If you’re a landlord in 49 of the 50 states, you can require tenants to carry renters insurance. But there are restrictions on requiring renters insurance in some states. Also, there may be restrictions on requiring renters insurance based on federal and local guidelines for some rental units.
There are many reasons landlords should require tenants to carry renters insurance. Renters insurance is inexpensive, it’s good for the tenant, and it helps the landlord.
This article goes into detail about when and where you can require renters insurance. It also discusses the many benefits of renters insurance along with what to do if a tenant is not carrying their required renters insurance.
Why Landlords Should Require Renters Insurance
You have insurance on the property. So, why would you, as a landlord, care if a renter is insuring their property or not? Because your landlord insurance covers damage to the structure, general liability, and personal property you used to maintain the rental unit. What about the losses the tenant suffered? Can they sue you to recover these losses?
If the incident is the landlord’s fault, the tenant can usually recover from the landlord for their losses. But, if the tenant has renters insurance, that policy will cover the renter’s loss. Their insurance protects you.
What if an injury occurs in the rental unit? The renters insurance can cover this. Renters insurance provides another layer of protection for you. If every renter has insurance, landlords will only be responsible for injuries occurring in the common areas. Of course, you may still have to file a landlord insurance claim in such a case if the renter’s insurance is not enough to cover the total claim.
Requiring renters insurance means landlords don't have to file as many claims against their landlord policy. Fewer claims mean lower premiums.
Another advantage of requiring renters insurance is that it protects your tenants from large unexpected expenses due to fire, theft, injury, or other insurable issues. Your tenant’s protection in these cases is also protection for you. You don't have to worry about such incidents affecting your tenant’s ability to pay the rent.
Why wouldn’t a tenant want to carry renters insurance? If there’s a burglary, they’ll be glad they had insurance. If there’s a fire or tornado that destroys all their belongings, they’ll be glad they had renters insurance. And renters insurance only costs the tenant an average of $15 to $20 per month. There’s really no reason a tenant should object to a requirement to have renters insurance.
So it’s settled. Requiring renters insurance is good for both the landlord and the tenant. But what if the tenant allows the insurance to lapse? What if they aren’t carrying enough coverage to handle potential losses? You can prevent such issues by requiring a set amount of insurance and requiring that the landlord be on the policy, so you’ll get notice if the policy lapses.
Relating Reading: What is Renters Insurance and What Does it Cover?
Can a Landlord Require Renters Insurance?
Unless the rental property is in Oklahoma, landlords can require rental insurance. But, to require rental insurance, there must be a provision in the lease. You can have the tenant sign an addendum after the signing of the lease, but they may not agree to that. Your other choice is to include the renters insurance requirement in the new lease when the old lease expires.
There are other situations where renters insurance requirements are limited. If the law prohibits or limits, a renters insurance requirement and the requirement is still in the lease, that provision of the lease will be unenforceable.
In many states, you can also purchase renters insurance for the tenants and charge a fee for doing this. That’s one way of ensuring that the policies do not lapse.
Restrictions on Renters Insurance Requirements
As mentioned, Oklahoma forbids rental insurance requirements. The reasoning behind Oklahoma’s laws is that landlords already carry landlord insurance. Tenants are paying for landlord insurance through their rents. Requiring the tenant to carry renters insurance is asking them to pay for insurance twice.
Virginia allows landlords to purchase renters insurance for the tenants. Landlords can even require the insurance premium to be paid up front, like security deposits. But Virginia forbids these combined upfront payments from exceeding two months’ rent.
Under Oregon law, landlords can require tenants to carry renters insurance. But the required amount of liability coverage cannot exceed $100,000. Also, the landlord can’t be a beneficiary. But, landlords can be on the policy to receive notices, i.e., notice that the policy has lapsed.
Landlords can’t require renters insurance for Section 8 subsidized housing unless renters insurance is required for their non-Section 8 tenants.
Rent controlled and rent stabilized apartments exist in DC, New York, New Jersey, California, Maryland, and Oregon. It’s a good idea to check the municipal ordinances to determine if landlords can require renters insurance for rental controlled or rent stabilized properties. It may be necessary to consult with a local attorney.
Related Reading: Can a Landlord Move Your Personal Belongings Without Permission?
What Can a Landlord Do if a Tenant is not Carrying the Required Renters Insurance?
You have a provision in your lease that requires tenants to carry renters insurance. No federal, state, or local laws render this provision unenforceable. But your tenant allows their renters insurance to lapse. What do you do now?
Usually, a friendly reminder will solve this issue. If it doesn’t, you’ll need to decide if you want to begin the process of eviction. The required notices and procedures for evictions vary across the country. State and local governments often have many requirements. It’s best to consult with a landlord-tenant attorney if you’re considering eviction for violating this provision of the lease.
An easier way to handle lapsed renters insurance might be to purchase a renters insurance policy and charge the tenant for this convenience. Again, it’s best to make sure you can force-place renters insurance under state law. Also, if the tenant doesn’t pay the additional charge, you may be back to the eviction procedures.
It’s a good idea to require renters insurance for tenants. It benefits both the landlord and the tenant. Unless the tenant is in Oklahoma, a renters insurance provision needs to be in your lease.
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