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Why Property Managers Should care About Renters Insurance

Image is an illustration of a house sitting in a protective bubble in someone's hands.Purchasing renters insurance may not be a top priority for a lot of tenants.  Though many property management companies require tenants to have renters insurance as a part of their lease, renters may still see it as an unnecessary expense. Renter’s insurance is not something to take lightly however, and not having it can impact tenants, property managers, and property owners alike.  Both tenants and property managers must understand that renters insurance is an essential, affordable, and easy way to protect property and mitigate personal liability.

What’s renters insurance?

According to, renters insurance “is an insurance policy, carried by the tenant, which provides coverage for the tenant’s personal property, property damage, and liability from accidental injuries to guests and damage to third-party property. Most policies are broken down into two parts; personal property coverage and liability coverage.”

Professional property managers will always require tenants to obtain and carry renters insurance.  Requiring tenants to have renters insurance is a form of liability insurance.  It’s an way to transfer certain risks away from the property owner and protect their investment.

Renters insurance typically costs about $20 a month, and it’s available from most insurance providers.

Recommended coverage

Good renters insurance should cover liability and personal property.  Though some property managers might not see the importance of requiring tenants to carry personal property coverage, it can help lessen the chance of a tenant trying to sue should something go wrong, while increasing the chances that the tenant will continue to be able to pay their rent if they experience a property loss.

Some property managers require tenants to have a minimum of $100,000 in liability and $15,000 in personal property coverage. Leases vary however.

What does it cover?

Personal property

Most of the time, personal property is protected from the following types of damage under renters insurance policies (subject to various coverage limits, conditions, and exclusions, which can vary on a state-by-state and policy basis):

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Smoke
  • Vandalism or malicious mischief
  • Theft
  • Accidental discharge or overflow of water or steam

Property managers who require their tenants to have renters insurance can help ensure that their tenant stay financially secure while they go through the process of replacing belongings.

Loss of use

If a property is damaged from a natural disaster, such as a fire, tenants typically need to move out while repairs are being done. Renters insurance would pay for a hotel or temporary housing.


The liability part of renters insurance kicks in when the tenant accidentally causes damage, like starting a fire by smoking or leaving a pot on the stove overnight.

The security deposit likely won’t cover those kinds of damages, and suing a tenant is never an easy solution.  Requiring a tenant to have liability insurance means that the insurance company will pay for damages (as long as they are covered in the policy

Liability coverage also includes certain injuries sustained at the property that were the tenant’s fault.  This could include someone falling because of clutter on the floor or a tenant’s dog biting someone.

Medical payments

Liability coverage also typically insures against medical costs associated with an injury of a guest. It won’t usually cover medical costs incurred by the tenant or household members though. A tenant must have separate health insurance coverage for those instances.

Third-party property damage

If a tenant accidentally damages another property or dwelling, the other owners might try to go after a rental property owner or their homeowner’s insurance to pay for damages.  Requiring tenants to have liability insurance usually keeps that from happening.

Why require renters insurance

Image is a drawing of an umbrella keeping rain off of a dollar sign.Requiring tenants to carry renters insurance can mitigate the threat of a lawsuit, reduce the responsibility of the rental property owner and property manager, weed out unqualified tenants (if they can’t afford renters insurance they will probably struggle to pay rent), and may even pay an owner’s insurance deductible if an owner’s policy is needed to cover repairs.

Professional property managers understand the importance of requiring their tenants to carry renters insurance and will include the mandate in their leases. When tenants have renters insurance life is easier for everyone involved.