Landlord Require Renters Insurance

Why Landlords Must Require Renter`s Insurance From Tenants?

Being a landlord, you can make it mandatory in your rental criteria to require renter`s insurance from tenants. A Renter`s insurance is a fairly cheap insurance policy and doesn’t cost a bomb to the tenants. Imagine by just spending his 5 beers money every month on renters insurance, your tenant can keep you free from all kinds of liabilities. And, even can protect his personal possessions. 

Require Renter`s Insurance from your tenants helps you mitigate the risk and avoid conflicting interests in case of damage to the tenant belongings. In event of any damage due to a peril, most tenants assume it to be the landlord’s responsibility to bear the cost from damages. Your landlord insurance policy never covers the tenant’s possessions. So, it is better you require renters insurance and have as much cover possible to protect your rental property.   

What is Renters Insurance?

A Renters Insurance often termed as tenant insurance is a low-cost insurance policy for tenants. It protects tenants from liabilities and their possessions in case of any unfortunate event on the property they are renting. 

This policy provides the same coverage as a homeowner’s insurance policy does. But it is different in a way that it doesn’t cover the dwelling or the structure of the property, the tenant is renting. The only cover the tenant gets is for the liability and his contents in the rental property. 

How does Renters Insurance benefit the Landlord?

Landlords require Renter`s Insurance

Do you know, only 40% of tenants in the US carry the renter’s insurance? For the rest to be believed, either they are not concerned about damage to their belongings. Or they simply assume that it is their landlord’s responsibility. 

Don`t worry, your tenant’s belongings are not your responsibility. You better be acting on your maintenance responsibilities and the damage should not be a result of your negligence. But imagine the trouble you can get due to conflicting interests. After all, we all are living a litigious society and a tenant suing their landlord is a pretty common sight. 

Also Read: Why Landlords must carry an Umbrella Insurance? 


You won’t believe how much trouble you are saving yourself from if you are requiring your tenants to carry renters insurance. 

1. Renters Insurance to Cover Costs During Certain Liabilities

The Renters Insurance benefits the landlord in cases where landlords can also be held liable for their tenant’s doings. Take the case of this tenant who threw a party at a rental property and one of his guests slipped on the bathroom floor due to a leaking pipe. 

Though it is his (tenant) responsibility to report such faults to their landlords. But he missed it and now his guest got a concussion and a permanent scar on his face. Imagine in this case, the tenant’s guest suing both you and your tenant for not maintaining the property. 

This could have become your personal liability too and your insurance company might have covered it. But having your tenant carry renters insurance in such a case, you are most likely to dodge these personal liabilities without any concern.  

2. Renters Insurance to Avoid Lawsuits

When you own a rental property, there can be anything that can go wrong with the property. It can be a loose circuit breaker that causes a fire, damaging both your rental property and tenant`s possessions.    

But what will you do in the case where the tenant wants you to cover the costs of his possessions? You can simply deny as it is not your responsibility. But that too can initiate some conflicting interests and even worse a lawsuit. You may win it but it will additionally cost you legal fees. 

A Renters insurance in this case comes very handy and covers the costs of tenant’s possessions up to a certain limit depending on the policy. No conflicting interests and no unwanted lawsuits. 

Read: How LLC Incorporation can Protect You From Lawsuits?

3. Renters Insurance Minimizes Liability During Uninhabitable Conditions

Damage on your Rental Property due to perils are covered by your Landlord Insurance policy. But what about the situation when your rental property becomes inhabitable and needs some rebuild to the structure? Being a landlord, it is your responsibility to provide a warranty of habitability

The rebuild will take some time, say about a month. But your renter needs a place to live. Either the lease can be ended in this case with mutual consent. Or you must provide alternate accommodation. Be ready then to pay for such expenses. 

But if your tenant carries renters insurance. The expenses of the alternate accommodation for a certain time period can be claimed through the renters insurance. And you need not pay for providing alternate accommodation.  

