CAR endorses rental insurance

Colorado apartment landlords can now buy a recently launched rental default insurance policy will pay them up to six months of rent for such things as tenants vacating their units, evictions or tenants who stop making monthly payments.

Colorado joins seven other states where the rental default insurance program is available. The AON Rent Protect program is being endorsed by the Colorado Association of Realtors.

The product also replaces up to three months of rent in case of the death of the tenant, or if a tenant receives a court-order canceling the insurance because of a financial hardship. It also provides up to three months of rent if a tenant is required to report for active duty in the military.

It also pays up to $1,000 in leal fees for such things as court costs and attorney fees in case of an eviction. The cost of the insurance starts at $250 a year per unit for apartments with rents up to $1,200 per month.

In part because of the economic crisis, job losses and foreclosures, apartment vacancy rates have been falling and rents have been rising in the Denver area.

On the other hand, the same economic forces that hammered homeowners can impact renters, too.

“If our tenants don’t pay us then we’re going to struggle to make that payment,” said Aaron DiCaprio, one of the first Colorado landlords to purchase AON Rent Protect for his property in Centennial. “As an attorney, I know that it’s a protracted process to evict a tenant and we really can’t afford to pay that additional mortgage for four to six months.

Insurance minimizes risk

“There are so many factors to consider as a landlord – whether you have one property or numerous properties,” said Mike Treadway, property manager and owner of Prism Realty Inc. in Greenwood Village. “A rent insurance product like this gives my clients a chance to protect their investment and stream of income, minimizing the overall financial risk through an extremely affordable coverage. Tapping into the policy protection just one time on one property could deliver a return on the annual premium over several years.”

While homeowner’s insurance will cover a property owner against claims of physical property damage or personal injury, it does not help a homeowner in the event a renter abandons the property, or worse, stops paying rent and refuses to vacate.

“This is a game changer for anyone who owns or manages a residential rental property in the state of Colorado,” said Steve Morgan, general counsel of CAR. “Just like homeowners who can’t pay the mortgage and foreclose, tenants lose their jobs and stop paying the rent. The loss of tenant income or subsequent eviction proceedings can create serious financial problems for landlords.”

The Colorado Association of Realtors has officially endorsed this product in an effort to encourage Realtors, property managers and other industry professionals to inform their clients about the new insurance.

“One of our initiatives at CAR is to help safeguard the wellbeing of Colorado homeowners and promote market stability,” said Robert Golden, CEO of the Colorado Association of Realtors. “We would like to see all Colorado Landlords protect themselves and their investments.”

Contact John Rebchook at JRCHOOK@gmail.com

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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Comments

  1. I am guessing the qualifying criteria is very burdensome. e.g. property must be managed by a licensed property manager, tenant must meet strict credit and income criteria. etc.. no thanks, I prefer to rent to those with some minor ‘issues’ that other ‘A’ grade landlords will not rent to, ‘b’ grade tenants stay longer and complain less.

  2. Hi All;

    Great feedback, and with any new solution there is a bit of a learning curve by partners and consumers alike. We welcome all questions.

    One of the many great things about Tenant Default Protection is the ability to provide Landlords financial protection in the event of skip tenant, stop pay, eviction and legal reimbursement.

    We wanted to make sure this program was relevant and user friendly for the Property Managers and Landlord communities, by providing ease of qualifying, simple enrollment, and customer support.

    The qualification are very basic:

    *If the tenant was in the property for less than 12 months, a valid tenant check must be obtained. Aon Rent Protect works with CoreLogic Safe Rent and tenant screenings are offered to Aon Rent Protect clients at a discounted rate. However any tenant screening service that includes the following will meet our qualifications:

    a) Credit check or credit report (note: Aon Rent Protect does not require any particular minimum score)
    b) Check on prior tenant evictions within the past five years
    c) Criminal records search
    Tenant score must be acceptable, positive, passing or
    recommended.

    * If the tenant has been in the property more than 12 months, their rent payments cannot have been in arrears the previous 12 months.
    (No tenant check is required).

    Please contact me if you have any questions or I can offer further assistance.

    Best,

    Bryan

    Bryan Kinsey | Sales Service Representative
    Aon Affinity | Aon Rent Protect
    159 E County Line Road | Hatboro, PA 19040
    t +1.801.559.9594 | f +1.847.953.4813
    bryan.kinsey@aon.com | http://www.aonrentprotect.com | http://www.aon.com

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