Can Landlords Require Renters Insurance?

Why is Landlord requiring Renters Insurance when the Landlord already has Landlords Insurance?

While a Landlord Insurance Policy provides coverage for the building/dwelling,  a renters insurance policy covers the personal contents of the tenant and also provides third party liability insurance for certain types of bodily injury or property damage. Buying Renters Insurance is a clever move and both beneficial to the Tenant and the Landlord. It is becoming more common to see the requirement of Renters Insurance in Lease Agreements.

Are there benefits for Landlords?

Landlords require Renters Insurance from tenants for many reasons which differ by State and the Landlord.  By requiring renters insurance, landlords may avoid liability claims from tenants due to damaged property caused by fire, or other covered losses. A tenant’s renters insurance policy may cover:

• Relocation Expenses
  A renters policy may provide coverage for the cost of temporary housing due to fire, smoke, or water damage.

• Coverage against Property Damage
  Most lease agreements include a hold harmless clause stating that a tenant is fully responsible for his/her own personal contents while residing at the rental property; many lease agreements go further to require Renters Insurance as a condition to the lease of the property.  If a tenant’s belongings are stolen, there may be a chance that the tenant may sue the landlord for being negligent and therefore causing the loss.  Although this is unlikely especially in the presence of a Rental Agreement, the requirement of Renters Insurance will most likely alleviate the issue.

• Damage or Injury by Tenant’s Pet
  Renters Insurance may help mitigate the risks of damage or injuries caused by pets to others or others’ property. Insurance companies always have a list of forbidden dogs, thus complicating this topic further.

• Dwelling Fire or Landlord Insurance Premium
  The tenant’s renters insurance policy may potentially cover the cost of damage to the renter’s personal contents, in this case, the Landlord would not involve his/her insurance in such a case.

• Screening Potential Tenants
  Tenants resisting the purchase of Renters Insurance to provide coverage for their own personal property and the protection of liability insurance may indicate the type of tenant a Landlord may be happier without.  The majority of Renters Insurance policies are written in the range of $100-$400 annual premium which varies based on coverage amount, deductible, geographic location and credit score (except in very few states);  if the Tenant resists purchasing Renters Insurance, a Landlord will most likely wonder about the tenant’s ability to pay rent on time.

What are the benefits of renters insurance?

Renters Insurance protects the tenant. It is fairly safe to say that Landlord Insurance does not cover the personal property of a tenant and also will not provide coverage for any legal suit brought against the tenant. Personal property loss or damage, caused by theft, vandalism, smoke or fire are typically not covered by the landlord’s policy. Buying Renters Insurance would be a wise decision whether required or not by the Landlord.

Renters Insurance might:

• Reimburse the tenant if his/her belongings, perhaps a bicycle, a television, a laptop or other belongings are stolen or damaged.
• Provide protection to the tenant against liability claims from a guest injured while in or near the rental unit.
• Provide limited coverage for personal property in a vehicle or at a location away from the rental property.