Tip #57

5 Reasons Why You Should Require Renters Insurance in the Lease

Written on January 28, 2016 by , updated on January 23, 2017

Require Renters Insurance in the LeaseYes, you can require a tenant to buy and maintain renters insurance as a requirement of the lease. Furthermore, doing so certainly benefits the landlord just as much as the tenant.

Many tenants simply assume that a landlord’s insurance policy covers their personal property in the event of damage to the dwelling.

Requiring tenants to purchase their own insurance policy is the only real way to protect their possessions.

For you, the landlord or manager, renters insurance is an extra layer of protection in this litigious world.

For a tenant, it’s relatively inexpensive, often less than $20 per month, and shouldn’t cause a burden except to the most financially strapped of tenants. Most people can simply add it as a discounted rider to their existing auto insurance policy (if they have one).

Since laws vary by state, speak to an attorney about adding a mandatory renters insurance clause to your leases.

Related: The Ultimate Guide to Renters Insurance

Benefits of Requiring Renters Insurance

1. It Mitigates the Threat of a Lawsuit

The top benefit of requiring tenants to purchase renters insurance involves keeping you out of court. When damage occurs to a renters belongings, and if the tenant does not have rental insurance, there’s a high probability the tenant will try to claim some type of landlord responsibility.

Here’s one scenario:

Check out these other examples of actual insurance claims.

Related: Why Landlords are Liable for the Personal Injuries of Tenants

2. It Reduces Your Responsibility

If the worst happens and there’s a fire or other disaster, you might feel responsible for finding your tenants a temporary place to stay. In certain states, you are considered responsible and must provide relocation benefits. To make things worse, while in the midst of dealing with your property damage, you’re also trying to negotiate lodging or other necessities on your tenant’s behalf.

Tenants with renters insurance don’t have to rely on your good will or ability to pay for their temporary housing. That’s their insurance company’s role. You shouldn’t have that hassle while you’re trying to get a handle on your own losses.

3. It Weeds Out Bad Tenants

If you require renters insurance and your applicant complains that he can’t afford it, that’s a red flag before you review the application.

…if an applicant complains about the insurance requirement, it’s a red flag before you even review the application.

If someone can’t afford to pay the low monthly rates for renters insurance, just how close to the edge are they living? What are the odds that they won’t have the monthly rent money?

Renters who live paycheck to paycheck are fine people, but they make horrible tenants.

4. It Covers Your Deductible

If a tenant damages your building, such as inadvertently causing a fire, your insurance policy may pay the repair costs. However, you’re still stuck paying the deductible – which can be a substantial amount of money.

If the tenant does have renters insurance, the policy should cover your homeowner’s insurance deductible – thereby making an unfortunate situation somewhat easier to deal with.

5. It Gives You Peace of Mind

It’s hard to put a price on peace of mind, but knowing your tenants have renters insurance helps fund it.

Realizing you won’t face lawsuits and pay the accompanying legal fees for issues that aren’t your responsibility takes a load off your shoulders. It should also improve your relationship with your tenants, as you’re not viewing them as prospective litigants should they experience personal emergencies.

Sample Lease Clause

Here’s a sample lease clause that you could use to require renters insurance, however please have a local attorney review the clause above for your own usage. I am not a lawyer, nor is this legal advice.

Perform Annual Checks

Just because your tenant showed you proof of rental insurance when signing the lease doesn’t mean he didn’t let the policy lapse.

For best results and continued peace of mind, have your tenant show you proof of insurance annually – typically as a requirement for renewal. If renters insurance is a mandated part of the lease, the tenant’s canceling or allowing the policy to lapse is grounds for termination.

