Why You May Need More Renters Insurance Than Your Landlord Requires

Two people sitting on the floor surrounded by moving boxes while looking up something on a laptop.

Image source: Getty Images

Landlords often require that tenants purchase renters insurance coverage. This requirement is usually meant to limit the landlord's potential liability. If someone is hurt by a renter's dog or in a renter's unit, that victim could potentially pursue a claim against the landlord. The chances of this are reduced if the tenant has insurance coverage.

Not every lease requires renters insurance, and the amount and type of coverage a landlord requires can vary. In many cases, renters may want to do more than buy the minimum insurance their lease mandates. Here's why.

Why would renters need more than the mandated renters insurance?

Renters shouldn't base their home insurance choices on the requirements set by a landlord -- although they should have at least the minimum amount of required coverage.

Rather than focusing on what is mandatory, renters should consider the amount of risk they are willing to take on, and the amount of risk they would rather transfer to an insurer. Renters insurance pays for many costs when problems develop, including:

  • Damages resulting from injuries a renter is liable for. Renters insurance can pay for legal fees, court costs, and compensation if someone is hurt on their property and they are held liable.
  • Replacement of a renter's property if it is damaged or destroyed. A renters insurance policy can pay for a tenant to repair or replace all personal possessions destroyed or damaged by a covered cause. This includes everything from sofas to electronics to clothing.
  • Living expenses and loss of use costs if the renter's home is being repaired. Renters often incur extra costs if their apartment or rental property is damaged or destroyed. This could be the cost of hotels or meals out, for instance, if they don't have a functioning kitchen.

Without sufficient renters insurance coverage, a renter would typically have to pay these expenses out of pocket. A landlord's insurance would not cover them in most cases.

While a landlord should have insurance coverage in case people are injured in common areas, the landlord's policy typically doesn't extend to protect a renter from loss if someone is injured due to problems within a renter's home or injured by a renter's dog. And it doesn't typically cover a renter's personal possessions.

The minimum coverage mandated by the landlord may not be enough to replace all of a renter's possessions, or to ensure they won't face a damage claim above their policy limits.

No renter should be unprotected and at risk of losing their assets to pay damages or replace everything they own. It's crucial to consider coverage needs and get the insurance that's right for the situation.

Top credit card wipes out interest
If you have credit card debt, transferring it to this top balance transfer card can allow you to pay 0% interest for a whopping 18 months! That's one reason our experts rate this card as a top pick to help get control of your debt. It'll allow you to pay 0% interest on both balance transfers and new purchases during the promotional period, and you'll pay no annual fee. Read our full review for free and apply in just two minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More