Perhaps you’re getting your first apartment and your parents are encouraging you to buy renters insurance by saying it’s the law. Or maybe you are moving into a new rental house and your landlord is requiring that you buy a policy with a certain amount of liability coverage. Are they right that tenants have to have renters insurance? Is renters insurance mandatory?
Renters insurance and the law
Renters insurance is insurance to protect your personal belongs and liability. Read more about how renters insurance works.
Renters insurance is not required by law, but it is legal for your landlord or management company to require that you and other tenants in your apartment building or house have renters insurance as terms of your lease agreement. Because it's not legally required, it's not surprising that 56% of millennial renters don't have renters insurance.
Other types of insurance and the law
One reason why many people think renters insurance may be legally required is because there there are other types of insurance that are required by law. For example, most states require auto insurance and the Affordable Care Act (ACA) requires you to have health insurance. And building owners are required to have insurance on buildings they rent out, although that insurance only covers the structure.
Like renters insurance, homeowners insurance isn’t required by law, but if you’ve financed your home, your mortgage lender will likely require you to have homeowners insurance.
How much renters insurance do landlords require
If your landlord requires renters insurance, there is likely a provision in your lease agreement that states how much coverage you’re required to have. Landlords generally do not stipulate how much personal property coverage you must have, but they will state how much liability coverage they expect you to have. A $100,000 liability limit is a typical requirement, though your landlord may require more.
Read more about how much renters insurance to buy.
Why your landlord requires renters insurance
There are several reasons why your landlord may require tenants to have renters insurance:
1. It lowers their own liability If one of your guests gets injured at your home and you don’t have renters insurance liability coverage to pay for their medical treatment, that person may try to get compensation from the landlord. By requiring you to have renters insurance, your landlord ensures that your own insurance company is the first place an injured guest will turn to for compensation, ensuring that your landlord will not have to pay for court costs associated with bodily injury claims.
2. It keeps you from trying to collect damages from them Landlords and their insurance companies are only responsible for structural damage to the building. But many tenants don’t know that and expect the landlord to replace their personal property and possessions in the event of a disaster. By requiring you have renters insurance, your landlord is mitigating the expectation that they will replace your personal belongings.
Another cost landlords aren’t responsible for: finding you alternate accommodations if your unit is unlivable after a fire or other disaster. Again, many tenants don’t know that the landlord won’t pay for them to stay in a hotel after a fire, but renters insurance covers that. By requiring renters insurance, landlords ensure that tenants have coverage for their property and additional living expenses and won’t turn to the landlord after a disaster.
3. It allows them to recover damages If you inadvertently cause a fire in your unit or water damage by leaving the tub running, your landlord’s insurance will pay for damages to the building — but only after your landlord pays the deductible. However, if you have renters insurance, your landlord can recover that deductible from your insurer.
How to show your landlord that you have renters insurance
There are a few ways your landlord can ensure that tenants have purchased the required renters insurance. Some landlords want to see a copy of your renters insurance policy or statement of insurance, but others will simply take your word for it.
But many landlords want to be listed as an additional interest on your policy. As an additional interest, your landlord will get notified if the policy lapses or is canceled.
Note that this is different than being named as an additional insured, which is for roommates or partners who also live in your home with you and who you wish to be covered by your policy. You cannot name your landlord as an additional insured, and wouldn’t want to anyway; it would preclude him from being able to make a claim against your liability coverage.