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What does renters insurance cover?

Renters insurance is like homeowners insurance, but limited to cover a tenant's needs. The main difference is that a renters insurance policy does not insure the structure or building. The landlord is responsible for insuring the structure.

Renters insurance has two main components:

  • Personal property protection for the tenant's furniture, clothing, electronics, and other belongings. This covers losses due to fire, flood, theft, or other disasters.
  • Liability protection covers negligent actions by the renter that harm others such as accidentally flooding a neighbor's unit or a guest's slip and fall on a child's toy.

Both property and liability coverage can be obtained at various limits depending on how much protection is needed. Additionally, many renters insurance policies offer additional coverage for injuries to workers a tenant may hire and invite in, such as a housekeeper, babysitter, tutor, or homecare worker.

Can renters insurance be required by a lease?

Yes. In most states, a landlord may require renters insurance in their Lease Agreement. If a landlord did not initially require renters insurance in the lease, it may be added through a Lease Amendment or at renewal time, provided the tenant agrees or the lease terms allow for changes. Some states may require specific conditions about coverage, what a tenant may be liable for, and how claims are processed. Rent controlled areas may have specific requirements that apply as well.

If you operate Section 8 housing, participate in another government sponsored housing program, or have subsidized tenants, there may be additional restrictions under the law or subsidy agreement. In most cases, you can require subsidized tenants to carry renters insurance if you require all of your tenants to carry the same coverage. Landlords considering adding a renters insurance requirement for subsidized tenants should ask a lawyer before doing so to make sure they are not running afoul of any legal requirements. 

Oklahoma is notable in that it bans landlords from requiring renters insurance. This is because potential losses to the landlord are typically covered by the landlord's own property and liability coverage. Oklahoma generally does not allow a landlord or their insurance company to recover from a tenant for losses covered by the landlord's insurance.

How much renters insurance should be required?

Landlords are typically most concerned with liability coverage. Liability coverage provides guests or neighbors a simple way to recover compensation if a covered tenant accidentally damages someone else's property or causes an injury. Minimum limits of $50,000 or $100,000 or more are common.

Coverage for a tenant's personal property is usually optional and depends on the value of a tenant's property. Coverage will generally be available at varying limits and costs. Some landlords, however, suggest it to prevent the tenant from making a personal property claim on the landlord's policy.

What can a landlord do if a renter fails to obtain or maintain renters insurance?

If you require renters insurance in the lease, the tenant may be in violation of the lease if they do not maintain coverage. Landlords generally require tenants to show proof of coverage annually by submitting the insurance declaration document that insurers provide. 

When a tenant fails to maintain coverage, a landlord's options vary based on local law and the lease. A first step might be to ask your tenant to provide proof of coverage. In multifamily buildings, it can be helpful to remind the tenants who let their coverage lapse that this obligation not only protects themselves, but also provides protection for their fellow roommates or neighbors. It may be that your tenant simply forgot to renew or accidentally missed a payment. Often, insurers will allow retroactive coverage in these situations if the gap in coverage was not too long. 

If a tenant fails to provide proof of coverage, a landlord may need to show the tenant they are serious about this requirement. This may require sending a notice to cure or quit, or an Eviction Notice, which instructs the tenant to fix the lease violation by obtaining the required insurance or move out. This notice is often the first step before moving forward with an eviction.

If the notice does not work, you may need to get creative or begin the eviction proceedings. Where allowed by law, some landlords may consider it so serious a violation that renters will not even be given more than a few days to fix the violation.

Can landlords get renters insurance for their tenants and charge it in the lease?

Much like employers purchasing life insurance as a benefit for their employees, landlords may buy renters insurance for their tenants and bake it into the rent. The policy will legally be in the tenant's name as renters insurance tends to only cover a tenant's personal property and personal liability. The landlord, however, may be listed as a covered party when it comes to liability claims. By being listed, the landlord will receive notifications about changes to the policy.

Some large landlords or property managers partner or negotiate with insurance companies to provide tenants with discounted coverage. Landlords might secure a discounted rate for their tenants and this option makes it convenient for tenants to buy coverage during the application or leasing process.

To learn more about the legal requirements in your area, how to include a renters insurance requirement in your Lease Agreement, or how to handle tenant violations, talk to a Rocket Lawyer network attorney or download the Rocket Lawyer Mobile App.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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