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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42 CommentsLeave a Comment

  • Usen

    It’s a nice idea, but totally impractical in my experience. I lose over 50% of my applicants as is when they realize I require them to be screened for credit/criminal. If I also required this I’d have no applicants left. There are too many owners not requiring it, so they can always decide to go elsewhere. (Sometimes for cheaper to boot, slumlords don’t care about renters insurance or background checks, or anything, really…) My applicants ask themselves “do I rent a 2 bedroom from this guy for $800 a month & have to pay $800 security & screening fee & insurance? No, I’ll rent the slumlords 2 bedroom for $600, no deposit, no screening, no insurance. After all, it’s ‘only temporary’ anyway.”

    • Lucas Hall

      Hi Usen

      Thanks for the feedback. Whether or not to require insurance is certainly a business decision that each landlord has to make for themselves. It’s a simple risk vs. reward situation and to each his own.

    • Gregory


      I want good applicants in my condo. If they don’t carry insurance or, can’t make a deposit then I don’t want that person in my place. You’ll be sorry.

    • Bekah

      I understand your complaint. I was a property manager at a complex in a rough part of town, and getting qualified applicants was difficult. But, I also had to send hundreds upon hundreds of dollars to collections because of bad renters. I lost money on nearly every move out. They renters didn’t care because they had nothing to lose. The owner did not like it, but he was unwilling to allow me to take the necessary steps, to gain good long term tenants. Had he allowed me to be screen tenants more strictly, we could have turned the building around, and made it profitable. But, he was to concerned with short-term occupancy to do that. Therefore, the building continues to lose money.

    • Julie Thevenow

      You can buy it for them and incorporate it into the rent.

    • Gina Mohr

      Try being a landlord in Seattle, WA. The city council has made it illegal for landlords to use criminal history as a criterial for declining tenancy to a tenant. The city has an enormous homeless population, due predominately to supportive drug addict services and the city is pushing the public housing responsibility onto the private landlords. Be glad that you can screen for criminal behavior.

  • Allen

    We rent to unrelated tenants in a single unit – college students who are room mates. Would any one of them having renter’s insurance cover us, or would each of them need it? I’m concerned that could become a legitimate barrier, as it would approach an additional $80/mo for a 4-bedroom.

    • Lucas Hall


      Their policies only cover their own stuff and damage they might cause – because only a single person is the policy holder. For this reason, every tenant would need to be listed on a policy – regardless of it they share a policy (like for spouses) or have separate policies (like for roommates).

  • Michele

    I am renting a 3 bedroom house to a single women and 1 child and she wants to move her boyfriend in there do I raise the rent, have him get rental insurance Can I raise the rent if my prosperity tax went up.

    • Jane Meggitt

      See Lucas’ reply above. Every tenant must be listed on a rental insurance policy in order to have their belongings covered.

    • Lucas Hall

      Hi Michele

      What’s your lease say? Does it prohibit other occupants? If so, you would need to modify it in order to allow the others to move in.

      Whenever a change occurs in the lease, it’s an opportunity for the landlord to make other changes – such as raising the rent – since you are negotiating a modification. You can also require rental insurance of any tenant as long as you put it in the lease that they sign.

      A landlord can’t just raise the rent (b/c of taxes or any other reason) if there is a fixed term lease. That’s the point of it being “fixed”. But month to month leases can be modified with proper notice according to your state laws.

      I hope that helps. Please know that I’m not a lawyer nor is this legal advice. Good luck!

  • Gabe Sanders

    Very wise requirement for anyone who is a landlord.

  • Michele

    I’m a owner of a house and I hired a manager for 5 months I let her go ,3 months ago I never received any thing from her so my renter can file her taxes . my renter wanted to E-mail her I told her know what should I do.

    • Lucas Hall

      Hi Michele,

      I’m confused by your question. Can you clarify.

      Why would the renter need a statement from the manager to do her taxes? You can’t write off living expenses unless she’s running a business out of it (which could be the case). Either way, why doesn’t she know how much she paid in rent? Can’t she just look at her back statement for cashed checks?

  • Demetra Mitropoulou

    Can the owner pay for the tenants’ Renter’s insurance in their name? Would that be wise if it it’s not costly?
    Or just deduct the amount from the rent?

  • Jane Meggitt

    You can’t deduct the amount from the rent, but you could confer with your tenant about footing the bill if it’s to your benefit and the tenant can’t afford it. Rental insurance isn’t usually expensive.

  • Tommy Whitaker

    my elderly friend across from me just received her rental renewal, in it the landlord/owner has required on top of renters insurance that she have a minimum of $100,000 personal liability insurance also. Can this be required? She is on a fixed income and doesn’t think she can afford that high of coverage. Thanks

    • Lucas Hall

      Hi Tommy,

      Personal liability can be added to the renter’s insurance policy if it’s not already included. Many policies already have personal liability, but I’m not sure what the standard amount is.

