Renters insurance isn’t usually required, but it’s a logical choice. And some landlords arrange leases so the decision is already made.
Can landlords force tenants to have renters insurance? Many individuals feel it should be the tenant’s prerogative if they want to pay for premiums or not, especially if the landlord has property coverage. After all, that insurance protects the landlord’s investment by covering the structure and their share of the interior that may apply.
It’s not wise to go without insurance and risk property loss, injury liability, or added expense if a renter has to evacuate temporarily, but it’s usually a choice. This particular freedom isn’t available to all of America’s 100 million-plus renters, however. Some landlords view renters insurance as a make-or-break deal for moving in.
The case for co-ops, apartments, and deductibles
Co-ops and apartments house multiple tenants in close proximity, sharing ceilings, floors, and walls. This makes a strong argument for landlords wanting renters to have insurance. A tenant in an isolated property has more grounds to claim that an incident is their problem and not anyone else’s.
Switch that scenario to a water leak that floods a downstairs neighbor—from something considered the tenant’s property— and it’s a potential lawsuit against the offending tenant (and possibly their landlord) to pay for repairs. Landlords and co-op boards want to know that every tenant is covering their interests. There’s no confusion about who will be held financially accountable if everyone has a policy.
This desire to protect themselves from extra expense and litigation from tenants is why some landlords make renters insurance a non-negotiable aspect of the lease. If they’ve done so, there’s no way around it. Landlords are within their legal rights to include this requirement. They are also free to add it to future leases, even if it’s not currently necessary.
Finally, a tenant with renters coverage in place makes it easier for the landlord in the event of water or fire damage. With an insured tenant, the landlord can claim their policy deductible for any broader damage to the property back from the tenant’s rental insurer.
All these factors drive landlords to insist on covered tenants, and some landlords are pressing to be added to a renters insurance policy as an “interested party.” This keeps them updated if their tenant’s policy should lapse or be canceled.
The case for common sense, no matter where you rent
The New York State Consumer Information site provides the complete list of what is and is not covered by renters insurance, and every one of those points is an excellent reason to have it. The law doesn’t require renters to secure a policy, but it’s a smart move. And the first concern for tenants—whether the landlord mandates a policy or not—is how much coverage is needed.
Landlords generally won’t dictate how much personal property coverage a tenant should have, since everyone’s possessions will differ in number and value. This makes it important for renters to assess the value of their belongings. The Insurance Information Institute recommends conducting a home inventory to determine the initial value and help future claims proceed more quickly and accurately.
Where landlords can exert pressure in a mandatory-coverage situation is how much personal liability protection a renters policy provides. Someone hurt while visiting a rental property may incur thousands of dollars in medical expenses and possible legal fees. The injured party will want the renter to pay these and, failing that, may target the landlord.
What’s the price of a happy landlord?
The good news is that the average renters policy costs around $16 a month, and only $18 a month for New Yorkers. That’s $211 a year, and the majority of policies studied to establish those rates provided up to $25,000 in personal property coverage and up to $100,000 in personal liability protection.
Both of those coverage limits can be increased for relatively little money. Tenants could get $300,000 in personal liability insurance for only $12 more (applied to the national average).
Ultimately, buying most forms of insurance is hedging bets against a “maybe.” An accident that harms property or people may never occur in a rental. But if it does, one thing is quite common: the tenant may be targeted to pay by someone, one way or another.
The NICRIS knowledge base offers many other articles to help renters understand their rights and responsibilities, while the NICRIS team is on hand to answer any insurance questions.
NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests, and their loved ones. If you need some insurance advice or would like a free, personalized insurance review, just drop us a line.