Almost every landlord has insurance on their property, but many landlords underestimate the importance of renters insurance. Some rental unit owners aren’t aware that they can require their tenants to purchase renters insurance before the lease is even signed. The bottom line is that renters insurance is beneficial to both the tenant and the landlord.

It’s important that potential tenants understand purchasing renters insurance is the best way to protect their possessions in case of an accident. Some tenants might assume that the landlord’s property insurance protects their valuable belongings. This is not the case.

It’s vital for landlords to communicate the benefits of renters insurance and the risks of going without a renters insurance policy.

How Does Renters Insurance Benefit the Tenant?

For a tenant, the benefits of owning renters insurance far outweigh the small additional monthly fee.

Once tenants understand how renters insurance can protect their possessions, buying a policy is an easy decision. There are many reasons why every tenant should purchase renters insurance. Letting your applicants know about the following benefits will help them see the importance of insurance.

This is what your tenant needs to know:

  1. Renters insurance is affordable. The cost is typically less than $20 per month.
  2. Insurance will give tenants peace of mind that their property is protected against accidental damages and losses.
  3. Purchasing renters insurance often leads to discounts on other forms of insurance, such as auto insurance.
  4. Renters insurance covers a wide range of things including situations where the tenant is sued, injuries on the premises, and medical fees to others, among other benefits.

What Does Renters Insurance Cover?

When you’re in the home rental business, accidents can happen. Without renters insurance coverage, any of your tenants’ possessions are at risk of being lost forever. Renters insurance protects against most accidents and property losses.

The damages commonly covered include:

  • Fire Damage
  • Lightning Damage
  • Smoke / Explosion Damage
  • Wind or Hail Damage
  • Accidental Water or Steam Damage
  • Theft and Burglary
  • Vandalism
  • Accidental Injuries to Guests: The plans cover the guest’s medical bills, but not the tenants.
  • Damage to Third-Party Property: Examples of third-party damage includes an overflowing bath or sink that damages the lower unit, driving into a fence, and grill or propane accidents. Most renters insurance policies even cover window damage, so if the tenant’s child accidentally throws a baseball through a window, that would be covered too.
  • Damage to Personal Property, for example: clothing, furniture, computers, electronics and small appliances

If your tenant’s insurance plan covers theft and burglary, you should be prepared to provide the insurance company with a list of the unit’s security measures including locks, automatic lights, and cameras. If the security measures aren’t listed, there is a chance the insurance company might decide the home wasn’t properly secured at the time of the theft and may not reimburse your tenant. You could also be on the hook as the tenant could sue you for the losses.

Benefits of Renters Insurance for Landlords

Renters insurance doesn’t only benefit the tenant. There are many benefits for landlords, as well:

  1. It lowers the chance of a lawsuit. When damage occurs to a renter’s possessions, often their first impulse is to sue the landlord. Without renters insurance, the tenant might claim the landlord shares responsibility for the damage. When a tenant purchases renters insurance, their first instinct will be to call the insurance company, instead of taking a trip to the courthouse.
  2. Requiring renters insurance can warn you of risky tenants. If a rental applicant complains about the insurance requirement, this should be a red flag that they might be a difficult tenant. If they can’t afford to pay a small monthly fee, how can you be sure they’ll be able to pay their rent every month? This does not make the applicants bad people. It simply means that renting property to them might be risky.
  3. Renters insurance vastly reduces your responsibility. In the case of a fire or other devastating accident, the tenant won’t have to rely on the landlord’s goodwill to secure temporary housing. Having the insurance company pay for their shelter means one less hassle to deal with.


As you can see, requiring that your tenants have renter’s insurance is beneficial for everyone involved.

Tenants are provided the peace of mind that their possessions are safe and landlords benefit from the reduced responsibility. Once you explain the benefits to your tenants, they’ll understand why you require the policy. In fact, they will likely be thankful for the information.