If you are looking for a house or apartment to rent, you might come across some that give you the option of paying a security deposit or buying a security deposit insurance policy. These insurance policies are a relatively new concept with rental properties, and they offer several key benefits to tenants. Here are a few things to understand about security deposit insurance.

It replaces a security deposit

When landlords offer security deposit insurance, they typically give you the option of either buying a policy or paying a deposit. The deposit you pay might be as much as one month of rent for the unit, while the insurance premium you pay may be a lot less than this. In many cases, security deposit insurance costs around 20% of the monthly rent on a unit. If this is the case, you could save a lot of money by purchasing the insurance instead of paying the deposit.

It is non-refundable

You might be wondering why everyone who rents wouldn't choose the security deposit insurance since it is cheaper, and the main reason is because you do not get it back. It is only typically a one-time fee, but you will never get the premium back, even if you leave the apartment in better shape than it was when you moved in.

This is the tradeoff you make for buying the insurance, but the good part is that it saves you money. The other good part is that you will not have to worry about losing your security deposit. It can often be hard to retrieve a security deposit after moving out, simply because landlords use this money to make repairs on things tenants have damaged.

Why landlords offer this option

Many landlords are now offering this option because it offers more protection. If a tenant pays a $600 security deposit and causes $1,000 in damages, the landlord can only collect $600 without a major fight. With an insurance policy, the landlord has a better chance of collecting all the money needed to pay for the damages the tenant caused. In addition, it's easier for a landlord to file a claim with an insurance company than to take a person to court for damages.

As you look for a place to rent, you may be given this option, and you are free to choose whichever choice you prefer. To find an apartment or house for rent, contact a landlord or a company like Miamisburg Luxury Apartments.