6 Renters Who Are Tough to Insure
There are seven types of renters who are known to fall under the "difficult to insure" heading. They are viewed as inevitable risks and it can be challenging to landlords to convince major insurance carriers to consider them.
1. Renters in need of financial assistance:
Section 8 renters are considered "risky" and most major insurance companies will not cover them. In fact, it is best to check with your insurance carrier to see if they will insure a Section 8 renter prior to opening up your properties to Section 8 applicants. In fact, you might save some time by googling carriers which insure Section 8 candidates as there are only a few out of thousands of companies that will do this. In fact, all rental assistance receiving tenants are normally considered in the same manner as Section 8 applicants and few insurance carriers categorize such prospects differently, depending on the underwriting guidelines specific to individual insurance carriers.
2. In-Home Daycare renters:
Prior to authorizing a specific prospect for lease, be sure to inquire as to whether the tenant will be caring for children other than his or her own offspring. Why? Because laws vary from state to state regarding criteria which constitutes an in-home day care. In other words, the state will determine how long a child or children who do not reside in the residence may be cared for in the residence before that property is considered a daycare business. Be sure your tenant prospect is in compliance with state-specific laws and that all insurance policies provide accurate coverage terms.
3. Students:
When investigating the option of renting to students, it is prudent to note that there are many differences between basic student rentals, frat houses, grad student rentals and simply renting to your friend's college kid off campus. Each require a different type of insurance underwriting. For example, renting to a grad student might require a specialized or specific policy which differs from a policy that is written for a frat house. Liabilities and fees would differ vastly as would the necessary coverage amount you would need to expect from your insurance carrier.
4. Dog Owners:
Check with your insurance company regarding dog breed restrictions before offering a lease agreement to a dog-owning tenant prospect. In addition, service animals must be vetted and, if the rental property is part of a condo association or HOA, verify the rules regarding breed restrictions, weight and number of allowed animals per property.
5. Week-to-Week:
Bear in mind that short-term tenants are usually tough to insure. For example, if you are running an Airbnb, there are only two companies from which to choose for appropriate insurance coverage. Check out google for more information.
6. Back-on-my-feet renters:
For halfway house or recovery program rental property owners, your tenants will be view as "high risk", therefore you need to have a very specific discussion with insurance carriers before moving forward in this aspect of your business. All properties which are categorized as "transitional living" properties will be subject to specific criteria, restrictions and other specifics which must be vetted by a carrier in order to ensure the property will make it through underwriting. For example, your carrier might mandate routine drug screening of the tenant or tenants in order to keep your policy in force.
It is wise to note that premium rental property management companies are skilled and experienced at handling all the details for your property, especially the difficult ones.
