How Much Renters Insurance to Require

Property manager calculating renters insurance at a desk

When managing rental properties, setting a renters insurance requirement is a critical step in protecting your business and mitigating risk. While it may be hard to imagine the worst will happen at your property, all it takes is one catastrophic event to cause a headache or even upend your entire operation– a visitor falling down the stairs, an accidental fire, or a tenant’s unit getting emptied in a break-in.

In fact, studies show that resident negligence leads to an average of $1.2 billion in property damages each year. Even with the probability of a loss relatively low, the hefty price tag if the worst happens is enough to change the math on requiring renters insurance.

That’s why getting coverage for your residents needs to be more than just a suggestion at move-in. To ensure peace of mind for you and your building, you need to require tenants to have renters insurance in order to protect both parties when the unexpected happens.

Ultimately, the right maximums to choose for a policy may differ for each resident. The amount of renters insurance coverage an individual needs depends on a variety of factors, including their belongings and your risk tolerance.

However, there are some guidelines to follow on the property management side to figure out how much insurance is enough for your lease agreement. Let’s talk about renters insurance, what it covers, and how much to require as a landlord.

What Is Renters Insurance?

Renters insurance is an insurance policy designed specifically for tenants who rent their living space. Unlike homeowners insurance, which covers the structure of the property, renters insurance primarily focuses on protecting the personal belongings of the tenant and providing liability coverage.

If you own or manage rental properties, it’s recommended to get your own landlord insurance to cover your liabilities and property. However, your insurance company will often give you a discount on your premiums if you can show that your tenants have their own renters insurance policies as well.

What Renters Insurance Covers (and What It Doesn’t)

Before deciding how much insurance to require from your tenants, it’s important to understand what’s covered under a standard renter’s insurance policy.

What Renters Insurance Covers:

For most renters insurance policies, what’s covered typically falls under one of three main categories:

  • Personal property: This includes coverage for personal belongings such as furniture, electronics, clothing, and appliances in the event of damages due to theft, fire, vandalism, or natural disasters like windstorms or lightning.
  • Liability protection: Renters insurance offers personal liability coverage in case a guest is injured on the rental property and decides to sue the tenant. Sometimes the injured party will even go after the landlord or property management, which is where this coverage comes in handy for those who oversee the rental. Coverage can also pay for legal fees and medical expenses associated with the incident.
  • Additional living expenses: If the rental property becomes uninhabitable due to a covered peril, renters insurance may reimburse the tenant for additional living expenses incurred, such as hotel bills or restaurant meals.

While most renters insurance policy will cover these overarching areas, what’s included within each category may vary depending on the terms. That’s why it’s best to advise your residents to read their policy documentation thoroughly or consult an insurance expert to understand their coverage.

What Renters Insurance Doesn’t Cover:

The purpose of renters insurance is to protect renters from losses and liabilities due to unexpected events. For that reason, many policies exclude incidents that are considered common occurrences or the result of negligent behavior on the part of the tenant or property manager.

Some common exclusions and limitations within renters insurance policies are:

  • Floods and earthquakes: Standard renters insurance policies typically do not cover damage caused by floods or earthquakes. Tenants residing in areas prone to these natural disasters can often choose to purchase separate policies for protection.
  • Expensive items: High-value items such as jewelry, fine art, or collectibles may have coverage limits under a standard renters insurance policy. Tenants with valuable possessions may need to purchase additional coverage, known as a rider or endorsement, to adequately insure these items.
  • Intentional damage: Renters insurance does not cover damage caused intentionally by the tenant. Any deliberate acts of destruction or vandalism will not be covered under the policy.

Optional Insurance Coverage Options

In addition to the standard coverage provided by renters insurance, tenants may have the option to purchase additional coverage for specific needs, including:

  • Scheduled personal property: Many renters insurance policies limit coverage for high-ticket items. For instance, you might have $20,000 in personal property coverage but only $1,500 can go toward jewelry. By adding scheduled personal property coverage for valuable possessions like engagement rings or musical instruments, tenants can ensure they are adequately protected.
  • Replacement cost coverage: A standard renters insurance policy typically pays out the actual cash value (ACV) of lost or damaged belongings, which means a reimbursement of their value after depreciation. With replacement cost coverage, the tenant can get the money they need to replace the lost items with new ones.
  • Water back up: While burst pipes are often covered by renters insurance, sewer and drain back ups typically require a policy add-on. This additional coverage will protect against water damage– insuring the tenant’s belongings and covering the cost of additional living expenses if they need to vacate the unit.

How Much Renters Insurance Should a Landlord Require?

Most property managers will set required limits for each coverage type, which may vary based on your local laws, geography, and tenant risk profile. A common requirement is $100,000 in liability coverage, but many policies allow you to go all the way up to $500,000.

Recent data shows that the average cost of renters insurance increases by $1 per month when upgrading from a $100,000 to $300,000 liability insurance policy, so a higher requirement is unlikely to impose a financial burden on your tenants.

On average, a renters policy costs about $215 annually based on the most recent available data.

For personal property coverage, your tenant should determine the right limit based on their belongings. While the average renter has an estimated $20,000 in possessions, this can vary widely by individual.

How to Help Your Tenants Choose a Coverage Limit

Beyond the requirements set in your lease, tenants can figure out how high to set their insurance limits by creating a home inventory with a list of all of their personal possessions in the unit and estimated values. However, note that in the case of ACV coverage, this value will typically be much lower than the original prices because of depreciation.

Another factor that might influence you and your tenants’ renters insurance decisions is how much coverage you expect to need in the event of an incident.

Here are the average renters insurance claims according to recent data:

Bodily injury and property damage



Property damage caused by water and freezing



Vandalism and malicious damage


Loss due to theft and burglary


As a landlord or property manager, your job is to determine the minimum insurance you require to protect your business. However, by guiding your tenants toward the information they need, you can help them make the right decision for themselves.

How to Enforce Renters Insurance Requirements Hassle-Free

It’s one thing to require renters insurance in your lease, but setting a protocol to enforce it is another challenge entirely. Typically, property managers will get tenants to show that they have a qualifying policy by requesting proof of insurance at move-in.

However, this common method fails to take into account that proof is not the same as verification. Accepting a static document as evidence of coverage leaves room for tenants to cancel their policies later on, lower their limits, or even submit fraudulent documents.

In the best case, this leads to a drawn out back-and-forth between the property management office and the tenant as they try to get coverage reinstated. In the worst case, the property manager faces a lawsuit after someone gets injured in their building and the tenant’s inactive renters insurance policy won’t cover it.

To combat this issue, some landlords are exploring tech-enabled solutions to verify and monitor renters insurance automatically. As the only automated insurance verification process, CheckMy Resident provides real-time transparency into a tenant’s policy and how it stacks up against your requirements.

Once the property manager triggers a verification, the renter will receive a link through which they can connect with their insurance carrier on their own device. From there, CheckMy Resident’s AI-driven adequacy engine instantly verifies whether the policy is active, accurate, and adequate. If the coverage doesn’t meet your requirements, embedded insurance options help the tenant to buy a new qualifying policy.

CheckMy Resident also offers a monthly monitoring feature, which you can use to make sure your tenants’ insurance stays compliant with the specified requirements. This will send you a notification if your resident cancels their policy or lowers coverage below the set minimums. And unlike additional interest letters, you’ll find out within the month, as opposed to 60 days after.

Learn more about how you can take the hassle out of renters insurance verification and monitoring to protect your business with CheckMy Resident.

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Rev. Date 01/10/24