As we’ve shared before, not all renters policies are made equal. While the average renters insurance boils down to protection for a tenants’ personal property and liability in the event of accidental damage, like all insurance policies, renters insurance has exclusions—situations or events for which the insurance won’t provide coverage. These exclusions can have implications for both tenants and property managers. Below are common renters insurance exclusions and why these matter to your business:
Common Renters Insurance Exclusions
- Flooding
- Exclusion: Standard renters insurance does not cover damage due to flooding, including rising water from heavy rain, hurricanes, or snowmelt.
- Impact on Property Managers: If a rental property is in a flood-prone area, property managers should encourage tenants to purchase separate flood insurance or obtain coverage through the National Flood Insurance Program (NFIP). Without this, residents’ personal property won’t be covered if a flood occurs, leading to potential disputes.
- Earthquakes
- Exclusion: Earthquake damage is not covered by standard renters insurance, including damage to personal property or personal liability claims arising from an earthquake.
- Impact on Property Managers: In earthquake-prone regions, property managers should inform tenants about the need for separate earthquake insurance if they want coverage for their belongings in the event of an earthquake.
- Intentional Acts
- Exclusion: Renters insurance does not cover damages caused by intentional actions, such as deliberate destruction of property or injuries caused by the tenant’s own actions.
- Impact on Property Managers: If a tenant intentionally damages property or causes injury, the insurance won’t cover the costs, leaving the tenant (and potentially the property manager) liable for damages.
- Negligence and Maintenance Issues
- Exclusion: Renters insurance typically does not cover damage resulting from resident negligence, such as leaving a window open during a storm or failing to report a leaking pipe.
- Impact on Property Managers: Property managers must ensure that residents understand their responsibilities to maintain the rental unit (e.g., reporting maintenance issues) and avoid negligent behavior that could lead to damage. Otherwise, tenants may not be able to rely on renters insurance to cover certain types of damages.
- High-Value Items
- Exclusion: Certain high-value items (e.g., jewelry, art, electronics) may be excluded or only partially covered under standard renters insurance unless the resident has purchased additional coverage, known as a rider or endorsement.
- Impact on Property Managers: Property managers may face claims from tenants who assume all personal property is covered. They should encourage tenants to review their policies to ensure adequate coverage for valuable items.
- Tenant’s Liability for Damage to the Rental Property
- Exclusion: Renters insurance does not cover damage to the physical structure of the rental property itself. This is typically covered by the landlord’s property insurance.
- Impact on Property Managers: Although renters insurance covers tenants’ personal property, it does not cover damage to the landlord’s property. Property managers should ensure that the landlord’s insurance policy covers the building and any structural damages that occur due to resident actions (e.g., accidentally starting a fire). In some cases, property managers may require residents to have liability coverage for damages they cause to the building, though this is typically a separate requirement from renters insurance.
- Roommates’ Coverage
- Exclusion: Renters insurance policies may not cover roommates unless they are listed as additional insured parties on the policy. This can lead to confusion or lack of coverage if a roommate’s belongings are damaged.
- Impact on Property Managers: Property managers should be aware of who is living in the unit and encourage tenants to ensure all residents are covered under their insurance. This can prevent disputes over coverage when multiple people are involved in a claim.
- Pests
- Exclusion: Renters insurance typically does not cover damages caused by pests, including rodents, insects, or bedbugs.
- Impact on Property Managers: If residents experience pest infestations, they may not be able to claim insurance for damage to their property. Property managers are often responsible for pest control and may face resident dissatisfaction if pests lead to damage.
Recommendations for Property Managers
With all of these exclusions, it’s easy to see where things can get confusing. From residents’ coverage assumptions to disputes over responsibilities, it’s important to help your residents understand what is and is not covered upon moving into their units. Our recommendations for you and your onsite teams include:
- Educating Tenants: Property managers should clearly explain the limitations of renters insurance to tenants and encourage them to review their policies to ensure adequate coverage.
- Providing a List of Recommended Coverages: For tenants in flood-prone or earthquake areas, suggest additional insurance policies, like flood or earthquake coverage.
- Requiring Proof of Insurance: Ensure that tenants provide proof of renters insurance before moving in, and clearly state the minimum coverage requirements (e.g., personal property, liability).
- Clarifying Liability for Property Damage: Property managers should clearly define in the lease who is responsible for damages and ensure tenants understand that renters insurance typically won’t cover structural damage to the rental property.
Enhanced Renters Insurance Offering
At ePremium® Insurance Agency, we’ve developed an enhanced renters insurance offering that includes:
- Liability Coverage
- For resident-caused accidental property damage including fire, water, smoke, and explosion
- Optional Damages
- For both parties; includes Resident-caused water damage, bed bug remediation expenses, and Biohazard clean-up
- Covered Perils
- Coverage anywhere in the world for damage or losses due to fire, lightning, windstorm, hail, explosion, riot, overflow of water, and more
Ring in a better renters insurance offering by scheduling a call today!
ePremium Insurance Agency, LLC, a limited liability company organized under the laws of Ohio, is a licensed insurance producer in all states, except Alaska with its principal place of operation at 4770 Duke Drive, Suite 200, Mason, OH 45040 (NPN 9925625, California License No.: 0G66570, Texas License No.: 1549460). ePremium Insurance Agency, LLC does business under the following names: in NY dba – ePremium Insurance Agency LLC; in FL dba – ePremium Insurance Agency, LLC; in CA dba – ePremium IRIS Insurance Solutions, LLC.