Lease insurance replaces the need for deposits entirely. Replacing highly regulated, burdensome security and pet deposits with reliable lease insurance eliminates a significant leasing roadblock, making housing more accessible for all renters. With millions of leases insured to date across the socio-economic spectrum, a majority of renters, regardless of affordability challenges, prefer lease insurance over traditional security and pet deposits.
Programs with a social focus, like lease insurance, staunchly maintain the best interests of renters. Unlike surety bonds, lease guarantees, and similar alternatives, lease insurance prioritizes affordability, accessibility, and social impact. While advocacy for deposit-related legislation has led to explicit support for deposit alternatives in several states, it is still crucial to educate about the difference between lease insurance and alternatives.
The primary difference between lease insurance and a bond or guarantee is the financial impact on renters. Lease insurance provides coverage for an entire property, while alternatives provide coverage for specific renters. While most renters prefer lease insurance regardless of income level, alternatives solicit affordability-challenged renters who simply can’t afford to pay a deposit. With lease insurance, there is no renter subrogation. With alternatives, renters are personally liable for all claims, which damages their credit and creates more barriers to future housing.
Lease insurance underwrites and insures properties – not renters. Coverage to offset write-offs is offered via a pass-through expense to renters, which is designed never to exceed the cost of a deposit. Unpaid balances are offset through property claims, and the insurance provider never pursues renters for collection.
Conversely, bonds and other alternatives underwrite renters, who remain fully liable for reimbursing the full cost of all claims filed by the property, regardless of payments made. Once enrolled in a bond, renters assume they are offsetting risk similar to a deposit, which is not the case. Full claims paid amounts are pursued for collection by bond providers, impacting the renter’s ability to obtain future housing. Bonds ensure renters maintain a cycle of financial struggle and create additional barriers to housing, exacerbating a growing housing problem nationwide. Offering a credit building program (like Esusu) to renters while offering a bond program is incongruous, as subrogation negatively impacts credit.
Lease insurance prioritizes the best interests of renters in all efforts. It creates greater access to housing and addresses the preference of all renters to avoid upfront move-in cost and the risk of deposit loss at move-out. Lease insurance fosters trust and goodwill with renters and aligns with ESG principles by promoting fairness and social responsibility, while preventing credit damage caused by deposits and bonds.
According to a report by NBC News, Cierra Winzor, a mother of two, was left without a home or job after Hurricane Dorian struck Florida in 2019. She didn’t have the time or resources to save up for a security deposit. She learned about security deposit alternatives during her apartment search and said it saved her approximately $2,500 upfront, allowing her to instead pay a small monthly fee for insurance.
“I was able to save that money that I would have spent on a security deposit to build my credit, and get into a better financial standing,” she told NBC News. “I was able to put my kids into a nice daycare and thrive from that because I was able to keep that money and do what I needed to do to be in a better financial place.”
Winzor is just one of many examples of how switching from deposits to a mutually beneficial solution like lease insurance can deliver social good for renters while appropriately mitigating risk and replacing avoidable lost income.