Do you need to require renter’s insurance from your tenants as a property owner? Yes, absolutely. Requiring renter’s insurance not only covers your tenant and their personal belongings, but it also covers you. For not a significant amount of money, your tenant can ensure that their belongings are protected in case of damage. As a landlord, you reduce the risk of having to cover your tenant if anything happens. 

Despite the various benefits to ensuring renter’s insurance is required by tenants, many places don’t require it. They see it as an expense that renters will not want to pay for. Always require your tenants to get renter’s insurance and explain in detail to them why your insurance as a landlord will not protect them and their items. Do not leave the decision up to your tenants. Many of them will not get it if the choice is theirs. If they ask, “Is renter’s insurance required?” the answer should always be yes.

What Is Covered by Renter’s Insurance?

When you require your tenants to get renter’s insurance, what is covered? As with any insurance, coverage can vary from plan to plan. That being said, most renter’s insurance policies will at least cover the following:

• Damage to personal property
• Losses caused by theft
• Liability for injuries on the property
• Natural disasters
• Relocation due to uninhabitable property

Why Tenants Should Get Renter’s Insurance

When you answer the question “is renter’s insurance required” with yes, your tenants may have many questions. A lot of first-time renters or those unfamiliar with rental policies may not understand why they must get insurance when you have insurance on the building. You will need to explain to them that, while your insurance covers the building and any damage caused to it, it does not protect your tenants’ belongings. The only thing that protects their property is their renter’s insurance.

Another example you can give your tenant for requiring renter’s insurance is what happens if there is a fire. If there was a fire that burnt down your building today, you, as a property owner, would be covered and would be able to use your insurance money to repair the building. Your tenant would lose everything inside, and now how to pay to find a new place to live while the property is being restored. If they had renter’s insurance, they would be reimbursed for the value of the belongings that they lost in the fire. It’s likely that their insurance would also pay for them to stay in a hotel while their home was uninhabitable.

Your tenants won’t be thrilled to hear that there is another expense they will have to pay on top of their monthly rent. Hopefully, when you give them the explanation listed above as to why you require renters insurance, they should be more understanding of having to pay to get it. They will be more at peace knowing they are protected if anything should happen. And, it hopefully shows that you have their best interest in mind as well.

Is Renters Insurance Expensive?

Renter’s insurance is generally pretty affordable. Of course, it may vary based on the tenant’s credit score and the area in which you are located. Overall, they should expect to pay around $10-12 per month for renter’s insurance. That’s essentially a Spotify premium subscription every month. Worth it for the comfort of knowing that their belongings are safe. 

Why Is Renter’s Insurance Required by Property Owners?

There are many reasons why property owners require their tenants to have renter’s insurance before moving in. Of course, the main reason is that it is to their tenant’s full benefit to have the protection. Many of the other reasons renter’s insurance is required benefit both the tenant and the property manager. In short, having more coverage from everyone on the property is never a bad idea. Some of the other benefits of required renter’s insurance include:

Mitigates Legal Issues

If someone gets hurt in your tenant’s apartment and they don’t have insurance, you could be the one getting sued. But, if you require your tenant to have renter’s insurance, they will be able to handle it through that, and you won’t be hit with a higher premium. 

Bigger Tenant Base

Tons of renters own pets like cats or dogs. Many rental properties do not allow pets because they can cause damage. If you require your tenants to have their own renter’s insurance that includes pet liability, you can cover yourself from any damage or injuries caused by pets. Then, you can be a pet-friendly rental facility which gives you a more extensive tenant base and can result in units filling up faster. Plus, your tenants will be happy knowing they can bring their pet or buy a new one. 

Lower Premiums

Requiring renter’s insurance for your tenants can actually lower your own premiums. When tenants have their own insurance, they will claim property damage and injuries through their renter’s insurance. That keeps those claims from going to your insurance and raising your premiums. 

Protection Against Theft

Renters insurance also covers your tenants’ personal belongings in any instance where they are stolen. They are more likely to take this up with their insurance if they have it instead of you. Tenants without insurance could easily turn around and come after you for failing to provide the proper security at the property. 

Protection Against Relocation Fees

If for any reason, your property becomes uninhabitable, your tenants’ renter’s insurance will cover their costs of having to live somewhere else. When you do not require them to have insurance, this burden can come back on you. In some states, you will have to handle the cost of your tenants relocating until whatever is causing the issue is fixed if they do not have their own insurance. That is a massive hit to your expenses that could be avoided by having your tenants pay $10 a month to protect themselves. 

Screens Tenants

If you let a potential tenant know that you require them to provide renter’s insurance and they push back, this may be a red flag for the tenant. They cannot afford the extra $10 a month, or they do not see their space as valuable enough to protect. Anyone who is willing to pay to protect their rental space and belongings will likely take better care of it. 

How Should Landlords Request Renters Insurance from Tenants?

Is renter’s insurance required at your property? If so, this is something you should let potential tenants know well before it is time to sign the lease. You should also add a clause in the lease indicating that you require them to obtain renter’s insurance within 14 days of the start of the lease. If you haven’t previously required insurance from tenants, reach out and see how many will get it. When it comes time to renew the lease of any existing tenants, add this requirement. 

For more great tips for property investors and landlords, make sure you check out our other helpful articles.