How much renters insurance can a landlord require?

As a tenant, you want your rented space to feel like home. Maybe that means a thousand succulents and a well-stocked bar cart, or maybe it’s a lava lamp and a Pink Floyd poster. While we can agree to disagree about the merits of hanging a tie-dye wall tapestry, we’re sure that we’re all on the same page that your space should bring you joy. And we can also agree that the absolute last thing you want to deal with are unexpected costs for your rental, especially because, and we can’t say this enough, your landlord is not responsible for what happens to your personal possessions in your rental. 

And that’s where renters insurance (also known as tenant insurance) comes into play. Renters insurance protects you from financial loss if your personal belongings are damaged, someone  is injured in your home (or has their property damaged), or you need to temporarily live elsewhere while your residence undergoes repairs. 

This article will cover why you need renters insurance and how much coverage you should buy.

Can Landlords Require Renters Insurance? 

Technically, no law requires you to have renters insurance. That being said, many landlords and property managers mandate coverage for their tenants, and while state laws may limit how much renters insurance a landlord can require, most states do permit landlords to impose the requirement. If you have questions about your local rules, chatting with a real estate attorney might be worthwhile.

Pro Tip: Even if your landlord doesn’t require you to have renters insurance, it’s still wise to get a policy. The affordable coverage will help replace damaged or stolen belongings and shield you from financial and legal trouble in the event of guest injury. 

Renters insurance is also portable. Diamond bracelet stolen on vacation? File a claim. Friend break their ankle at your mother’s house? File a claim.

Why Do Landlords Require Renters Insurance? 

There are several reasons a landlord might require renters insurance. Having a policy means:

• You’re more likely to pay your rent in full and on time if you don’t have to pay out of pocket to replace your damaged personal property.
• You’re less likely to sue them to replace your belongings. (They’re not legally responsible, and neither is their landlord insurance policy. But litigation is a hassle.)
• They’re less likely to get sued by an injured third party because your liability coverage will kick in.
• They might also be able to get some property damage covered by your policy if your negligence caused the damage.

How Much Renters Insurance Should a Landlord Require?

As a rule of thumb, a landlord will likely require you to have enough personal property coverage to cover the cost of replacing your belongings. While it may seem like nothing more than a pile of Ikea furniture and old socks, you may be surprised to realize you probably own at least $20,000 to $30,000 worth of stuff. 

They may also require sufficient personal liability insurance to protect you (and them) from a guest’s injury or damage to their property. A standard renters insurance policy generally comes with $100,000 in coverage, which is usually enough protection for most renters.

Finally, your landlord may ask you to have several months' worth of living expenses paid for by loss-of-use coverage. That way, if your rental unit becomes uninhabitable, your living expenses will be covered and you can afford to move somewhere else while the place is being repaired.

Pro Tip: Be prepared for your landlord to ask for proof of active insurance. They may also ask you to list them as an additional insured party on your policy. Make sure you check all insurance requirements before you sign your lease. 

How Do Landlords Calculate Renters Insurance Amounts?

Landlords want to protect themselves against potential financial loss, so they calculate how much renters insurance you need to obtain to mitigate their risks. For example, if you own a dog, $100,000 in personal liability insurance coverage will take care of the average dog bite claim of $49,000 (including legal costs and medical payments).

When it comes to your personal possessions, it bears repeating: your landlord is not responsible for what happens to your stuff (nor is your landlord’s policy). However, many tenants without renters insurance (or adequate personal belonging coverage) try to sue their landlords out of desperation. Unfortunately, lawsuits are expensive and time-consuming. So, even though the landlord will likely win, they still lose.

Plus, if you’re not scrambling to replace essential items, you’ll easily be able to make rent every month, which helps your landlord pay their bills. Your timely payments also prevent your landlord from having to file a claim against their rent guarantee insurance (coverage that pays out if you fail to remit your rent payment). If they don’t file any claims, their policy premium is less likely to increase at renewal. 

Pro Tip: How much renters insurance you get is up to you, but you might want to do a quick inventory of your belongings and assign each item a value. It helps if you hold onto receipts! You might also want to take pictures of your belongings, which could prove useful should you have to make a claim. 

Is It Worthwhile to Purchase Additional Insurance?

It depends on your circumstances and budget, not to mention what exactly it is you’re protecting. If you happen to own a lot of fancy electronics, paintings by Monet, or other collectibles, obtaining extra protection for those items is a smart idea.

That’s because a basic renters insurance policy may have limited coverage for big ticket items. So if your Rolex watch was stolen, you’d be in dire straits and wouldn’t receive a payout for the full loss. Additional insurance or a rider can help bridge that gap. 

Likewise, while $100,000 in liability insurance coverage may sound like a lot, it won’t cover all events or injuries. It’s possible for a friend’s medical bills, for example, to exceed your policy limit. 

Every policy has its limitations, so if you’re nervous, buying additional liability insurance may be a wise choice, especially if your total assets are worth more than $100,000. That way, there’s no risk of a plaintiff being able to go after your cash or property.

Pro Tip: Don’t worry too much about the cost of a renters policy. According to the Insurance Information Institute, the average renters insurance premium runs $174 annually. That’s less than $15 per month. Bumping up your liability protection will only increase your monthly premium by a few dollars.

Ensure Your Rental Property is Protected with Marble

The only things true about life are death and taxes. Beyond that, everything is up in the air! Fortunately, you can prepare for the inevitable by purchasing insurance. The Marble Marketplace makes shopping for renters insurance easy. You can compare renters insurance quotes from multiple insurance companies, and then you can manage all of your policies via a single dashboard — all while earning rewards. Get started today!