Are you a landlord who’s thinking about renting to college students? Make sure you’re protected. Being a landlord can be challenging in general, but there are special considerations when dealing with college students. Many of them are on their own for the first time, with little experience in maintaining a home. And of course, they have been known to throw the occasional party that gets out of control.
One possible solution? Landlord insurance.
How landlord insurance can help
Landlord insurance combines elements of homeowner’s insurance and small business insurance to protect a rental property from monetary losses. “Distinct from renter’s insurance, landlord insurance is a specific type of insurance policy that covers structural damage to a rental building or home, personal injury, and lost rental income from listed perils like storms, accidents, and vandalism,” explains Emile L’Eplattenier, a marketing and real estate marketing and sales analyst at Fit Small Business.
A typical homeowner’s insurance policy may fall short when renting to this demographic. Kristofer R Kirchen of Advanced Insurance Managers, Inc. says that the chief difference between the policies is that the landlord (or dwelling) policy is designed to accommodate the risk to properties occupied by a tenant, whereas a homeowner’s policy is exactly what it says: a policy for people who own their homes.
L’Eplattenier cautions that the vast majority of homeowner’s policies will not cover damage to the rental property, nor will they reimburse the landlord for lost rent. “You need to acquire a specific landlord insurance policy in order to have coverage,” he says. “It can definitely help mitigate the risks of renting to college students or any other tenants that may be inclined to damage property beyond normal wear and tear.”
“Landlord insurance is similar to homeowner’s insurance but with a key difference: landlord insurance covers only the structure of the property – it does not cover personal belongings,” says Brian Davis, co-founder of SparkRental.com and a real estate investor with 15 rental properties. And while many of these policies do cover damage caused by tenants (including rowdy college students), some do not.
Other tips for renting to college students
So besides ponying up for more insurance, what other steps can landlords take to protect themselves when renting to college students? Here are a few common sense tactics:
Boost security deposits To further protect themselves, landlords should consider imposing higher security deposits. Doing so may enable them to avoid filing a claim. “Like other insurance types, landlord insurance premiums tend to skyrocket (or even non-renew policy holders) after a claim,” says Davis.
Good screening practices Kirchen recommends that landlords stringently screen student applicants, and also advises landlords to “require that all tenants have their own renter’s policy, and utilize a lease that contains a strict, unambiguous damage clause with an indemnity provision at the very least.”
Customize the lease A real estate attorney can help you draft a lease that is specifically designed for college students, with options for co-signers (college students don’t have a lot of credit, usually) and stipulations dealing more specifically with damage, noise, and maximum occupancy.
