Can Landlords Make Renters Insurance Mandatory?

Renters insurance is required in leases to offer landlords and tenants with peace of mind and liability protection. Find out what choices a landlord has here.

What you will discover:

What is the scope of renters insurance?
Can a lease mandate renters insurance?
What is the appropriate amount of renters insurance?
What can a landlord do if a tenant does not get or have renters insurance?
Can landlords get renters insurance and include it in the lease?

Landlords perform an important service and are subject to liability at practically every stage. Many landlords need renters insurance to offset some of that exposure or, at the very least, to ease the claims process. While certain state and municipal regulations may impose limitations, landlords may give peace of mind to themselves and their renters by ensuring that everyone is insured in the event of an unintentional injury or property damage.

What is the scope of renters insurance?

Renters insurance is similar to homeowners insurance, except it is restricted to the requirements of the renter. The primary distinction is that renters insurance does not cover the structure or building. The building must be insured by the landlord.

Renters insurance consists of two major components:

Personal property insurance covers the tenant’s furniture, clothes, gadgets, and other possessions. This insurance covers damages caused by fire, flood, theft, or other natural catastrophes.
Liability insurance protects the renter’s careless activities that cause injury to others, such as accidently flooding a neighbor’s apartment or a visitor slipping and falling on a child’s toy.

Depending on the amount of protection required, both property and liability coverage may be bought at varying amounts. Furthermore, many renters insurance plans include supplementary coverage for accidents to professionals hired and invited in by a tenant, such as a maid, babysitter, tutor, or homecare provider.

Can a lease mandate renters insurance?

Yes. A landlord may mandate tenants insurance in their Lease Agreement in most jurisdictions. If a landlord did not originally require renters insurance in the lease, it may be added via a Lease Amendment or at renewal time if the tenant agrees or the lease rules permit alterations. Some states may have particular requirements regarding coverage, what a renter may be responsible for, and how claims are handled. Specific criteria may also apply in rent-controlled zones.

If you manage Section 8 housing, engage in another government-sponsored housing program, or have subsidized tenants, the legislation or subsidy agreement may impose extra limits. In most circumstances, subsidized tenants may be required to get renters insurance provided all of your tenants have the same policy. Landlords who are thinking about requiring renters insurance for subsidized tenants should consult with a lawyer first to ensure they are not violating any laws.

Oklahoma is noteworthy in that landlords are not required to provide renters insurance. This is due to the landlord’s own property and liability coverage often covering possible damages. In most cases, a landlord or their insurance company cannot collect from a tenant for damages covered by the landlord’s insurance.

What is the appropriate amount of renters insurance?

Typically, landlords are more concerned about liability coverage. Liability coverage gives visitors or neighbors a convenient option to seek compensation if a covered renter accidently destroys or injures someone else’s property. Minimum restrictions of $50,000, $100,000, or more are usual.

Coverage for a tenant’s personal property is typically optional and is based on the item’s worth. In most cases, coverage will be offered with varied restrictions and rates. Some landlords, on the other hand, recommend it in order to prevent the tenant from filing a personal property claim under the landlord’s insurance.

What can a landlord do if a tenant does not get or have renters insurance?

If your contract requires renters insurance, the tenant may be in breach if they do not maintain coverage. Landlords often demand renters to present evidence of coverage yearly by submitting the insurance declaration paperwork provided by insurers.

A landlord’s options when a tenant fails to maintain coverage vary depending on local legislation and the agreement. As a starting step, you might request evidence of coverage from your renter. In multifamily buildings, it might be useful to remind renters who have allowed their coverage expire that this requirement not only covers themselves, but also their roommates or neighbors. It is possible that your renter just forgot to renew or missed a payment. In these cases, insurers will often provide retroactive coverage if the lapse in coverage was not too extensive.

If a renter fails to submit evidence of insurance, the landlord may be required to demonstrate to the tenant that they are serious about this obligation. This may need mailing a notice to cure or quit, or an Eviction Notice, instructing the renter to either correct the lease violation by getting the necessary insurance or move out. This notification is often the initial step before proceeding with an eviction.

If the notice fails, you may need to be inventive or start the eviction process. Where permitted by law, some landlords may see it as such a significant infringement that tenants will be granted no more than a few days to correct the problem.

Can landlords get renters insurance and include it in the lease?

Renters insurance may be purchased by landlords and baked into the rent, similar to how companies purchase life insurance as a perk for their workers. Because renters insurance often only covers a tenant’s personal property and personal responsibility, the policy will be legally in the tenant’s name. When it comes to liability claims, however, the landlord may be classified as a covered party. The landlord will be notified of policy changes if he or she is mentioned.

Some major landlords or property managers collaborate or negotiate with insurance firms to give cheaper coverage to renters. Landlords may be able to negotiate a cheaper cost for their renters, and this option allows tenants to purchase coverage during the application or leasing process.