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