limited security and easy entrance as some of the advantages that thieves have when stealing from a rental location. If you are a renter, you can easily combat the anonymity issue by getting to know your neighbors. By doing this, you would be able to identify individuals who might not belong on the premises. The limited security and easy entrance concern can also be alleviated by installing a home alarm system or security bar for a sliding patio door.
Pet damage coverage is also becoming increasingly popular among renters and senior tenants who take in an animal for companionship. Regardless of the age of the tenant, the HO4 Renters product offers a pet damage endorsement that provides up to $500 for damage to the landlord’s property that is caused by the tenant’s pet. Imagine your dog scratches the hardwood floors or has multiple accidents on the carpet of your rental location. The pet damage endorsement would provide the coverage needed for the insured to repair these damages.
In this article, we’ve discussed the different types of loss exposures that landlords and renters face. The USLI HO6 Condominium Rented to Others and HO4 Renters products are available to assist these individuals by providing them with peace of mind that they need.
As always, thank you for your support and business.
Written by Danielle Conner
March 3, 2016
Co-author and Contact Stacy Barrett
Underwriter and Product Leader | Personal Lines | 888-523-5545 Ext. 2108