      To answer your question, renter’s insurance (and a specific amount) can be require per the lease. If she is unwilling to accept those terms, your friend doesn’t not have to renew. I hope that helps – but please know that I’m not a lawyer, nor is this legal advice.

  • Kendall Ryder

    It would be nice to be able to “weed” out the bad tenants. I don’t want someone on my property that is troublesome. I have had to deal with that before and don’t want to deal with it anymore. If they can’t pay for renter’s insurance I am sure they will have trouble paying for rent!

  • Michele

    I showed people a house to rent and they put down money to hold it for them to rent . Then they picked a time and place to sign the lease and thry didn’t show up . They called 2 1/2 hours later. What should I do?

  • PAT

    Getting ready to sign a new lease, i have been in apt over 5 years and always had rental ins. Now apt complex making rental ins a requirement. Either thru them or if I have my own I have to pay $5.00 a month administration fee. I feel like they are trying to make me get rental ins thru them or else $5. monthly penalty. What are they doing each month if I pay my own ins that would require an administrative fee of $5.00 a month? That`s $60.00 a year more rent because I have my own rental Ins. Can this be legal?

  • Bill king

    Does renters insurance pay the landlord if the tenant damages the property? I had a property manager tell me that if the owner is named as additionally insured/loss payee, renter insurance should cover damages caused by the tenant to the property. That’s the first time I have heard that.

    • Anne Henning

      I just had to evict renters who did not pay their rent for two months and damaged the property. I required them to carry renters insurance, Their insurance Co needs to reimburs me for damage to the property. Fiinding them is a problem,

  • Scott Adams

    I hadn’t thought about how renter’s insurance would be able to keep you out of court if something goes wrong. I have been wanting to start buying property, and I wasn’t sure how renter’s insurance would be able to help me. I can see how it would be nice to have the insurance set up, that way I wouldn’t be as liable for injuries.

  • R&T Group Inc.

    Great advice.

    We value our investments so we purposely require small things such as renter insurance, application fees, deposits, etc. It amazes me how many landlords complain about tenants not paying or valuing their dwellings when they too don’t value their investments because of their low requirements.

    If a potential tenant sees that a landlord is serious about provide quality housing most of the bad ones will not even apply.

    Great advice and it works because we’ve done it for the past 4 years.

  • Jack

    Why would a landlord require their name on the tenant’s renter’s insurance?

    • Jennifer Casey

      Because the requirement for liability coverage is to the benefit of the property should the resident cause damage such as fire, flood or any other covered incident so they would need to be named to be covered.

  • Shawn

    You ppl are so full of yourselves.

    After a divorce I moved into a small apartment. My credit at the time was stellar and my income was triple the minimum.

    Now with 3 yrs of timely payments and zero issues I have a new landlord who wants to raise rent 33% and I just found out about this insurance requirement.

    Here’s the problem, I got shafted in the divorce and got left with the bills, piles of legal debts, and court mandated nonsense. Last year I lost my job and this yr I decided to file for bankruptcy. I literally have no property even worth insuring (& no credit now either.)

    The rent increase may be justified in terms of the market but this extra is just a slap in the face. I’m a reliable and frugal tenant & it’s a waste of my money.

  • Mary jones

    I have a rent to own house I had water damage done to the house the land owner did not have insurance so I carry Insurance in my name the insurance company won’t pay me because they say I don’t on the house

  • Jared Newsom

    I am an Investor as well as an Insurance Agent and have never heard of a Renter Policy that will pay the deductible for a Landlord Policy claim. Could you elaborate or give names of companies that offer such coverage?

  • johny

    as a landlord with multiple listings, would forming an llc or s corp also provide the same liability coverage or is that entirely different.

  • luz maria

    why a landlord all of the sudden ask for renters insurance? I live in a little apt. w 2 kids and now he is asking if we have renters insurance. what thick is going on. we have been living here for almost 8 years and we have renters insurance but he never ask before. why now?!? can anyone tell me what’s going on?

  • Rebecca Ruano

    Have you ever been a renter? You sound like some one who believes they are superior because you were dealt a better hand!!! SMH

  • Summer

    To the person who wrote this article: You assume that people who live paycheck to paycheck are poor tenants. How snobbish are you? Be careful as you could find yourself there one day…

  • Sarah

    I was thinking the same thing!

  • Sarah

    “Renters who live paycheck to paycheck are fine people, but they make horrible tenants.” This comment took my breath away. I work in property management as well as live on a budget. Most people I know live paycheck to paycheck and to make that judgmental comment shows how little you understand people’s character. You have no idea what someone is going through. And for you to mouth off like that shows you lack relationship skills. Thank goodness we don’t work together. You give managers a bad name.

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