4. Renters Insurance to Cover Your Policy Deductible Cost

Having your tenant carry Renters Insurance saves the landlord from bearing the deductible cost of his policy for events where the tenant is liable. Your tenant accidentally started a fire in the basement of your rental property damaging it completely.  

You can claim the cost of this damage through your landlord insurance policy. But you must pay the deductible cost on your policy to make a claim. In this case, if your tenant carries the renter’s insurance, the deductible cost can be claimed through the tenant`s policy. 

5. Renters Insurance to Reduce Your Landlord Insurance Costs

Having your tenants carry renters insurance can help you save on the premium, you pay for your landlord insurance policy. Renters Insurance reduces the risk of liabilities for the landlord. And the insurance companies see this in their favor and allow good discounts when you buy landlord insurance from them. 

What Renters Insurance Actually Covers?

In a nutshell, the renter’s insurance covers the tenant’s possessions and keeps the tenant covered in case of personal liability. But speaking broadly, a renters insurance provides the tenant 

What Renter`s Insurance Covers

1. Personal Property Coverage

The Renters Insurance covers the tenant for the replacement cost of the damaged personal belongings. The personal property coverage can range from $15,000 to $50,000 depending upon your policy. Furthermore, you can include additional riders covering your precious jewelry and art. The tenant is covered from the damages resulting from these perils. 

  • Fire
  • Lightning
  • Hailstorm
  • Riots
  • Explosion
  • Aircraft and Vehicles (Hitting the Property)
  • Burglary
  • Smoke
  • Vandalism
  • Weight of Snow
  • Falling Objects
  • Steam
  • Freezing of Pipes
  • Leakage
  • Short Circuit

Do You Know?

Floods and Earthquakes are not covered in the list of perils and the tenant has to add an additional endorsement to cover their personal belongings. 

2. Liability and Medical Coverage

The Renters Insurance provides liability coverage for cases when the tenant or the additional insured is held legally responsible to pay for the damages to someone. This can be at your property or outside the property. 

The Liability and Medical Coverage covers the tenant for the medical bills of someone injured and for the cost of damaging someone’s property accidentally. This liability coverage can range from $100,000 to even $1 Million depending upon the policy ($500,000 max in California). 

3. Additional Living Expenses

The tenants are covered under the renter’s insurance if the property becomes inhabitable. The insurance company covers the cost of the lodging or a hotel room until they find a new place to live. 

How Much Renters Insurance Costs?

Renters Insurance is a fairly cheap priced insurance policy and doesn’t cost much. Your tenant can buy renters insurance by spending just $5-$15 per month depending upon the insurer and the covers he/she chooses. 

Insurance CompanyCoversPolicy Options (Extras)Policy Cost (Minimum)
LemonadePersonal Property,
Portable Electronics,
Personal Liability,
Loss of Use,
Medical Payment To Others
Add Landlord/ Property Manger to Policy,
Add Spouse and Significant Other,
Damages by Water Backing Up,
Landlord Property Damage.

Fine Art,
Musical Instrument,
State FarmPersonal Property,
Personal Liability,
Medical Payments,
Loss of Use (up to 24 hrs)
Water Bed Liability,
Fungus including Mold,
Cyber Protection,

Silver and Gold Wares,
Business Personal Property,
All StatePersonal Property Protection,
Liability Protection,
Medical Expenses,
Loss of Use

Identity Theft Coverage,

Extended Coverage on Jewelry, Watches, Furs.

Scheduled Personal Property,

Increased Coverage on Business Property,

Add Landlord/ Property Manger to Policy.

How To Get Your Tenants Carry Renters Insurance?

It is important that you make it mandatory for your tenants to carry the renter’s insurance. For the purpose, you can include this as a condition in your rental criteria to accept the prospective tenant application. 

During the signing of the rental application, include a Renters Insurance Requirement Letter. The Requirement Letter will make it certain for the tenant that a renter’s insurance is mandatory to rent your place. 

A Sample Letter wording goes like this.

Dear ______________

One of the requirement to rent the property  ____________________ at ________________________ is you to maintain a renters insurance carrying a minimum of $300,000 of personal liability coverage. With the policy, you guarantee to keep your landlord free from all kinds of liabilities and damages occurring to your personal property due to any kinds of perils.   