Related: Top 5 Legal Reasons to Evict a Tenant

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80 CommentsLeave a Comment

  • Mak

    in my rental for over 30 years , raised 5 kids in a 3 bdrm, yea I know should have bought my own place but it’s now too expensive, I’m one of those people living payck to payck,when I first moved In the landlord never asked for renters insurance now that she elects to raise the rent significantly I want an upgrade cuz I have old shag carpets, she’s requiring insurance of 300,000 , she has more rentals and rents to students I see them coming n going ,even if they are in for only a year , there is always new paint, new carpets for the next tenants,and I just carry on,if I need to paint I usually do it and don’t ask for a deduction of rent, my question ,do I need to sign a new lease? Am I required now?only a mo – mo for the last 29 yrs

    • Ksteed

      From an owner/landlord,s perspective:
      The inflation rate in my area has been so high, the costs of repairing damage or replacing items has risen much more than the rent. Property taxes, insurance , utilities, maintenance, fees from government entities ect. If you are paying the rent rate of 30 yrs. ago, that is rare.

      Getting renters insurance protects the renter from having to pay for damage the renter or friends of renter cause or even actions of neighbors may cause you to pay. It covers your loss. It protects you. Could you afford to pay for a $300,000.00 liability loss? Stuff happens.

  • jeremy thompson

    not everyone in america is rich I know that’s hard to believe but it’s true. as far as ridiculing people who live paycheck to paycheck, puss on you. I was bullied and abused at home and dropped out and ran away and been struggling ever since. I make 10 An hour cause of my education level society labels me with. not everyone e can go to college. not everyone can have thousands of dollars in bank account. a small few of us are barely hanging o from being g homeless, let alone from killing ourselves due to poverty and lonliness

    • Janet Gutierrez

      I agree!! How horrible to label people out that way. Yet another reason our country is the way it is today.

    • Monica Sobel

      Hang in there Jeremy, you never know when a good turn will come your way! I hope so for you and anyone else that feels the pinch like you describe. So many of us are living paycheck to paycheck with a little more, or less, as a buffer. I wish you the best of luck Jeremy, hang in there!

  • Jersey

    My husband and I live paycheck to paycheck not once EVER have we made a late ANYTHING payment from rent to phone and everything in between…saying people that live paycheck to paycheck are bad tenants…don’t know a darn thing…bad tenant can be anyone

  • Homer

    Odd that the people trying to defend the paycheck to paycheck statement all have the same quality grammar.

    • Chris

      It’s odd that some pretentious douche named Homer would feel the need to criticize people living in poverty for their lack of skill in grammar. Actually, wait, that’s not odd, that’s entirely predictable. Sometimes people who haven’t had everything handed to them in life don’t have time to worry about trivial things such as their grammar in a random post on an online article. How do I know you’ve had everything handed to you? Because someone who’s struggled or had to work for anything in their life wouldn’t feel a compulsive need to feel superior over people that are in a worse situation.

      • Monica Sobel

        Right on Chris, thanks for posting your response to arrogant Homer! couldn’t agree with you more.

    • One who’s not had anything “handed to them on a platter.”

      Agree with you, Homer. And poor grammar may be part of the reason they’re living paycheck-to-paycheck.

      • Page DuBois

        To “One that’s not had” Your reply is ironic, as your reply to Homer is not Grammatically correct. People in glass houses…

      • Lucy

        This discussion is so irritating and yet it fascinating to read stupid comments. My humor for the day. Now it’s time get on with living paycheck to paycheck. What, I didn’t even mispell a word. Things are tough everywhere and a lot of people are barely making it.

      • Brooke

        First of all, as another commenter pointed out, YOUR grammar is ironically poor. Second of all, if someone is living paycheck to paycheck, it stands to reason they are NOT having anything handed to them “on a platter”; they are obviously working a steady job, hence the paycheck. Perhaps it is YOU who are having things handed to them “on a platter” since you are *supposedly* doing better financially? Is that eau du hypocrite I’m smelling?

    • elaine nelson

      Shame on you Mr. Homer. Everyone makes mistakes in grammar at times even you I assume.

    • Brooke

      Let me guess, you’re a Republican? Only a Republican would be so demeaning and condescending. I live paycheck to paycheck however I can almost guarantee that I’m more intelligent than you are; and without a doubt, my emotional IQ is far superior. I truly hope you find yourself in a position where you are living paycheck to paycheck so you can gain a little compassion and empathy. People find themselves in that position for many reasons, many beyond their control (i.e. accidents, illnesses, etc). Do you know what IS in your control? Keeping that gaping hole in your face closed instead of spewing your flawed, prejudiced beliefs.

