Are you part of growing property investors looking for property insurance?
Over 36% of US households are properties that are being rented. Signing a contract with a tenant means that you entrust them to take care of your property, but sometimes, you can’t avoid accidents.
Property insurance is the first thing to think of even before buying a property. Property insurance gives you protection and coverage from costs of damages and losses. Insurance helped cover the cost of over $120 billion worth of property loss and damage in 2021.
Are you torn between buying a vacation rental insurance policy or a security deposit? Here are things to help you compare these options.
Security Deposit
If you’ve ever rented a house or any property, you already know what a security deposit is. This is standard in all rental property contracts. Most security deposits equal 10% of the total rental price or up to one month of rent.
Security deposits are usually charged before the tenant or renter moves in. This became an industry standard. Security deposits are usually collected and held until after the renter leaves.
To get one’s security deposit back, one must leave the property in pristine condition. At the end of the contract, the owner conducts a check on the property to ensure no damage or loss happened. If there are any damages or losses, the security deposit covers its cost and the rest gets refunded.
Should You Use a Security Deposit?
While security deposits are the easiest way to get insurance, they can be a hassle. Holding and refunding security deposits need extra paperwork, among other things. A fixed security deposit also limits you to that amount.
Regardless of the damage caused by a renter, you only have the security deposit given to you. If property damage exceeds the security deposit, you may have to pay the damages yourself. You may have to take it to a small claims court to get compensation for property damage.
Since payment is upfront, high deposits can also cause you to lose potential renters. Some renters think they might not get their security deposit back so they back out.
What is Vacation Rental Insurance?
Vacation rental insurance lets you outsource insurance from another company. With this, you can offer renters to buy their own insurance policy and have more coverage. This is a better way of insuring your property since you can consult and have insurance that fit your needs.
Both security deposits and vacation rental insurance cost less than damage deposits. Vacation rental insurance cost only $40 and can cover up to $25,000 or more. Greater coverage at a lower price means this won’t be a burden to your renters and you.
If you think security deposits aren’t for you, this is the best alternative.
Outsourcing insurance is less of a headache for you and your clients. With less price and greater coverage, you can sleep better knowing your property is safe and covered.
Only get property insurance from a trusted insurance company. Go to propertyinsurancehq.com for fast insurance and claims!
Protect Your Property Today
Everyone gets their property damaged all the time. Whether you own a rental property or a home, it is important to get property insurance. Consider vacation rental insurance today!
Want to learn more about property investments? Check out our other blog posts!