Solved! Is Renters Insurance Required?

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Q: The lease on our new apartment states that we are required to buy and carry renters insurance for the entire time we live in our apartment. Is this legal? Can a landlord require renters insurance for apartments, and do I really need renters insurance?

A: While the law does not require renters to carry insurance, landlords have a pretty open field in terms of what they can require in a lease because if you don’t like their requirements, you can choose to rent a different apartment. In some ways, a landlord who requires tenants to carry insurance may be a great find; renters insurance protects both renters and the property owners, and this requirement may signal that your potential landlord is on top of the details about your lease and will be up front in their dealings with you. Renters insurance policies will financially cover the repair or replacement of your personal items if they are damaged or destroyed in a covered event, which usually means fires, storm damage, vandalism, and theft. Similar to homeowners insurance, you’ll pay an annual premium, choose your level of coverage, and decide on a deductible. If there’s an emergency or disastrous situation that is covered by the insurance, you’ll pay your deductible, and the insurance company will pay to restore or replace your items up to your coverage limit. If this still seems excessive, begin an inventory of your possessions and an estimate of what each item would cost to replace. Chances are you’ll be surprised. Do you have to get renters insurance? Well, if your landlord says so, then yes. Do you need renters insurance? Probably more than you realize.

The law doesn’t require renters to get renters insurance, but it can be required by the property owner.

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Property owners carry commercial or landlord insurance on the structure of the building, and sometimes a home warranty to cover the systems and appliances in their buildings. By requiring tenants to carry their own coverage, the landlord avoids liability claims from tenants and minimize associated risks. What is renters insurance? It’s a policy that provides insurance coverage against financial loss after certain events that cause damage or destruction of personal property inside your apartment, along with several other benefits.

How much renters insurance should a landlord require? This is a tricky question, because some landlords place a specific dollar figure in the insurance requirement clause within the lease, while others do not. Usually, simply requiring that tenants carry a policy absolves the landlord of any perceived liability for a tenant’s personal possessions so the amount that you insure your belongings for is up to you. However, if you’re going to pay for a policy at all, it’s worth adequately covering all your valuables and possessions.

If your lease requires that you carry insurance, it’s important to start shopping right away. First, if the insurance is a component of your lease, you can’t skip out on it without risking eviction, and your landlord may not be sympathetic to delays. Plus, not all policies are equal, so you’ll want to have as much time as possible to research and find a policy that works with the items that you own. For example, if you own musical instruments, expensive electronics, heirloom jewelry, or investment collectibles, you may need specific policy endorsements to effectively cover them. Don’t just grab the first policy you see—if you’re going to pay for insurance, you may as well make sure you’ll be appropriately covered.

Even if renters insurance isn’t required by the property manager, it’s generally a good idea to get it—and it’s affordable.

So your landlord requires renters insurance. Yes, it’s another expense—but there are specific benefits to carrying your own policy. Renters insurance is much more affordable than most people expect, and it’s certainly more affordable than replacing everything you own. If you’re asking yourself “Why do I need renters insurance?” there are quite a few reasons. As a renter, you may not have the established kind of emergency fund that most homeowners eventually develop; high rent rates and the expense of moving can make that difficult. This makes your personal property even more important to protect. Even if your apartment is furnished in leftovers from your grandparents’ attics and hand-me-downs from friends, replacing your furniture and belongings may cost more than you have to spend, and you’ll be faced with a choice between running up credit card debt and living somewhere partially furnished. And if your apartment is beautifully furnished with carefully chosen pieces you’ve accumulated over the years, it’s even more important to make sure that you can replace your belongings with items that equal the standard you tend to uphold.

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Renters insurance will cover certain scenarios that lead to loss or damage to personal property.

Why is renters insurance required by some landlords? Fire, weather damage, theft, vandalism. Water damage resulting from a broken appliance or burst pipe. Smoke damage from a small fire in a unit on another floor. These are all events that you can’t prevent, aren’t your fault, and could still end up causing thousands of dollars’ worth of damage. For a landlord, insurance provides financial security for their business. But what is renters insurance for apartments? The list of events that renters insurance policies cover is extensive. It’s also good for more than just replacement of your possessions—renters insurance covers your liability if you cause damage or injury to other people or property, even if you’re not at home at the time, so if your neighbor slips in your kitchen and suffers an injury, your renters insurance will cover their medical bills at least in part.

Another often-overlooked benefit of renters insurance is coverage for temporary relocation. After a disaster, your apartment may not be livable until repairs or rebuilding is complete. You’ll still likely have to pay rent during this time, so paying for a hotel or short-term rental, along with the inconveniences that come with relocating such as restaurant meals or restocking groceries, can be overwhelming. Renters insurance policies will cover this cost while your apartment is repaired.

Some scenarios are not covered: Damage caused by flooding from extreme weather conditions is specifically excluded, as is damage caused by earthquakes. Separate flood insurance policies can be purchased by renters in high-risk areas, but these events aren’t covered by standard renters insurance.

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After determining how much renters insurance you need, you can collect quotes from providers to find the best coverage for you.

How much insurance you need will be dependent on what you would need to replace after a disaster. Completing an inventory and supporting it with receipts, appraisals, and photo documentation when possible is a great way to begin. Then you can determine what kind of coverage you need. Actual cash value coverage will pay out what your items were worth at the time they were destroyed, which means the insurer will take the original value of the items and subtract an amount based on the age and anticipated wear and tear. This kind of coverage costs less, but it may leave you unable to replace the items as the cost of replacements may be more. Replacement value coverage, on the other hand, will pay out the amount it will cost to go out and replace your items today with items of comparable value.

Beyond the cost of the base policy, you’ll want to consider whether or not you need additional coverage for items with high value. As you begin to research policy options, you’ll see different ranges of coverage maximums. If replacing certain items, such as artwork, jewelry, or instruments, will exceed the coverage amount on their own, you may seek policy endorsements to cover those items separately, outside of the rest of the policy’s maximums. You’ll also want to consider your deductible, or the amount you’ll have to pay out of pocket before the insurance kicks in and starts paying. A higher deductible will cost you more out of pocket at the time of a claim but reduce your policy premium, whereas a lower deductible will cost more at the outset but reduce your financial responsibility during what may be a very stressful time.

Once you’ve figured out the coverage you need and your budget, it’s time to research the best renters insurance companies. Check with companies with which you already have relationships, such as your auto insurance company, and canvass your friends and family for recommendations. Do your own investigating online, too. When you’ve isolated a few companies that look like solid candidates, seek quotes, using the same parameters for each quote (request the same type of coverage, maximums, and deductible), and then determine which companies you’ll apply to. There’s no harm in applying to more than one! Different companies may offer unique discounts, so it’s important to follow through and ask about them. Because the policies will all be slightly different, you’ll want to read all the fine print before selecting one so you’re certain about what you’re paying and what’s covered. Then you can purchase your policy and show your landlord that you’re in compliance with your lease and sit back and enjoy the peace of mind that comes with knowing you’re financially protected in case of a disaster. Even if you don’t need to provide proof of coverage to a landlord, the answer to the question “Should I get renters insurance?” is almost always yes.