You dotted the i's and crossed the t's on the rental
application, wrote a check for first and last months' rent,
provided character references and are all set to move in.
But wait - do you have renters insurance?
What used to be optional is now becoming a requirement for
tenants at a growing number of apartment complexes.
In a 2012 survey of large apartment complex owners by the
National Multi Housing Council in Washington, D.C., 84 percent said
they required their tenants in at least some of their properties to
have insurance, up from 62 percent in 2012.
"We started requiring renters insurance in 2007, and we were on
the forefront of doing that," says Shanna Teague Berrien, director
of insurance risk for CWS Apartment Homes in Austin, Texas, and a
member of the National Apartment Association. "In the last three
years, everybody who's anybody has made that a requirement."
Berrien says mom-and-pop landlords generally don't require
renters insurance, but most big complexes do. Her company owns and
manages 21,000 units in Texas, North Carolina, Atlanta, Denver and
covers your personal belongings if they're stolen or damaged and
provides liability protection if you cause someone else to suffer
injuries or property damage. A landlord's insurance covers the
structure and their own liability but
tenants' possessions or tenants' liability.
Renters insurance also pays for additional living expenses if
your apartment or rental home is uninhabitable because of a covered
disaster, such as a fire. The coverage kicks in if you have to live
somewhere else and incur extra expenses while your apartment is
Why landlords want you to have renters insurance
"A big reason we're seeing it grow is because it's just a good
idea for all involved," says Jim Lapides, a spokesperson for the
National Multi Housing Council. "For the renter, it can provide
protection against catastrophic events. The building management's
insurance will rarely cover the personal items of their
Berrien recalls when a 32-unit apartment complex owned by her
company burned. Three tenants didn't have insurance, despite the
company's requirement, and they lost everything.
"There really was nothing we could do, absolutely nothing, and
it was really sad," she says.
It was a happier ending for tenants of an eight-unit Houston
apartment complex recently damaged by fire. All of them were
"Every single one had temporary housing paid for by insurance
and had their contents covered," Berrien says.
Requiring renters insurance makes recovery go more smoothly if
disaster strikes. Although landlords aren't responsible for their
tenants' stuff, tenants tend to look to landlords for help when
their belongings are destroyed, she says.
Your renters insurance saves the landlord money
Renters insurance is good for the landlord, too. Say, for
instance, a negligent tenant causes a fire that destroys several
apartment units. If the tenant has insurance, his liability
coverage can be called upon to pay for the damage, up to the
Typically the landlord's property insurance would pay for
repairs and then the landlord's insurer would seek reimbursement
from the tenant's insurer. The reimbursement would include recovery
of the landlord's deductible, saving the building owner thousands
of dollars in out-of-pocket costs. Another bonus for landlords:
Insurers give premium discounts to apartment complexes that require
tenants to have renters insurance. The most common liability limit
required for renters is $100,000, according to the National Multi
If the apartment dweller doesn't have renters insurance, the
landlord could sue the tenant to cover the costs of repairs, but
the average renter doesn't have the assets to make such a lawsuit
Many renters just say no
Sales of renters insurance are growing, in part because more
tenants are forced to buy it. But most renters who aren't required
just skip it. Overall, only 31 percent of renters buy renters
insurance, according to a 2012 Insurance Information Institute
The lack of renters insurance often stems from
"They believe if there's a fire or water damage, their
landlord's insurance would cover their stuff," says Jim Hyatt, vice
president of personal lines for Arbella Insurance Group, a regional
property insurer headquartered in Quincy, Mass. "We have to change
Hyatt says to ask yourself: "If I were to lose all my stuff, how
long would it take me to replace everything I have?"
Renters insurance is surprisingly cheap. Average renters
insurance premiums run between $15 and $30 a month, according to
the National Association of Insurance Commissioners. You can save
on your premium by buying coverage from your auto insurance
company, known as bundling. Most insurers give car insurance
discounts for maintaining both types of coverage with them.
Hyatt says a "starter" renters insurance policy is about $130 to
$150 a year. That would provide about $12,000 to $15,000 in
contents coverage and $300,000 in liability coverage, he says.
Hyatt recommends everyone buy at least $300,000 in liability
coverage. If you're a renter with substantial assets, such as
savings, you should buy more.
Good liability protection is especially important if you have a
dog. More than a third of all the money insurers paid out for home
and renters insurance liability claims in 2012 was for dog bites,
according to a recent Insurance Information Institute report.