The Palisades and Alta Dena Fires: A Wake-Up Call for Housing Providers

Mercedes Shaffer l Broker l Published in AOA Magazine

The recent fires in the Palisades and Alta Dena serve as a stark reminder of how quickly disaster can strike, leaving tenants displaced and housing providers facing unnecessary risks. A well-written lease includes terms requiring tenants to carry renter's insurance to help mitigate these risks. If your lease doesn’t have this, you may want to consider incentivizing tenants to obtain renter’s insurance by allowing them to deduct the cost from their rent. Without this coverage, you could be exposing yourself to financial and legal complications that are easily avoidable.

The Cost vs. The Risk

Renter’s insurance is typically under $250 per year and can provide significant financial security. In addition to covering a tenant’s personal belongings, it may also reduce your own insurance premiums. It’s worth checking with your insurance provider to see if submitting proof that your tenants have renter’s insurance can lower your costs.  I’ve seen many instances where it does.

What Renter’s Insurance Covers

·       Personal Property – If a tenant’s belongings (TVs, computers, clothing, etc.) are damaged due to fire, theft, vandalism, or water, their policy will likely reimburse them for the loss.

·       Liability Protection – While a housing provider’s policy may cover claims for injuries that occur on the property, renter’s insurance protects tenants from liability for accidental damage or injury they may cause. Standard coverage typically includes $100,000 in protection, but some policies can go as high as $1M in liability protection.

·       Loss of Use – If a covered disaster forces a tenant to relocate temporarily, their policy should cover hotel stays and meals while the property is being repaired.

Additional Coverage in a Strong Renter’s Insurance Policy

There are additional renter's insurance policies for tenants that go beyond the basics, offering more comprehensive coverage that can benefit both tenants and give you peace of mind. Here are some of the extra protections these policies can provide.

·       Medical Payments to Others – Covers minor medical expenses if someone is injured in the tenant’s unit, even if the tenant isn’t at fault.

·       Identity Theft Protection – Some policies include identity theft coverage, which can help with expenses related to fraud, credit monitoring, and legal fees.

·       Pet Liability Coverage – If a tenant’s pet injures someone or damages property, this coverage helps protect against liability claims.

The Bottom Line

Housing providers should take a proactive approach to help safeguard their investments and avoid unnecessary liability. Renter’s insurance is a small cost that can make a significant difference in protecting both you and your tenants.

Not all renter’s insurance policies are created equal—some offer far better coverage than others. A little time spent researching the different options on the front end can save you from potential headaches later. Having explored the options thoroughly, I can assure you that the right coverage can make all the difference in protecting your property and your peace of mind.

To share your thoughts and opinions, feel free to contact me.  Mercedes Shaffer is a multifamily real estate agent with REAL Broker, and If you have questions about buying, selling or doing a 1031 exchange, her  team serves LA and Orange County and can be reached at 714.330.9999, InvestingInTheOC@gmail.com, or you can visit their website at InvestingInTheOC.com  DRE 02114448