Is Renters Insurance Required?

You wouldn't think of driving a car without insurance, but what about living in that apartment or home that you rent? You almost certainly keep more of your possessions there. So why wouldn't you want to make sure your place is properly insured?

While renters insurance is not required by law, landlords may require it in order for you to sign a lease. A renters insurance policy also might be a smart thing to have for your own protection even if you don't have to buy it.

This article explains when renters insurance is required and why you may want a policy even if it's not required. Topics covered include:

When Is Renters Insurance Required?

Renters insurance, known in the industry as an HO-4 policy, covers tenants for accidental damage to personal property or theft of that property. It may also protect them from certain types of liability for injury to others or damage to other people's property.

While renters insurance is not required by law, landlords may require it in order for you to sign a lease.

In many cases, you may need a renters insurance policy to rent an apartment. This is not any kind of federal or state law, but increasingly it is a practical requirement by apartment community managers and homeowners renting their homes.

Do all landlords require renters insurance?

More and more landlords are requiring their tenants to have renters insurance in place in order to sign a lease. Certainly, not all landlords require renters insurance. You are more likely to find that more landlords do in big cities like New York or Los Angeles. Also, if you are renting from a big property management company as opposed to a private individual, you are more likely to encounter formal requirements like renters insurance.

Should I get renters insurance even if it's not required?

In many places, you can still find a landlord that doesn't require you to carry renters insurance. Does this mean you're off the hook, or should you consider it anyway?

Renters insurance protects your personal possessions from theft or damage due to things like a fire or burst pipes. It can also protect you if someone gets hurt in your apartment.

You may not think you own much that's worth insuring, but think of it this way: if your laptop, phone and all your clothes and furniture were suddenly destroyed, how would you pay to replace them?

Certainly, if you have more valuable items like musical instruments, high-end electronics or expensive artwork, renters insurance is a prudent way to cover yourself from exorbitant out-of-pocket costs.

How Much Renters Insurance Do I Need?

Look around and take an inventory of everything you'd want to replace if it were gone. Now put an estimated dollar figure next to each item and add them all up. Better yet, take pictures for a home inventory, which will come in handy if you ever need to file a claim. Receipts are helpful as well.

Both you and a roommate might be better protected if you have your own separate renters insurance policies.

The total dollar amount of your possessions is the minimum amount of renters insurance you will need. Depending on your situation, you might also want a renters insurance policy with additional coverage for things like liability for damage to the building or the cost of emergency housing if your apartment becomes uninhabitable.

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Understanding Your Landlord's Policies

To get back to a key question, why should you need insurance if you're living in someone else's building? Doesn't the landlord's insurance policy cover that?

As a property owner, your landlord probably has an insurance policy that covers things like the following:

  • Dwelling spaces. The building you live in should be covered against hazards like fire, windstorms etc.

  • Other structures. If the property has outbuildings like a garage or storage space, damage to these is probably included in the landlord's insurance as well.

  • Personal property. Here's the key. Your landlord probably has coverage for their own personal property. However, this does not extend to any tenant's belongings.

To cover the cost of replacing your possessions in case of damage or theft, you'd need your own renters insurance policy with personal property coverage. Your renters insurance coverage should also protect you from liability for things like damage you accidentally cause to the landlord's building, or medical expenses if someone gets hurt in your apartment.

Renters insurance can protect you if someone gets hurt in your apartment.

Are There Alternatives To Renters Insurance?

While there really is no substitute for renters insurance, these are some ways you can compensate:

  • Additional tenant fees. A landlord may charge a tenant who doesn't want to buy renters insurance an additional monthly fee. This can be held in reserve or put towards additional insurance to cover the landlord's potential losses.

  • Insurance waiver. Landlords may require a tenant who chooses not to carry renters insurance to sign a waiver saying that they understand that the landlord has no liability for the tenant's personal property.

  • Emergency fund. As a tenant, instead of buying renters insurance you could build up a savings account to use for emergencies like having to replace lost or stolen possessions. There are other good reasons for having an emergency fund, but as a practical matter it may be difficult to set aside enough money to cover more expensive items, let alone your potential liability to others.

How Can I Save on Renters Insurance?

Renters insurance costs are very low, and start as low as $120 a year for smaller spaces and go for around $200 on a house. If your cost is too high, you can adjust your renters insurance policy to suit your budgetary needs in the following ways:

  • Raise the deductible. The deductible is the out-of-pocket cost you have to pay before insurance kicks in. A higher deductible should lower your monthly premium, but it also leaves you on the hook for more money if you have to replace property. The higher your deductible, the lower your monthly payments.

  • Lower your coverage limits. Getting coverage limits right is a key part of choosing an insurance policy. If your coverage limit is too high, you may be paying a lot more for insurance than you need. If you go too low, however, you may not cover the cost of replacing your possessions.

  • Combine coverage with a roommate. If you have a roommate, both you and that roommate might be better protected if you have your own separate renters insurance policies. However, having both of you listed on the policy is better than one of you having no coverage at all. If you do share one policy, make sure to raise coverage limits.

  • Don't buy optional coverages. Based on your needs, you might be interested in additional coverage options like added liability protection, loss-of-use reimbursement, and replacement cost rather than actual cash value coverage. However, these do cost more.

Is it Required By Law To Have Renters Insurance FAQs

Why do I need renters insurance when it's the landlord's property?

The key phrase in that question is "the landlord's property." Landlords do carry insurance, and that covers their own property and liability - not yours. If you want coverage that protects you, you'll need your own insurance policy.

Is renters insurance required in California?

While there is no state law that requires renters insurance in California, the nature of some of the rental markets in the state is that you are likely to encounter landlords that insist on it. Think of a market like San Francisco, where housing is in high demand. That means landlords get to call the shots, and that may leave you little choice other than agreeing to get renters insurance.

Is renters insurance required in Texas?

As with California, Texas has no state law that requires renters insurance. Again though, the key is often what landlords require. Given the varied living situations across a huge state like Texas, rental insurance requirements are likely to be more common in some places than in others. A small landlord in one of the state's rural areas may not ever have given this requirement a thought. However, move to a big city like Dallas and Houston and you may find many landlords who insist on renters insurance.

Find the Renters Insurance You Need

You may or may not need renters insurance in order to rent an apartment or a home, but it's always in your best interest to be covered in case of a loss.

You can reduce your renters insurance cost without compromising on coverage by shopping around. Enter your zip code below and answer a few questions in return for free renters insurance quotes from competing carriers. You can save up to 40%!

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