All the residents who are an adult must be named and covered under the policy. Further, do provide a copy of the declaration page of your policy meeting all the requirements above in the criteria before moving in. 

This is an important clause in the lease and failure to maintain the required renter’s insurance coverage is the breach of the contract and is subject to all the available remedies under the law. 

Is It Legal To Make Renters Insurance Mandatory For Tenants?

It is 100% legal for a landlord to make the renter’s insurance a compulsion for the tenants. The renter’s insurance is not the obligation for tenants under the law to rent a place. But it is in your own discretion that you make it mandatory for your tenants. If you are making it mandatory, do include the insurance addendum in the lease. 

How to Include The Clause of Renters Insurance in the Lease?

“The tenant understands that the landlord’s insurance policy doesn’t cover the tenants or the guests. 

During the term of the lease, the tenant is required to maintain commercial general liability insurance (sometimes known as Renters Insurance) insuring the tenant against the liabilities occurring from bodily injury and damage to property (including the loss of use).

The Liability coverage amount of renters insurance should not be less than Three Hundred Thousand Dollars ($300,000) per occurrence. 

The insurance policy to be required from the Tenant shall be issued by a responsible insurance company acceptable to the Landlord and must be qualified to do business in the State

Additionally, Tenant shall name the Landlord as an additional interest under such a policy.”

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What If the Tenant Feels Otherwise on having Renters Insurance?

Though if it is the compulsion under your terms to have renters insurance. Your tenants must abide by it. But there can be some instances where some tenants can feel otherwise and resist not having renters insurance. In such cases, you can either deny renting your place to that tenant or can have a renters insurance waiver form signed from him. 

Having your tenant sign the waiver form assures you that your tenant has willfully denied having the insurance. And the tenant agrees to keep you free from all kinds of liabilities from the tenant or his guests at the property. “

Can the Landlord be an Additional Insured in the Renters Insurance Policy?

Most Landlords require their tenants to include them as an additional insured in their policy. But if you do so, it can have a negative implication. Having a landlord and the tenant both as insured parties on the renter’s policy can cause conflicts.  

It is better for you that you require your tenant to add you as an additional interested party. Doing so will help you stay informed shall the policy get canceled and non renewed. The additional interest however is purely for the intent of notification and doesn’t provide the landlord the status of an insured party on the policy.  

How Much Renters Insurance Should a Landlord Require?

Renters Insurance comes with different coverage limits. And how much coverage your tenant carries directly impacts the amount of liability you can save yourself in the future. The more the coverage the tenant has with the renter’s insurance, the less liability, you will have to suffer.   

The Liability Cover in the renter’s insurance doesn’t cost much and just 1 or 2 bucks extra every month if your tenant wants to avail higher liability coverage. Take the case of renters insurance from Lemonade. A tenant can upgrade the liability coverage of $100,000 to $300,000 by spending $13.75 instead of $12.50. 

Source: Lemonade


Lemonade Renters Insurance Cost
Source: Lemonade

The other two things you must take into account while requiring your tenants to carry renters insurance is 

  • Analyze the kind of tenants you are having on your property.
  • The type of property you are renting to them.  

Your rental property can have different types of tenants ranging from students, working professionals, and other kinds of personnel. Renting to students is different from renting to a working professional. A working professional can be more responsible than a student who is renting for the first time in life. In such a case, your liability increases and you must require that your student tenant have more coverage in the renter’s insurance. 

Similarly, when you have a high-end rental compared to other low-end rentals. Your rental property will surely attract the tenants who comparatively will have high-cost possessions. In this case, too, you must ensure that your tenants carry enough coverage for their possessions. 

What if your tenant carries a pet? There is a risk of your tenant’s pet biting someone in the park or at your property. And in this case, you definitely want your tenant to carry enough in renters insurance.

The Bottom Line

There you have it all on why you must require your tenants to carry renters insurance. Make it a compulsion and both you and your tenant will be at advantage.

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