Summary
Military servicemembers and their families can be excellent long-term tenants, but their unique lifestyle presents challenges that may not be as common for traditional rental properties. Frequent relocations, deployments, and protections provided under the SCRA can create unexpected vacancies and income disruptions. Understanding these risks and carrying a landlord insurance package that includes Skip Rent coverage can help protect your properties and your rental income.
Military Rentals Require a Different Approach from Investors
Off-base military rentals can provide investors with a steady pool of qualified tenants, but they also come with risks that traditional long-term rentals may not encounter as frequently. Deployments, Permanent Change of Station (PCS) orders, and protections provided under the Servicemembers Civil Relief Act (SCRA) can create unexpected vacancies and income disruptions.
Understanding these unique challenges and carrying insurance specifically designed for landlords can help investors protect both their properties and their cash flow. By preparing for the realities of military tenancy, landlords can build strong relationships with military families while minimizing the financial impact of sudden occupancy changes.
Understanding Military Tenant Needs
Military tenants have unique requirements and preferences that set them apart from typical renters. Their lifestyle often demands flexible lease terms due to potential sudden deployments or relocation. Here are some key needs to consider when renting to military families:
- Proximity to military bases for ease of commute
- Pet-friendly rentals
- Lease flexibility for short-term assignments
- Safety and security features in the property
- Close proximity to schools and community amenities
Accommodating these needs can make your property more appealing to military families. Additionally, landlords who show understanding and flexibility often experience longer-term tenancies and fewer vacancies. Acknowledging the stress associated with military relocations, landlords can also provide a welcoming community to ease transitions.
Challenges of Renting to Military Families
Renting to military families presents unique obstacles to landlords. One significant challenge is the potential for frequent, and oftentimes sudden, tenant turnover. Military relocations can result in abrupt moves, leading to unexpected vacancies. Below are common challenges landlords might face:
- PCS or deployment orders leading to early lease terminations, increased tenant turnover, and unexpected vacancies
- Cash-flow interruptions while searching for replacement tenants
- Legal considerations associated with the Servicemembers Civil Relief Act
- Rigid insurance policies that lack flexibility or income protection options for unexpected vacancies
PCS Orders and the SCRA
Military tenants who receive Permanent Change of Station (PCS) orders may be entitled to terminate their lease early under the Servicemembers Civil Relief Act (SCRA). This federal law provides certain legal protections to active-duty service members, including the ability to end residential leases without penalty when qualifying deployment or relocation orders are received.
While these protections benefit service members, they can create unexpected vacancies and lost rental income for landlords, reinforcing the importance of maintaining relevant insurance coverages.
Despite these challenges, military tenants are often disciplined, responsible, and reliable, making them desirable renters.
Insurance Needs for Off-Base Military Rentals
Landlord insurance offers critical protections for rental properties and owners. Investors with off-base rentals must secure adequate coverage to protect their investments and their income against unique risks associated with military tenancies. It’s important for investors to discuss each property with their insurance agent to determine what specific coverages each property requires based on its unique risk profile. With that said, below are several important coverages landlords should consider for off-base military rentals.
| Coverage | Protections Provided |
|---|---|
| Dwelling Coverage | Damage to the physical structure from covered perils |
| Premises Liability | Payments for bodily injury, third-party property damage, canine liability, and defense costs |
| Loss of Rents | Rental income lost when a covered property loss renders the home uninhabitable and forces an active tenant to be temporarily relocated |
| Tenant Protector Plan® | Protection against tenant-caused negligent damage and other tenant-related exposures |
| Skip Rent | Missed rental income caused by qualifying vacancies, including military deployment |
Dwelling Coverage
Dwelling coverage (also called property coverage) protects the physical structure of the rental against damage caused by covered events or perils. While the types of covered perils vary based on your coverage form, most landlord policies include coverage for common risks such as fire, wind, hail, and vandalism.
Learn more about Basic and Special Form dwelling coverage here.
Premises Liability
Premises liability coverage is arguably the most important protection a landlord can carry. As a property owner, you are legally responsible for ensuring your premises are reasonably safe for guests, contractors, and even trespassers. A Premises Liability policy helps protect you from the significant costs associated with potential claims of negligence. A comprehensive Premises Liability policy covers:
- Payment for bodily injury or property damage for which you are legally obligated to pay
- Medical expenses for injured parties
- Coverage for carbon monoxide pollution
- Canine liability
- Defense costs like counsel, court fees, and judgements
Because rental properties present unique liability exposures, investors should seek policies specifically designed for landlords. Comprehensive Premises Liability policies that offer limits beginning at $1 million per occurrence and include defense costs outside the limit of liability can provide broader protection against potentially catastrophic claims.
Loss of Rents
Loss of Rents protects you financially in cases where your rental has become uninhabitable due to a covered loss. While property insurance may cover necessary repairs, Loss of Rents can reimburse you for rental income lost due to a covered property loss.
Example:
A burst pipe causes water damage at a rental property with Special Form coverage. The damage was so severe that the tenant occupying the home must move out while repairs are being made. Since Special Form includes Water Damage, both the repairs and the lost rent may be covered. Unlike Skip Rent coverage, Loss of Rents coverage is triggered by a covered property loss that renders the home uninhabitable.
NREIG’s Tenant Protector Plan®
NREIG’s Tenant Protector Plan® is a landlord-purchased coverage that protects against tenant-negligent damage, working in excess of renters insurance and helping protect your property and loss history.
The full coverage offering includes Tenant Liability, Sewer & Drain Backup, Contents, and Skip Rent coverages. For landlords renting to military families, the Skip Rent component of TPP can provide valuable protection against unexpected income disruptions.
With a $1,000 sublimit, Skip Rent may help reimburse lost income when a tenant unexpectedly leaves before the end of the lease, including situations involving military deployment and other qualifying events. This protection addresses a different exposure than traditional Loss of Rents coverage, which typically only responds when a covered property loss renders the home uninhabitable.
Learn more about the benefits NREIG’s Tenant Protector Plan® offers here.
Insurance Flexibility Matters for Military Rentals
Military rentals may experience more occupancy changes than traditional long-term rentals. Investors may transition between occupied and vacant many times throughout the life of ownership. Insurance programs that allow month-to-month coverage changes can help landlords adapt as insurance needs change, rather than locking you into annual policy terms that may not align with your current investment strategy.
Protecting Your Investment While Serving Military Communities
With the right approach, military families can be some of the most dependable and responsible tenants a landlord encounters. Understanding PCS moves, SCRA protections, and the insurance needs unique to military housing markets can help investors reduce risk and provide a positive rental experience. Insurance programs designed specifically for landlords can offer the flexibility and income protection needed to navigate the realities of military tenancy.
