Should You Require Renters Insurance? A Guide for Landlords

What Is Renters Insurance and What Does It Cover?

Renters insurance is similar to homeowners insurance but tailored for tenants. While landlord insurance covers the physical structure of the property, renters insurance protects tenants’ belongings and provides additional benefits.

1. Personal Belongings Protection: Tenants’ furniture, electronics, clothes, and other personal items are covered in case of theft, fire, or certain natural disasters. Your landlord’s insurance does not cover these items.

2. Liability Coverage: If a tenant accidentally damages the property or injures someone while on the premises, renters insurance can cover legal fees and medical expenses.

3. Temporary Living Expenses: If a disaster temporarily displaces a tenant, renters insurance may cover hotel bills or other temporary housing costs, saving you from the responsibility of covering these costs.

Can You Legally Require Renters Insurance?

Yes, property owners can legally require renters insurance as part of the lease agreement in Virginia. However, ensure compliance with local and state laws, and consult with a property management company to correctly incorporate this requirement in your leases.

Under the Virginia Residential Landlord Tenant Act (VRLTA), you can make renters insurance a lease condition by:

• Including It in Your Rental Criteria: State the renter's insurance requirement upfront during tenant selection.
• Adding It to the Lease Agreement: Clearly outline the insurance requirement in the lease contract to avoid confusion.
• Maintaining Consistency: Require renters insurance from all tenants to avoid discrimination claims.

How to Enforce Renters Insurance Requirements

Once the renter's insurance requirement is in place, you’ll need a system to verify compliance.

According to VRLTA guidelines, you can request written proof of coverage from tenants and require them to maintain the policy throughout the lease.

A professional property management company can assist with monitoring compliance to make sure each tenant has adequate insurance coverage.

Top Reasons to Require Renters Insurance

Here are some key reasons why landlords should consider making renters insurance mandatory:

1. Limits Landlord Liability: With renters insurance in place, tenants have a direct way to seek compensation for damaged belongings or injuries, reducing the likelihood they will come after you for damages.

2. Covers Relocation Costs: In cases of major damage, such as fire or flooding, renters insurance can help cover tenants' relocation expenses, sparing you from unexpected costs.

3. Protects Against Property Damage Claims: Renters insurance provides tenants with compensation for accidental damages, such as those caused by burst pipes or fire, reducing claims on your own insurance policy.

4. Minimizes Lawsuit Risks: Tenants with liability coverage are less likely to file lawsuits against you for accidental injuries or damage, as they can resolve claims through their own insurance.

5. Enhances Tenant Screening: Requiring renters insurance during the application process can serve as an extra filter for tenant selection. Tenants unwilling to purchase insurance might indicate higher risk or financial instability.

6. Allows for Pet-Friendly Policies: Renters insurance often covers pet-related damages and liabilities (such as dog bites), allowing you to offer pet-friendly rentals to a broader tenant base without increased risks.

7. Helps Control Insurance Premiums: When tenants have renters insurance, they are less likely to file claims against your landlord insurance, potentially preventing premium increases over time.

Ready to protect your rentals and your peace of mind?

Renters insurance is just one piece of a strong lease strategy. Download our free guide, "Guide to Finding the Best Property Manager in Hampton Roads,” to learn how a qualified property manager can help you reduce risk, screen better tenants, and protect your investment from day one.

How Much Renters Insurance Should a Landlord Require?

Determining the right amount of renters insurance to require can ensure adequate protection for both the landlord and tenant. Here’s what property owners should consider:

Minimum Liability Coverage

Landlords should require tenants to have a minimum of $100,000 in liability coverage. This amount typically covers common claims such as accidental property damage or injuries on the premises. For properties with higher risk factors (e.g., multi-unit buildings or properties with pools), landlords may consider requiring higher liability limits.

Personal Property Coverage

Encourage tenants to secure coverage that fully protects their belongings. While the amount will vary depending on the tenant’s possessions, $15,000–$30,000 in personal property coverage is a reasonable standard for most renters.

Loss of Use Coverage

While not mandatory, landlords can recommend that tenants include loss of use coverage in their policies. This ensures tenants are compensated for temporary housing costs in case of disasters like fires or floods.

Additional Riders for Pets or High-Risk Tenants

If your property allows pets or tenants engage in activities that could increase risk (e.g., operating a home-based business), you might consider requiring additional riders in the insurance policy to cover these scenarios.

Requiring Proof of Coverage

To maintain consistency and ensure compliance, request tenants provide proof of renters insurance before move-in and during annual lease renewals. Property management professionals can help enforce these requirements effectively.

By setting clear renters insurance standards, landlords can better protect their investments, minimize liabilities, and foster a responsible tenant base.

Can You Buy Renters Insurance for Tenants?

While landlords cannot directly purchase renters insurance for tenants, there are ways to make it easier and more affordable for tenants to get coverage:

• Work with an Insurance Provider: Partnering with a preferred provider can offer tenants discounted rates.
• Add Insurance Costs to Rent: You can add renters insurance premiums to the monthly rent or require the tenant to pay an annual premium upfront.

Some property owners with larger portfolios even negotiate bulk discounts with insurance providers to make renters insurance more accessible and affordable for their tenants.

Peace of Mind with Professional Property Management

Managing the complexities of landlord-tenant legislation and ensuring that rental properties are properly protected can be overwhelming.

Working with a reliable property management company, like Osprey Property Management, ensures your lease agreements are legally compliant, your tenants are properly insured, and your property is in good hands.

Protect Your Rental Properties With the Right Policies

As you can see, there are several advantages for property owners requiring renters insurance. It is in the tenant's best interest as well as yours!

While renters insurance can help minimize your renter's risk, the best way to minimize the property owner's risk is to select reliable tenants and work with property management professionals. 

For peace of mind, entrust the tenant screening process and day-to-day running of your Hampton Roads rental property to experienced professionals. 

Learn how our expert property managers help protect your rental and your peace of mind. Contact us today!