COVERAGE IS THE MOST IMPORTANT ELEMENT IN YOUR INSURANCE POLICY.
HOW DO LANDLORDS BENEFIT FROM SECURITY DEPOSIT ALTERNATIVES?
Landlords benefit from security deposit alternatives such as an insurance policy several different ways:
Advertise rental units as “security deposit free” (if locally allowed)
Be assured that the insurance company will pay on valid claims
Avoid hassles trying to collect unpaid amounts due from tenants
Eliminate complexities arising from accrued interest on deposits (in some states)
This program is for Landlords and Property Owners with 50+ units.
We do not write policies for individuals/ renters.
SECURITY DEPOSIT INSURANCE
WHAT IS IT?
WHO NEEDS IT?
COVERAGES
What is security deposit insurance?
Security deposits are the traditional way landlords protect themselves against tenant-caused damage and unpaid rent. Security deposit insurance takes the place of a traditional deposit, ensuring landlords have a financial backstop while allowing tenants to front fewer funds.
Security deposit insurance is a new and alternative way for landlords to protect themselves, while making financial terms easier for tenants to manage. It’s a win-win in many situations.
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How does a security deposit waiver work?
Security deposit alternatives don’t do away with these deposits, but rather find different ways to make security deposits more easily managed. In the case of an insurer-backed security deposit waiver, the process is simpler for both landlord and tenant. The process is as follows:
- The landlord selects a security deposit waiver program to offer tenants.
- The cost of the waiver program is passed onto the tenant as a monthly fee.*
- Should the tenant cause excessive damage or miss payment, the landlord files a claim with the insurance company.
- Assuming the claim is valid, the insurance company pays the landlord their due funds directly.
- The insurance company addresses the issue with the tenant, trying to collect whatever amount the landlord was paid.
- The landlord retains the insurer-paid funds regardless of the outcome with the tenant.
An insurance agent who specializes in new security deposit alternatives such as this can explain the process in more detail.
*The fee might be presented to tenants in a few different ways. Rent could simply be increased by the fee, and then no security deposit required. The fee could be added onto a monthly payment, in exchange for no security deposit being required. Tenants could choose between a traditional security deposit and their monthly fee.
How does a security deposit policy benefit the tenant?
Security deposit policies help tenants because the tenant no longer has to provide a full security deposit.
Many tenants struggle to come up with security deposits, especially at a time when they must pay other moving expenses. Paying a nominal monthly fee instead of fronting a full deposit is much more manageable.
Even tenants who are renewing (and thus not moving) would often still like to get their security deposit back. It could be returned at the time of renewal, if the tenant signs up for a waiver program instead.
Whether to new tenants or current ones, advertising that they no longer need a security deposit could be a major selling point for many properties. Lower-income tenants might need such a program to pay the initial costs of a place. Higher-income tenants might have security deposits well into the four figures that they’d rather not pay.
How much do security deposit policies cost tenants?
Security deposit policies tend to have quite affordable premiums. While the exact cost can vary, they’re usually a small amount each month -- and much more feasible than a large security deposit.
How can property managers obtain security deposit insurance?
To learn more about security deposit insurance, contact the independent insurance agents at Sergeant Fifty-Five Insurance. Our agents will work closely with you to determine whether this program is right for you and your tenants.
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