Insurance versus deposit: new alternative to traditional security deposit paid to property owners

Many tenants are a bit puzzled when they stumble into the must-payable ‘three amounts’ while renting an apartment. These three amounts are traditional security deposit covering possible damage to an apartment rental, commission to real estate agency along with advanced payment for one-month rent.  

Страхование квартиры или страховой залог

Insurers believe than new product will fully protect owners’ property and will ease the procedure to the tenants who now are obliged to pay expensive deposit.

“PIK-Lease” and “AlfaInsurance” companies, offered to owners and tenants an alternative to security deposit, expect great demand of the new insurance product, as it guarantees full expenses coverage in the event of property or premises finishing damage along with sudden tenant’s “check-out” or delay with rental payment.

Insurers are positive that from now tenants will sleep well in their rented apartments, as there is no risks to be deprived of the security deposit without explanation. As, statistically, a quarter of security deposits are kept by the property owners without any ground.

Insurance policy will cost to the tenant 600 – 2300 rubles per month and will cover one million rubles and it considerably more expensive than average security deposit. Tenants will have choice to pay it monthly or in a single payment. So the insurance will cost to a tenant from 7 900 to 27 600 rubles per year.

However, property owners can prefer a fowl in hand in the form of security deposit equal to one month rent than two flying fowls payable in a single payment in some distant future. Furthermore, some landlords can be preoccupied with tax matters. For sure, tenants would be satisfied with a new alternative to security deposit, but it is an open-ended question if property owners are ready to switch form classic procedure with a security deposit to insurance policies.

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