Why smart landlords require renters insurance

Renters insurance is designed primarily to protect residents, but it also provides a critical layer of protection for landlords. When your residents aren’t insured, you’re more vulnerable to lawsuits and financial losses.

To put it simply, if a resident suffers a loss (whether their home is robbed or a burst pipe destroys their things) they’ll need money to cover the damages. If they have renters insurance, their policy will likely cover at least part of the expenses involved.


A basic renters insurance policy protects your residents in four important ways:

  • Contents coverage protects their belongings if they’re stolen or damaged due to a covered incident.
  • Loss of use coverage can pay for temporary accommodations if their home becomes uninhabitable due to a covered peril.
  • Liability coverage helps renters when they’re held financially responsible for an issue like a kitchen fire or injury to another person.
  • Medical payments coverage offers financial assistance if a renter needs to cover someone else’s medical bills due to an incident in their home.

For the renter, the benefits of having this kind of protection are clear. And as a landlord, requiring your residents to hold a policy can help you in three important ways.

1. Renters insurance can keep your insurance premiums down.

Let’s say a resident accidentally starts a fire. Technically, they’re responsible for the resulting damage, both to their belongings and to your building.

If that resident has renters insurance, their contents coverage will help replace their belongings. Plus, the liability portion of their policy will kick in to cover the property damage, and your insurance company can work with theirs to sort out compensation. If your insurance policy covers part of the repair costs, their insurance may even cover your deductible.

It’s important to note here that your resident’s renters insurance policy can only pay out up to the limit of their liability coverage. Because certain kinds of damage (like fire damage) can be extremely expensive, most renters insurance carries a minimum of $100,000 in liability coverage—and if you decide to require coverage, you may want to make that minimum a part of your requirements.

Now, let’s say a resident who doesn’t have renters insurance causes a fire. In this case, your insurance company may go after their personal funds to pay for your repairs. But because structural damage can cost tens of thousands (or even hundreds of thousands) of dollars to repair, it’s unlikely that your insurance company will be able to recover the full cost from your resident.

After all, not many people have that kind of cash lying around. As a result, your insurance company could be stuck footing the bill—and you could take the hit in the form of a higher insurance premium.

2. Renters insurance can protect you from lawsuits.

The contents coverage portion of a renters insurance policy protects the policyholder’s belongings from covered perils, like burglaries and burst pipes. That means your resident can rely on their insurance provider to help repair or replace their things.

For example, if someone breaks into your building and steals a resident’s TV, their insurance company will help pay for a replacement. And if a burst pipe soaks your resident’s living room, their renters insurance company can foot the bill for new furniture.

If your resident doesn’t have renters insurance, though, they may look elsewhere for the money to replace their things. They might claim that the theft happened because your building isn’t secure, or that the pipe burst because you’ve been negligent with maintenance—and try to sue you to recoup their losses. Whether they win the case or not, those legal fees can really add up, so it’s in your best interest to avoid potential lawsuits altogether.

The loss of use portion of a renters insurance policy is similarly beneficial to you as a landlord. If a covered incident, like a fire or water damage, renders a resident’s home uninhabitable, renters insurance will help pay for temporary accommodations like a hotel room. But if that resident doesn’t have a policy, they may turn to you to foot the bill.

3. Renters insurance can protect you from bad residents.

There’s no sure-fire way to screen out all potentially difficult residents, but a renters insurance requirement can help. If a prospective resident isn’t willing to get a policy, this could signal that they’ll be uncooperative about other things in the future.

Plus, given that there are plenty of affordable renters insurance options on the market—Jetty’s start at just $5/month!—every resident should be able to find a policy that fits their budget and needs.

When your residents are protected, you are, too. So if you don’t yet require renters insurance, it’s time to seriously consider updating your lease agreement.

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