Should Landlords Require Renters’ Insurance?

Landlords have the option of requiring tenants to maintain renters’ insurance as a condition to entering into the lease or rental agreement with the tenant. It is good practice for a landlord to include such a clause because the cost of renters insurance is relatively low and there are worthwhile benefits for both the landlord and tenant. 

What is Renters’ Insurance?

Renters insurance is a type of insurance policy that helps protect personal belongings owned by the renter. It typically covers property damage for anything of value that the renter brings onto the rental property.  A policy can also include liability coverage for injuries sustained on the property.  A policy may also cover the cost associated with living somewhere else temporarily, food, and more.  So, if you’re displaced by an accidental event like a fire or extensive water damage renters insurance will generally pick up the tab during repair. 

The Cost

Renters insurance is relatively inexpensive.  The average price of a standard policy is around $10 a month for approximately $20,000 in personal property coverage.  Extended coverage can be obtained for a few dollars more each month. 

Benefits of Requiring Renters Insurance

Without renters’ insurance, landlords may be on the hook financially because of an accident or theft resulting in a loss of the renter’s property.  Renters would not otherwise have coverage if someone breaks into your home and steals your belongings, for example, or if your apartment building burns down, or if someone sues you after your dog bites them. Some renters are willing to take this risk. For others, renters’ insurance provides peace of mind for a relatively small price. 

Given the relatively modest cost of rental insurance, a tenant who does not agree to such a requirement may not be the ideal tenant from a financial perspective. Consequently, if the tenant balks at paying the additional cost or does not care to purchase a renter’s insurance policy, it may be in your best interest to continue looking for another applicant.

Additionally, if a tenant damages the property, such as inadvertently causing a fire, your insurance policy may pay the repair costs but you might be responsible for the policy deductible, which can be substantial. If the tenant has renters’ insurance, the policy will likely cover your homeowner’s insurance deductible, easing the financial burden of this situation on your end.

What is not Covered by Renters’ Insurance?

While renters’ insurance can provide protection for losses to rental property and related expenses, there are some things that are typically excluded from coverage. For example, renters insurance typically does not cover damages caused by intentional acts. Additionally, it generally does not cover the tenant’s belongings if they’re stolen or damaged outside the home. This includes belongings stored in a car or even a storage unit.  Other items not covered in a basic renters insurance policy include high-end valuables like certain pieces of jewelry and expensive collectibles. Tenants might need more extensive coverage and coverage limits to recoup a loss of such items.

Please contact us with any questions regarding the above, and for all of your eviction needs.  We can be reached at 888-441-2355 or info@lynxlegal.com.  Our experienced professionals are standing by to assist in any way we can.