Following a recent industry trend, it seems apartment renters throughout the country should be prepared for an extra expense to be added to their bills if it hasn't been already: renter's insurance. According to a 2012 survey of apartment companies by the National Multi Housing Council, more and more of these companies are requiring their tenants to obtain rental insurance as part of their lease agreement. In fact, from 2011 to 2012, the percentage of companies requiring rental insurance for all their building's tenants jumped from 62% to 84%, with further increases expected in the years to come. As one company executive puts it...
We consider [requiring renters insurance] an industry best practice that eventually will become an industry standard.
Do the Benefits Outweigh the Cost?
While the burden of cost for renter's insurance may fall on the apartment's lessee, there are many ways in which such insurance benefits both the tenant and landlord alike, and most tenants agree to paying renter's insurance with little or no argument. Under standard renter's insurance, both the tenant and landlord can recover damages in cases of smoke, fire, flood or another major event such as an explosion, and are covered when it comes to issues of liability, personal possession, and external living expenses. While most apartment companies also carry a more general insurance plan, renter's insurance allows them to recover damages directly from their tenant's insurance company, rather than risk paying a deductible or a rise in their own rates. At the same time, tenant's can rest easier knowing an accident in their apartment will not set them back financially for years to come.
Can Insurance Really be Required?
Since the renter's insurance requirement is simply another clause within the lease agreement, it is fully legal and legitimate for a landlord to require it from all tenants. However, in many states, it IS illegal for a landlord or apartment company to require renters to obtain insurance from a single company. Renters retain the right to shop around, and consider the many options they may have available. That being said, most companies choose to provide their tenants with a list of insurance providers that they have previously established relationships with. These companies often offer insurance at a discount and thus are the best choice for both landlord and the tenant.
So whether you're a tenant, landlord, or apartment company, you may want to take the time to consider renter's insurance if you haven't already. In many cases, it can be a great investment in both safety and peace of mind, and can often be had at a very reasonable price. Still, if you're a renter on a tight budget, you may need to double check your lease before diving in, as individual landlords and apartment companies move closer to making renter's insurance just another industry standard.