      • Pablo

        You speak of IQ yet you blame a political position for ones opinion on a topic. Facts are facts. It does not matter what political affiliation you are. People that work paycheck to paycheck can easily get into financial trouble, one speeding ticket, one bad tooth, even a flat tire can cause someone on a tight budget to become financially unable to take care of bills. It does not mean they are not responsible it means they are in a tight position financially and on the investment side of things its best to hedge your bet. My parents for instance have one rental to supplement their SS income, they live paycheck to paycheck also.. This is a very common situation, you cannot always blame the rich for the woes of the poor.

  • Patrick

    What other businesses have the luxury of advertising one price then charging a totally different one when all their hidden fees are added up? Most don’t. You landlords should have your own insurance for your business and whatever it may be you factor that into the cost of doing business. If you insist on shoving all business expenses onto the renters then you better sum up some kind of estimate or average and include that in the advertised price. The free market economy only functions properly when consumers have access to accurate information. If you can’t do that then just admit it: you have deceptive business practices motivated by greed.

  • John

    So I am a tenant In an apartment complex. I have always had renters insurance as it has been a condition of renting here since I have been here. Now, I’m signing a new lease and the management wants me to add a clause to the policy that says the insurance company will cover water damage if I am neglegent in my upstairs apt and damage the apt below me. My insurance company has never heard of such a thing and won’t sign their form. Management is recommending I go to another insurance company and frankly find the whole thing absurd as I think this insurance thing has perhaps gone too far. So now apartment owners are forcing me to change my insurance? Suggestions?

  • Carlos

    If a tenant in the state of Florida causes damage to the common area of the condo building they live in. example Broken hallway mirror, stain carpet… Would their liability insurance cover them for those damages, or will it only cover damages in the apartment they live in?

  • Me

    There are a majority of repectable folks that earn pay check to pay check that not only sacrifice to pay their bills on times but make ends meet. Meet head get your facts straight!😲😝 Thank God for hard working respectable folk. You to can lose all, get sick, and work to make a bit. Please consider others. We “all” live in the same planet!

  • Tim

    1. Considering the clause language related to the first 7 days, it appears the landlord could include the same kind of clause for the whole rental period, and not require renters insurance.
    2. If the landlord is not liable for damage to personal property, then there is no need to include the renters insurance requirement.
    3. It appears the landlord knows the tenant would have a case against the landlord.
    4. Quite presumptuous language about people living from paycheck to paycheck being horrible tenants.

  • Page DuBois

    I’m currently renting a town home I’ve been in for 3+ years. the Management company requires renters insurance and that the Dec page be uploaded to the portal annually, which I do. This past lease renewal they started charging me for liability in Utah you cannot get Renter for just property/possessions it come with building liability, so now I’m paying for building liability twice a month (their rate and my insurance). Is this legal? They are also forcing me to be a part of what they call a “Benefit Plan” and I’m paying 16.00 a month for a mid-grade a/c filter I receive once every 3 months. I feel like I’m being scammed. HLEP

  • Cathy

    My renter fell broke the shower wall and bursted the pipe! That caused the water poured down to the 2 units below! I didn’t have landlord insurance since my first time renting out a condo! She didn’t have renter insurance neither! She also couldn’t keep up with the rent, so no way I could ask her to pay for the damage, but I really have no extra money! What should I do?
    The condo HOA just raised the deductible up to $25,000 right before the incident!
    I am so stressed out! Is selling the unit after her lease up the best bet for my situation? Thanks

