Rhino lets renters avoid a security deposit in exchange for a monthly fee

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• Rhino Insurance lets you avoid putting down a security deposit when you rent an apartment. 
• If your landlord accepts Rhino, you can skip the security deposit and pay a low monthly fee instead.
• Rhino allows renters to have more cash on hand for other expenses like renters insurance.
• See Insider’s guide to the best renters insurance companies »

The pandemic highlighted America’s lack of affordable housing, with many Americans unable to make rent and facing evictions due to coronavirus layoffs, furloughs, and expended emergency savings.

One of the many initial barriers to affordable housing is the standard requirement to put down a security deposit — generally equal to one month’s rent — along with paying first and possibly last month’s rent. If you live in New York, you could easily have to pay $1,900 in rent and an additional $1,900 security deposit for a studio or small one-bedroom apartment. That doesn’t include the cost for movers and furnishing your apartment.

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Rhino Insurance provides a way to get around the cash security deposit requirement, potentially making it easier to secure a rental. Here’s what you need to know.

What is Rhino Insurance?

Martha Dreiling, senior vice president of Operations at Rhino, said the company was created in 2016 “to create a financial product that was better than a cash security deposit because housing affordability was one of the largest issues facing our country.”

Dreiling says Rhino’s mission is to make housing more affordable. Atlanta and Cincinnati passed ordinances to offer residents alternatives to cash security deposits like Rhino to address the lack of affordable housing. Dreiling said that Philadelphia and Baltimore are considering similar legislation

Rhino found that renters generally pay rent on time and typically don’t go out of their way to damage property — two of the main risks that a security deposit is meant to protect against. 

Rhino is a licensed insurance agency in 48 states, and it’s available for landlords and property management companies with rental apartments and rental homes. 

How does Rhino Insurance work?

With Rhino, instead of paying a security deposit to your landlord, you pay about $5 to $10 a month for an insurance policy that covers your rental for damage or lost rent. Basically, it frees up money for you by requiring a low monthly payment instead of a lump sum, and it provides the coverage the property owner requires.

To use Rhino, landlords and property management companies must agree to accept Rhino instead of cash deposits. Rhino allows renters more cash flow to furnish their apartment, pay for movers, or invest the cash elsewhere.

Dreiling said veterans, single parents, and those leaving domestic abuse have even used Rhino to start a new life. If you have the cash but would prefer to use it to furnish your apartment or invest it, you can use Rhino — so long as the landlord or property management accepts it.

Monthly payments are risk-based, depending on the renter’s credit using an averaging tool. Dreiling said that although FICO scores are used, they are not the only factor. She also said an eviction is not considered unless the landlord obtained a judgment and it’s part of the public record on your FICO score.

Your monthly rate is also tied to the amount of the security deposit, since a $2,000 security deposit isn’t the same risk as a $5,000 security deposit.

How is Rhino different from renters insurance?

On a basic level, renters insurance covers your belongings from theft, damage, and unexpected events. It’s an insurance policy you pay for on an annual or monthly basis. Renters insurance is not required by state law, but some landlords require it in the lease. 

Rhino is security deposit insurance. Instead of paying the security  deposit amount in cash at the time of the lease — renters pay a monthly fee to Rhino, averaging $5-10 a month — to cover the security deposit.

Using Rhino frees up renters’ cash so that they can afford renters insurance and other moving expenses. So you shouldn’t think of Rhino as an alternative to renters insurance; it’s just an alternative to paying a security deposit.

Ronda Lee is an associate editor for insurance at Personal Finance Insider covering life, auto, homeowners, and renters insurance for consumers. She is also a licensed attorney who practiced litigation and insurance defense.

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