Yes, landlords can require tenants to have a renters' insurance policy. Many landlords insist that their tenants carry insurance to help avoid potential disputes if the tenant's belongings are damaged while on the property, or to reduce their liability for legal claims, according to the Insurance Information Institute (III). We recommend that you check your state and local laws before adding a clause requiring renters insurance to your lease. The big difference between the two policies is that renters insurance does not cover the cost of damage to the structure of a building.
Most renters insurance policies include coverage outside the home, which means that belongings outside the home are still covered. The amount of coverage you require from a renters insurance policy is up to you, but be sure to discuss this with your lawyer as well. If you have a certain breed of dog, you may want to obtain a personal liability policy in addition to your renters insurance plan. If a court holds you liable, your renters' liability insurance will usually cover the costs up to the limit you have taken out, even if the incident takes place outside your home.
Depending on the insurance company you choose and the state you live in, you may qualify for discounts on renters insurance. If one of your guests is injured in your home and you do not have renters' insurance liability coverage to pay for medical treatment, that person can seek compensation from the landlord. If a potential tenant cannot afford to pay the monthly renters' insurance rate, you risk renting to a tenant who cannot pay the rent in full or on time. By investing in renters' insurance, you will not have to bear the cost of potential losses on your own.
Many tenants assume that their landlord's insurance policy covers their personal property, which is not the case. When a tenant has renters' insurance, landlords do not have to worry about replacing personal property. For example, most states require auto insurance and the Affordable Care Act (ACA) mandates health insurance. And building owners are required to have insurance on the buildings they rent, although that insurance only covers the structure.
Your own insurance may not cover the tenant's personal property in these cases, but the tenant's insurance may. Many tenants, whether they are required to or not, purchase and maintain renters' insurance for their own benefit.