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When is renters insurance mandatory?
There are no states where there’s a blanket requirement for all tenants to have renters insurance. However, in most states, it is legal for your landlord to make having renters insurance mandatory, and to write the requirement into your lease agreement.
Currently, there are two exceptions:
- In Oregon, tenants cannot be required to have more than $100,000 of liability insurance, and landlords must also have their own insurance policies. Renters who earn less than half of their city’s average income, or who live in publicly subsidized housing, cannot be required to own renters insurance.
- In Oklahoma, due to the state’s interpretation of something called the Sutton Rule, landlords cannot require tenants to have renters insurance at all.
Can I be evicted for not having renters insurance?
Yes, you can be evicted for not having renters insurance.
If the terms of your lease agreement demand that you purchase renters insurance, your landlord can evict you if you fail to purchase a policy or let your existing policy expire without renewing it.
Why do landlords require renters insurance?
Landlords require their tenants to have renters insurance for three reasons:
1. To avoid potential disputes if the tenant loses their personal belongings
Many tenants don’t realize that landlord insurance only covers structural damage to the building. If you have renters insurance, your insurer will cover your personal property loss as long as the loss was caused by a covered peril, which means that your landlord doesn’t have to worry about you trying to collect damages from them.
2. To reduce potential liability in legal claims and recover damages
When it comes to injuries at a rental, the liability and claims process can be complex. If the injury is due to your landlord’s negligence at maintaining the property, it’s technically their fault. On the other hand, if the injury is due to your dog biting a guest, it’s your fault.
When both the landlord and the tenant have insurance, the grey areas with these situations and the “who owes what” headaches are much more easily resolved.
If you have renters insurance, it also simplifies situations where your landlord might come after you to recover damages. For instance, if you negligently start a fire or cause some other disaster that damages your apartment and your landlord seeks compensation from you, your insurer can cover your liability.
3. To avoid covering the renters’ housing costs if they are forced to evacuate
If you’ve read our post on what renters insurance is, you know that renters insurance offers loss-of-use coverage for when you’re forced to move out of your home due to a covered peril. For instance, if your home requires extensive repairs from burst pipes, your provider will pay for your temporary housing and other additional living expenses. Having renters insurance helps the landlord avoid having to cover these potential costs.
What if my landlord asks to be added to my policy?
Your landlord might ask to be added to your policy to verify that you’re carrying the required insurance. There are two ways you can add them: as an additional interest, or as additional insured.
When you add someone as additional interest, they’ll be notified if you make any changes to your policy or if you let it expire. It’s very common for landlords to ask to be added as additional interest, and there’s no reason not to do it — it’s a harmless provision that doesn’t give them the power to change your policy or file claims.
When you add someone as additional insured, they benefit from your policy and can file claims. Adding your landlord as additional insured is almost always a bad idea, because it can lead to confusion when you have to file a claim. Renters insurance is meant to protect tenants, not landlords.
Is renters insurance necessary?
No, renters insurance isn’t necessary if your landlord hasn’t required it. However, getting it is always a good idea because it can help you avoid potentially devastating financial losses.
Your possessions are likely worth more than you realize — the average renter owns about $30,000 in personal property. If a gas fire damages your home and destroys your possessions, you don’t want to pay to replace all that out of your own pocket.
Thankfully, the cost of renters insurance is very low, with premiums averaging between $12 to $15 per month. It’s even cheaper if you bundle it with another kind of insurance, like auto insurance.
Ultimately, whether you need renters insurance depends on your tolerance for risk, but getting it will usually save you money in the long run.