  • howard banks

    Isn’t it terrible that auto insurance to cover COSTS in the event that (YOUR NEGELENCE) CAUSES AN ACCIDENT Since you say you are living paycheck to paycheck,how would you PAY,TO FIX (YOUR NEGLENCE)?Suppose your rent is $1k per month,and your owner pays #25k,repairs,A MAJOR LOSS TO OWNER.Most apartment owners I know DID WITHOUT for years,Paycheck to Paycheck–improving their skills working extra jobs doing without a new or late model car,the latest TV-VIDEO game,GADGET,etc SO THEY COULD PROVID YOU WITH a place to live and possibly damage Me,MYwife+2 kids lived 5yrs in a 30 foot trailer,35%of my pay A HALF CENTURY I HAVE owned 4 units,lived in one ALWAYS MOST REASONABLE RENTS,BELOW GOING RATES haven’t found one FULLY responsible TENANT YET

  • howard banks

    for an owner to get reimbursed for damage done to his property BY A NEGELENT TENANT OR HIS/HER VISITER is a lot easier said than done, judgements sometimes are less use than paper on the roll in your bathroom– much too stiff and rough on sensitive body tissue to be of much use-If a tenant is already living paycheck to paycheck he/she is probably what is referred to as judgement proof and the owner is still stuck with paying the bill I truly believe that it should be a rental industry standard to require tenant insurance AND I THINK THAT THE RENTAL INDUSTRY SHOULD put PREASURE on OUR LEGISLATURE TO MAKE IT LAW why are the people who are responsible for keeping a clean dry roof over your head always the bad guy BE A RESPONSIBLE RENTER

  • Martha

    I live in a Senior Apartment Community. Most of these are for low income seniors as the owners receive tax credits. Only the market rate tenants are required to purchase rental and liability insurance. Seams backwards to me as surely more need of coverage for those with little income. Is this legal in Virginia.?

  • Jeff hash

    I’m just starting in the rental business of my basement apartment and I see that the BEST advice here is in the case of injury and law suits.

  • Shahzad Majeed

    This article is the most horrible thing I have ever read. Force people to get insurances so that you can fill your pocket with money??? That is terrorism

    • Pablo

      Force people to get insurance so you can fill your pockets.. Hmm oddly enough you are ignorant at best.
      1. Renters insurance is a responsible thing to do as a renter. The landlords insurance does not cover your personal items. If there is a fire and you lose everything the landlord is not responsible. for a few dollars a month you can make sure your stuff is paid for.
      2. You are also being a responsible renter, if you happen to make a mistake and cause a huge amount of damage to someone else property you can rest assure than it will be fixed and you will continue to have a place to live.

      So many people have so much envy of what someone else has.. Someone else has because they worked and saved and invested..

  • Clorrisa

    Does renters insurance cover damages to the home or property of the landlords caused by fire or anything of that nature

  • Brooke

    First of all, as another commenter pointed out, YOUR grammar is ironically poor. Second of all, if someone is living paycheck to paycheck, it stands to reason they are NOT having anything handed to them “on a platter”; they are obviously working a steady job, hence the paycheck. Perhaps it is YOU who are having things handed to them “on a platter” since you are *supposedly* doing better financially? Is that eau du hypocrite I’m smelling?

  • J-Bot

    In my area, Washington state, I have never had to have renters insurance for and apartment, condo or house. My new property manager that took over from a previous property manager is requesting another security deposit and renters insurance plus pay water/sewer/garbage ($150 a month flat rate). I already pay $1300 a month in rent plus the regular first/last/deposit when I moved in last winter. I was told that the security deposit is supposed to cover any damages upon moving out (which we don’t plan on doing anytime soon). We are responsible tenants that don’t throw parties or have out of control kids destroying property as they were raised better than that. Why should we have to pay for renters insurance?

  • Cynthia

    Can a landlord require you to have renter insurance and add them on your insurance policy and require you to pay extra with your rent for their renter insurance also. Is that double insurance on the same propriety

  • Bee

    In light of the current pandemic that is happening (COVID-19), it’s come to light that most Americans are living paycheck to paycheck.

    If I want to live in a nice apartment, cockroach free, my rent is half my monthly income. If an emergency happened, I would not be able to cover the cost of damages, so it’s definitely best if I purchase insurance. I will do just that.

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