Your thoughts on Zillow "Rental Protection"?

Question

I recently found this new service from Zillow, called "Zillow Rental Protection". I won't post a link so you think I'm spamming, but you can google it.

For $45/month, you get $5,000 in rental coverage for things like missed rent, excessive damage, excessive cleaning, pet damage, and eviction costs. Or so they say. Only available in 3 states currently, and I happen to be in one of them. (NC)

I have a vacant house to fill and I'm thinking about using this. I already use Zillow for payments and applications. Theoretically, I could advertise "no deposit" and charge something like a $500 move in fee, which is non refundable. This fee pays for the insurance. Problem is I don't want this attracting tenants who cannot pay, or making them think "who cares, I don't have a deposit to lose".

What do you think about using this in lieu of a standard deposit? Perhaps just collect a standard deposit AND buy the insurance? ($5,000 coverage is way more than my deposit would be) Or, will they be impossible to work with and try to deny any claims? I have a bit of a problem trusting Zillow fully...

Josh Young · Answer

@Michael R. they only offer it because they collect more in fees than they pay out, most all protection/warranty/insurance is a slow bleed, just save an extra $5000 for your reserves and don't pay it to Zillow.  Also, you are right about wanting to have a deposit from the tenant, so they have some skin in the game to take better care of your property.

Ricardo R. · Answer

@Michael R. how do you file or how do you collect? what's the fine print and exclusions? how long does it take? do you still have to pay and is mostly a reimbursement? etc., etc. etc. ---- For $5,000??? ... Just save your $45/mo. and save for this yourself... trust me... you'll be better off.

Corby Goade · Answer

For one, I would not trust Zillow to pay out under any circumstances, so there's that. Secondly, why would you rent to someone who can't or won't pay a deposit? What else will they refuse to pay?

Nathan Gesner · Answer

Insurance companies are in the business of making money, not paying money out. They know that most landlords won't file a claim, or their claim will be denied because the landlord didn't meet the requirements outlined in the fine print.

Wesley W. · Answer

Remember, a palpable business strategy for insurance carriers is denying claims.  The fine print has been written and massaged by someone who has much more of grasp of the legal aspects of the industry than we have.  So, you may not have the coverage you think, and this insurance is only a profit center for the company if the premiums exceed the payouts.

I wouldn't think this is a good idea, for the reasons @Josh Young outlined.

Robin Waters · Answer

$39 for $5,000

$59 for $10,000

Insurance only seems worth it when you have a claim, other than offering some peace of mind

Greg M. · Answer

$45 a month for $5000 in protection. That's $540 a year or 10.8% premium of the max payout. That's a ridiculously high insurance premium.

Robin Waters · Answer

As am I. Have you tried it? I don't see a reply from Michael R here.

Deirdra Funcheon · Answer

Michael, did you end up using Zillow's rental protection? If so, how is it working out? I am considering it.

Michael R. · Answer

Well, like I said, I can pretty much make the tenant pay for it. I can "afford" to fix $5,000 in damage but I sure don't want to. (Rent is going up quite a lot also)

I see this as similar to renter's insurance, which is usually a pretty good deal for the renter. Low rates, cover $20K plus, low deductibles. This is a normal market, why not have the same for landlords? But Zillow isn't known for their insurance products. I use them for payments because it's free and background checks are cheap for applicants.

This same house previously came with a warranty when I bought it, it was actually a good deal. The seller paid like $500, I paid nothing, and they replaced a water heater. When it was time for renewal, the price was obscene so I stopped.

Your thoughts on Zillow "Rental Protection"?

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