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Home » Property insurance » 6 Reasons Landlord Requires Renters Insurance in Lease Agreement

What do many tenants have in common? They think they don’t need renters insurance.

While landlord insurance already covers certain perils such as fires and floods, it primarily protects the property. Its coverage does not extend to the tenant in the event of theft, break-ins, natural disasters, and other unfortunate events.

As a landlord, you are allowed to require your tenant to get renters insurance in the lease agreement. While it’s not necessary, it is recommended. Requiring renters insurance in the lease agreement protects your tenants from the additional expense of replacing lost or damaged property.

If you’re not sure if you should require renters insurance, read on to learn about how it can help you and your tenant.

What is renters insurance?

what is renters insurance?

A renters insurance policy is designed to protect your tenant from personal property losses and liability claims. It is similar to homeowners insurance but it applies to individuals who rent a home or unit. Renters insurance is relatively inexpensive at a national average of $19 per month.

Is Renters Insurance Required By Law?

Although renters insurance is not required by law, it may be required by the landlord. However, landlords, property owners, and property managers should be careful when requiring renters insurance in lease. Landlord-tenant laws vary by state, so be sure to consult an attorney beforehand. Your state may have specific requirements on the amount of coverage you can require.

Why Should Landlord Requires Renters Insurance in the Lease?

Renters insurance benefits both the landlord and the tenant. Here’s why should a landlord require renters insurance:

#1 It covers relocation expenses

renters insurance to cover relocation expenses

In some states, landlords are responsible for covering the cost of relocation. For instance, if the rental property becomes damaged due to a fire, the landlord is obligated to offer relocation assistance by paying for the tenant’s temporary living arrangements. However, if the tenant has renters insurance, their insurance company will be able to cover the costs.

#2 It reduces the risk of a lawsuit

reduces the risk of a lawsuit with renters insurance

America is the land of lawsuits. If the tenant does not have renters insurance, they may insist that the landlord is responsible for their losses. For example, if a tenant invites a friend over, and that friend falls down the stairs, the tenant may sue the landlord — even if it isn’t the landlord’s fault. In general, the landlord is liable for injuries only if the home is deemed structurally unsound (e.g. the landlord failed to repair broken railings).

#3 It protects the landlord in the event of property damage

renters insurance policy protects landlord

If the tenant’s personal property perishes in a fire, flood, or other natural disasters, the tenant may come after the landlord for damages. The landlord’s insurance policy likely doesn’t cover the tenant’s items, however, renters insurance will. By requiring renters insurance, you don’t have to worry about repairing or replacing your tenant’s personal property.

#4 It helps landlords find qualified tenants

landlords find qualified tenants

Renters insurance is inexpensive. So, when a prospective tenant can’t afford renters insurance, it’s likely that their income isn’t sufficient. They either don’t care or they’re barely making ends meet. If you rent out your home to a tenant who doesn’t have renters insurance, chances are, they will be unable to pay their rent at times.

#5 It makes the rental property pet-friendly

pet-friendly rental property

According to the American Pet Products Association (APPA), approximately 85 million families in the U.S. own a pet. You’ll have a wider pool of prospective tenants if you have a pet-friendly property. Since pets are accident-prone, requiring renters insurance may be able to mitigate the risks of property damage.

#6 It lowers insurance premiums

renters insurance lowers insurance premiums

Insurance companies may increase the landlord’s premiums if the landlord files too many insurance claims. This is because multiple claims are a sign that the landlord has a high-risk property. By requiring renters insurance, the risk shifts to the tenant, appeasing the insurer and potentially lowering the cost of premiums.

Why should tenants get renters insurance?

If your tenant is on the fence about being insured, you can educate them about the many benefits of renters insurance.

#1 It protects their personal property

get renters insurance to protects tenant's personal property

Renters insurance protects your tenant’s personal property, such as their clothes, jewelry, devices, and more. A standard renters policy covers losses due to perils including theft, vandalism, civil commotion, fire, windstorms, and other unexpected events. It, however, does not cover losses caused by negligence or malice. This is a reason why renters insurance is required by landlords.

#2 It includes liability coverage

renters insurance includes liability coverage

A renters insurance policy covers the medical bills and legal expenses should someone be accidentally injured in the rental property. Keep in mind that this applies only when the tenant is found at fault. It does not apply when the injury was caused by the landlord’s failure to ensure the safety of the home.

#3 It covers property damage

covers property damage with renters insurance

If your tenant has children or pets, chances are, you’ll find more than scratches on the floor and dents in the wall during the move-out inspection. A landlord wants renters insurance as it covers the damage caused by the tenant’s negligence. These include broken windows, stained carpets, and so on.

When should the landlord ask their tenant to get renters insurance?

ask your tenant to get renters insurance

Your lease agreement can include a mandatory clause to get renters insurance. Ideally, the requirement should be brought up during the initial stages of the tenant screening process. Doing this allows you to “weed out” tenants who may not be willing to buy renters insurance.

If the lease has already started, you can require your tenant to buy renters insurance when they renew their lease (here is a lease renewal guide for you). Be sure to speak to a single-family property management company about your state’s laws on the maximum coverage you can require.


Renters insurance protects your tenants from personal property losses and liability claims. While it primarily protects them, it also protects you. As a landlord, it is your responsibility to ensure that your tenants are safe. However, despite your best efforts, some situations are unforeseeable. In these situations, renters insurance would be a worthwhile investment for your tenants.

If you’ve decided to require renters insurance in your lease agreement, consider consulting Luxury Property Care’s managers. Our property managers will ensure that you’re not stepping over legal boundaries and that your tenants are educated on the benefits of renters insurance.

Contact us at (561) 944 – 2992 or complete our contact form to get started.

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