Can a Landlord Require Renters Insurance?

As a landlord, many perks go hand in hand with the requirement. Let’s take a look at whether or not you can require your tenants to purchase renters insurance, whether it’s a good idea for all parties involved and much more.

Yes, a landlord can require a tenant to purchase renters insurance. They just need to add an addendum to the lease agreement that states a tenant must obtain, and be able to provide proof, of renters insurance during the entire length of the lease.

The addendum must be added before the tenant signs, or it must be agreed upon by both parties during the lease. Landlords cannot legally make changes to a lease that’s already in place unless the tenant agrees to the changes. You can also ask your tenant to add you as an additional interest to their policy, which enables you to make sure they both purchase and keep adequate renters insurance while they’re living in your rental property.

However, there are more stipulations to the requirement based on where you live and how many properties you manage. Property management companies may be legally denied the ability to require their tenants to purchase renters insurance. Also, that lease addendum doesn’t fly in all 50 states. One state has separated itself from the pack, and a few more states have slightly followed suit.

Oklahoma is leading the charge in the fight to combat landlords’ renters insurance requirement. The Sooner State passed a law prohibiting landlords to require tenants to purchase renters insurance. It passed under the notion that tenants are co-insured through their monthly rent payments, effectively paying a portion of the landlord insurance each month.

Rent-controlled cities like San Francisco and New York require landlords to cap the amount of renters insurance needed by a tenant to a specific dollar amount. Virginia has a similar law that caters to landlords, allowing them to charge tenants fees (not to exceed two months’ rent) for self-carried renters insurance.

Oregon, on the other hand, can require renters insurance with $100,000 liability coverage if they carry a comparable policy. However, those limits end when tenants earn less than the median area income by at least 50 percent. Those below-average earners cannot be required to purchase their own renters insurance policy.

Many of the remaining 50 states haven’t put any laws or policies in place that prevent landlords from requiring renters insurance. Therefore, a simple addendum to the lease is legal cause to deny a potential tenant who doesn’t want to, or can’t, purchase their own renters insurance.

Tenant liability insurance isn’t mandatory by law and, since no lender is holding them to a higher standard, landlords are the only ones who can actually require their tenants to purchase mandatory liability insurance.

If possible, you should require your tenants to maintain a set amount of renters insurance. It helps both you and your tenant. Landlord insurance only covers damage to your home’s structure and belongings you keep on the property that are used to maintain it. It doesn’t cover damage to your tenant’s belongings — even if they were damaged by a peril that wasn’t their fault.

So if a pipe bursts and sprays water all over your tenant’s belongings, damaging and destroying $10,000 worth of their stuff, you may be found liable and have to file a claim with your landlord policy to cover the damages.

If your tenant had renters insurance, they’d file a renters insurance claim to replace their belongings, negating another claim on your policy. Or, if your policy denied the coverage, negating you from having to pay out of pocket to replace their belongings.

If the incident was your fault and you didn’t pay up, they could also take legal action against you. Requiring your renters to purchase renters insurance also reduces the threat of legal action if an unfortunate event were to happen on the property.

Let’s say a person gets injured on your rental property and they seek medical attention, causing them to fork over $3,000 for medical expenses. They may try to go after the landlord policy or even file a lawsuit to recover money for the damages. If they possess renters insurance, it will step in and be the first line of defense.

If your situation as a landlord allows you to require your tenants to purchase renters insurance, you should absolutely require them to do so. By requiring your tenants to purchase renters insurance, it reduces your responsibility for damage to your tenants and their guests, personal belongings and legal actions taken against you.

At a low monthly cost to the tenant at around $15 per month for $20,000 personal property and $100,000 liability coverage, renters insurance is fairly affordable to many people. Get a quick, easy and free renters insurance quote today to see how affordable it is in your area.