Should I Require Renters Insurance for My Indianapolis Rental Home?

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If you are a Landlord, or considering becoming a Landlord, I’ll guess that you’ve at least thought about the idea of  Renters Insurance.

But most Landlords in the Indianapolis rental market, in my experience, aren’t overly concerned about Renters Insurance. In fact, I think most Landlords are under the impression that Renters Insurance will only cover the Tenants possessions in case of theft. And as a result, most Landlords don’t require Renters Insurance.   

So, should you require Renters Insurance for your rental property? 

Absolutely, and there’s 4 major reasons why:

    1. It mitigates the threat of a Lawsuit
    2. It reduces your responsibility
    3. It weeds out bad Tenants
    4. It gives you peace of mind

Renters insurance policy

First, let’s discuss what Renters Insurance actually covers:


Coverage offered by Renters Insurance

  • Personal Property Coverage – Let’s say that you experience a major plumbing failure at your property and the result is severe water damage. Your Tenant’s Renters Insurance should cover any personal possessions that the Tenant may have lost.


    This protects you in case the Tenant claims your negligence caused their damage, which could cause you even more financial hardship. 

    And, as I noted above, a standard RI policy will also provide replacement of any items the Tenant may lose during a home break-in.

  • Liability Coverage – A standard RI policy will also provide the Tenant liability coverage.

    Let’s say that a Tenant’s dog bites a guest or a neighbor and a lawsuit is filed. The Tenant’s liability policy should cover any damages.

    If a tenant damages your building, such as inadvertently causing a fire, your insurance policy may pay the repair costs. However, you’re still stuck paying the deductible – which can be a substantial amount of money.

    If the tenant does have renters insurance, the policy should cover your homeowner’s insurance deductible – thereby making an unfortunate situation somewhat easier to deal with.

    The liability coverage obviously provides both the Tenant and the Landlord with some significant protections.  

  • Additional Living Expenses – Again, we’ll use the example concerning the plumbing failure. If the home was deemed to be uninhabitable, the Tenant’s RI policy may cover the cost of temporary housing.

This will be a huge benefit to you, as some states even require that the Landlord pay for temporary housing if the home becomes uninhabitable.

Clearly, it’s in your best interest to require Renter’s insurance. 


Keys to enforce a Renters Insurance Policy

  • Advertise the requirement – Any and all advertising for the rental home should state “Renters Insurance Required.” That way, the Tenant knows in advance what to expect and everyone is on the same page.
  • Make it part of your Lease – The requirement should also be a part of your standard Lease Agreement. Make sure you state exactly what kind of limits you expect the Tenant to maintain and that failure to maintain adequate Renters Insurance will be considered a breach of the Lease Agreement.
  • Additional Interest – Finally, it’s imperative that you require your Tenant to list you as an “Additional Interest” on the policy. This is different than “Additional Insured.”  The Additional Interest will require the carrier to notify you of any lapses or cancellations of the policy, which is very important and allows you to monitor the coverage effectively. 

Again, we consider Renters Insurance to be very important and require it from all of our Tenants. We encourage you to do the same.

About the Author

Jeremy Tallman

Jeremy is the Chief Executive Officer and Managing Broker for T&H Realty Services. He has been active in the Central Indiana real estate market since 2000 and leads one of the most successful single-family property management companies in the state.

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