Insurance Displaced - How do you guarantee insurance will pay?

Question

I had an inquiry from insurance recovery agent for my property for a displaced property owner from house fire. He is the insurance adjuster not actually from the insurance displacement group.  He said the tenant is in a motel and is having a hard time being placed in a home due to finding an adequate place and also a middle man home placement team dragging their feet.  I asked him to have her fill out my application which I received this morning and it does not meet my rental guidelines for credit score and yearly income.

Question: I have not had an insurance paid tenant.  Should I require the lease to be in the insurance gurantee name?  How is this normally done? The adjuster said the insurance money is guaranteed and the tenant needs a Lease Agreement to present to the insurance company in order to move forward.  Does this sound right? Any advice or guidance would be appreciated. I don't want to have a lease with just the tenant and then be in a position that I will not receive my rent etc.

April in Georgia

Rod Hanks · Answer

@April Birdsong

I’ve dealt with this a few times. The main thing is don’t rely on someone saying the insurance will pay. Most policies have Loss of Use / ALE coverage, but the insurance company usually reimburses the tenant, not the landlord.

It’s normal for the adjuster to ask for a lease because they need it to approve the housing expense. I’d ask the adjuster for written confirmation of the ALE coverage and the limits so you know the rent is actually covered.

I would still have the tenant sign the lease, but try to have the insurance company pay you directly or have the rent paid upfront from the insurance proceeds. The key is simply making sure you know who is actually responsible for the rent before you move forward.

April Birdsong · Answer

Thank you for your response.