Understanding Proof of Renters Insurance

If you already have insurance for your property, you might wonder if you really need to require your renters to have renters insurance. Renters insurance protects your renters should something happen to their property. By extension, it also protects you as the landlord from claims your renters might make against you.

What is renters insurance?

Renters insurance is a particular kind of insurance policy that covers theft and damage to a renter’s personal property. It differs from the property insurance you hold as a landlord in that property insurance covers damage and loss only to the building itself. It’s a good idea to require that your renters carry renters insurance  — and to show adequate proof that they have the coverage you require — to make sure they can get their belongings replaced if something should happen, or so they’re covered if they damage someone else’s property.

Basic policies will cover a portion of the cost of a renter’s items in the event that something destroys or damages them. Some events that renters insurance often covers include:

• Damage from appliances or systems
• Fire
• Freezing of air conditioning, heating, or plumbing
• Leakage or overflow of steam or water
• Short-circuit damage by electrical appliances
• Smoke damage
• Theft

Why should you require proof of renters insurance?

When you require renters to have renters insurance, you help yourself avoid liability claims due to covered losses. A renters insurance policy can offer protection against property damage and cover relocation expenses. For example, if someone steals your renter’s belongings and their insurance covers the damage for those lost belongings, they may be less likely to sue you to cover those damages. This may also help with your property insurance premiums, as you may have fewer claims made against your rental dwelling policy.

Requiring proof of renters insurance helps you ensure that a renter really does have the insurance policy you require. You don’t want to run into a situation where you receive fake proof of renters insurance or an expired renters insurance letter, then realize your renter doesn’t have coverage when a problem actually arises. Requiring proof of renters insurance can also help you screen potential renters as it offers an indicator of a potential renter’s ability to pay rent on time.

All in all, proof of renters insurance is just what it sounds like: tangible evidence that a renter has purchased and currently maintains a policy. You’ll want to guarantee that the renter has an active policy as well as some details of the coverage. Once you obtain the proof, either via a proof of renters insurance form or another method, you’ll also want to verify the information you have received.

How can renters show proof of insurance?

Landlords have some flexibility to decide how they want proof of renters insurance presented to them. Some common ways to ask a renter to prove they’ve enrolled in a coverage policy include:

• Getting added to the policy as an additional interested party: Having a renter add you as an additional interested party (also known as a party of interest or simply an interested party) will not only prove that a renter has the proper insurance, but it will also give you the ability to receive notifications if the policy changes or the renter cancels their policy.
• Receiving a copy of the declarations page: This policy page includes the renter’s name, address, and relevant information such as the coverage amount and current enrollment status.
• Receiving digital or physical proof of the full policy: Some insurance companies offer renters the option to download a copy of the policy and email it to the landlord. You might also ask for a physical copy of the policy.
• Contacting a policy representative: A renter can request a representative from their insurance company contact you on their behalf. The representative can then confirm proof of insurance coverage by phone or with a signed letter. You might also take the additional step of calling a listed representative to make absolutely certain a renter didn’t give you a fake renters insurance form.

Whether you ask for specific forms or contact an insurance company for information (or do a combination of the above), you can ensure a renter didn’t show a fake renters insurance policy. That way, you’ll know that your renter has the coverage to protect themselves — and you.

How much insurance should landlords require?

If you require renters to buy insurance, you must include this information (including how much renters insurance to purchase) in the lease agreement. Landlords cannot legally require renters to buy insurance unless they state this obligation in the lease. If you do not include a provision in the lease that makes purchasing renters insurance mandatory, you can’t legally hold a renter responsible if they choose to stay uninsured.

As long as you make sure to include the information in the lease agreement, though, the amount of renters insurance you can compel a renter to purchase depends largely on your discretion. That said, some states cap the amount of coverage you can require, while certain states completely prohibit you from requiring renters to buy coverage. Still other states allow landlords to buy renters insurance on behalf of their renters and include the policy price in the rent. You should always check your local laws to make sure you’re in compliance with whatever you decide.

Renters insurance is a worthwhile investment: It’s typically fast and easy for renters to get, and it’s not usually very expensive. Obtaining proof of renters insurance can give you peace of mind knowing that your renter has the coverage they need to be protected if an unforeseen problem arises.