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Renters Insurance – What Do I Need?

When you’re renting an apartment or house, there are fees for just about everything — from security and pet deposits to building maintenance and parking.

So if your landlord decides to require renters insurance on top of that, you might be reluctant to add yet another expense.

What’s more, you may be wondering: Can your landlord actually make you buy renters insurance?

Put simply, yes. But perhaps the bigger question about renters insurance is: Can you afford to go without it?

Let’s delve into how and why you might need renters insurance, and what’s within your rights as a tenant.

What is Renters Insurance?

Renters insurance protects personal belongings in a rented apartment, home or other property in case of losses or damages from an unexpected event such as a fire, flood or theft.

A renters policy is similar to homeowners insurance, except it does not protect the structure where you live — since it’s the landlord’s property. But it would cover damages you cause to the property.

What renters insurance does offer is three types of protection:
• Liability coverage in case you or a visitor is injured in your home, or if you accidentally damage the property.

• Personal property coverage for your belongings

• Additional living expenses coverage, which covers the cost of your living arrangements in case you have to temporarily move out of your apartment because of unexpected damages.

Can Your Landlord Make You Get Insurance?

In most states, a landlord has the right to include a clause in the lease agreement requiring the tenant to provide proof of renters insurance.

The one exception is Oklahoma, which passed a law prohibiting landlords from requiring that tenants purchase renters insurance.

Oklahoma based this decision on a provision known as the Sutton Rule, which presumes that the tenant is co-insured under the landlord’s policy, and that rent payments help cover a portion of the landlord’s insurance each month.

There are also some cities, such as New York and San Francisco, that have rent control laws and mandate that landlords must cap the amount of renters insurance they require their tenants to buy.

Although many states mandate other types of insurance coverage, such as liability protection for drivers, there are no state laws mandating renters insurance, nor is there a federal law requiring it. So assuming the landlord or state or local government doesn’t impose a requirement, it’s pretty much up to the tenant to decide whether to purchase a renters policy.

Tenants who refuse to buy required renters insurance simply may not get the apartment they want. And for those already renting the property, the landlord could fine or evict tenants who won’t purchase a renters policy.

Why Do Landlords Require Renter’s Insurance?

Rising insurance costs. Renters insurance requirements became the norm only within the last decade or so, as property insurance costs have risen significantly. As it is, policies for landlords are usually about 25% higher than traditional homeowners policies.

Tenant becomes responsible. A renters insurance requirement shifts some of the responsibility for damages to the tenant. So if a tenant accidentally starts a fire or puts a hole in the drywall, the tenant’s liability policy would kick in so the landlord doesn’t have to file a claim on their own policy.

Lower rates for landlord: Not filing any major claims can keep premium costs down.

Helps find better tenants: A tenant’s willingness to purchase a renters policy may signal to the landlord the tenant’s likelihood to pay rent on time.

Why Should I Get Renters Insurance?

Before you scoff at the idea of another rental expense, there are a few things to consider that might make purchasing a renters policy worthwhile — even if your landlord isn’t mandating that you buy one.

Your landlord’s insurance may not cover you. It’s unlikely your landlord’s liability policy will protect you if you or someone else is injured on the property, or if you accidentally damage the unit. Without insurance, you could be on the hook for thousands of dollars in expenses, not to mention at risk of getting sued.

Protection for your prized possessions. Research by the Insurance Information Institute found that although 95% of homeowners have a homeowners insurance policy, only 37% of renters have renters insurance. Since a landlord’s policy doesn’t cover a tenant’s personal belongings, a renters policy is necessary to protect these items if they become damaged or stolen.

Premiums are inexpensive. Renters policies are a fraction of what homeowners insurance costs. Compared to homeowner’s insurance, which had an average premium of $1,272 in 2019, the average renters premium cost $174, according to the Insurance Information Institute.

You could qualify for a tax break. If you are self-employed and use a portion of your apartment as your home office, you may be able to write off your renters insurance as a business expense. It’s worth noting that if you receive a W-2 from your employer, even if your job allows you to work from home, you can’t claim the deduction.

The costs are getting even lower. Whereas the average homeowners premium has risen nearly 40% since 2010, the average renters premium has fallen almost 6% in that time, according to III.

Tips for Getting Rental Insurance

  1. Get an inventory app. Just as you would with a homeowner’s insurance policy, you will need to take inventory of all of your possessions and their estimated costs, making sure to highlight any high-value items. A good tool is the National Association of Insurance Commissioners Home Inventory App, which you can download on your smartphone.
  2. Check with property insurance companies. Renters policies are usually available from any insurance company that offers property coverage. You’ll want to compare several quotes to get the best price.
  3. Ask questions. Find out from the insurer whether the policy covers liability, theft, living expenses and contents. You can also ask about deductible costs, available discounts and policy inclusions.

Whether it’s required or not, both landlord and tenant can benefit from renters insurance. A better understanding of how renters policies work can help you make an informed decision.