REQUIRE New Tenant Get RENTAL INSURANCE?

Question

Property location = Sherman, TX.  It is a simple tiny house 1Bed,1Bath.  It has been over 6 years since I have had a NEW tenant.    I noticed that my last tenant had a renters insurance policy (without me mandating).  In 2026 is it normal to REQUIRE this from tenants?  What are Pros/Cons?  Grateful for advice!

Margaret Loper · Answer

Yes, I always request renters insurance at the beginning and renewals because some will stop paying during the lease period. Its best to have it.

Bill B. · Answer

It can’t hurt but sometimes won’t help a much as you think. It often only covers the tenant’s stuff in case it’s damaged/stolen. Even when it’s supposed to cover damage they cause you are sometimes disappointed.

I had a tenant start the tub fill and then fall asleep flooding the upstairs. They have USAA insurance which I’ve only heard good things about. They filed a claim and heard nothing. So they filed another claim and we called to confirm, they had a valid policy. The response? Oh yeah, they have a policy but we don’t cover water damage… Huh? Probably the most common kind of tenant damage ain’t covered?

Anyway, they did send a $1,000 “look we’re good guys” payment but still had to file under my own insurance to get it rebuilt.

Marc Winter · Answer

For our management practice, there is no lease signing without renter's insurance.  We get named on the policy, so if it lapses we get notified.

Had a tenant-caused kitchen fire that did about $15k in damages.  Our insurance carrier collected from the renter's policy, and didn't raise our premium.

I believe renter's insurance is well worth it for all concerned.

Jim Johnson · Answer

We generally see renters insurance as a good requirement, especially because the owner's policy typically isn't there to cover a resident's personal belongings. It also helps make expectations clearer before move-in rather than after something happens.

The key is making the requirement part of the lease and having a process to verify coverage and renewals. Since requirements can vary by location, I'd also make sure the lease language lines up with Texas and any local rules.

Benjamin Sussman · Answer

@Kevin Turano - Margaret's absolutely right. I'd add: It's become way more common in the last few years, and enforceability varies by state. Texas generally allows you to require it in the lease, though it's not mandatory. Pros are solid: the tenant is financially responsible if they damage the place, and you're not the one they call for every broken lamp. Con: some tenants resist the upfront $15-20/month cost, especially if they're already tight on money. I've found requesting it (rather than demanding) at lease time gets better compliance, you can frame it as "this protects you from liability too." Have you thought about whether you'll enforce it if a new tenant refuses?

Owen Rosen · Answer

If a tenant refuses to get renters insurance for their property - do you really think they'll take good care of your property?

Richard F. · Answer

Reality is, yes, of course it is a "good idea" to require, BUT, can your C and D class property tenants afford it? Especially if they are on subsidized housing? What are their total monthly obligations?

For A and B class property, not very many will push back on the requirement. "Tracking" is a non-issue. You require they name you/your company as "additional insured" or "additional interest" (this varies depending on the insurance company). Some insurance companies charge a fee to the tenant for this, others do not. Either way, YOU will get a written (regular mail) Notice from the carrier of cancellation and effective date (typically around 10 days in advance). You then need to send your own "Notice of Violation" to the tenant for breaching their Rental Terms.

Once the tenant makes the payment for the coverage, a rescission notice will be sent by the carrier, re-instating the coverage, possibly with a gap in coverage dates. As long as you check your own mail regularly, there is nothing you really need to do. If you are OCD, you can set up a reminder based on the stated term of the initial coverage certificate, or enter it into your database and generate a monthly report of "end" dates. But our office handled several thousand COA/HOA units in addition to well over a hundred rentals, and never had an insurance loss due to no coverage where it was required (COA/HOA projects typically require owners to carry HO6 coverage that meshes with the "master" project policy for proper coverage).

Drew Sygit · Answer

Most of these policies are primarily designed to protect tenant personal possessions, NOT the rental home.

Landlord Benefit: tenant possessions insured if damaged by basement flood, leaks, etc.

You may want to research local options to find policies that will protect you, then provide these to your tenants to use.

Be sure to be added as, "additionally insured".

"Additional interest" will ONLY get you notified if coverage changes or lapses.

Aaron Zimmerman · Answer

I require this on my leases

Richard F. · Answer

Just to add to @Mike Fisher's comment about the liability portion and limits, ask YOUR insurance agent to write a "minimum" set of requirements for Tenant's to obtain, based on your LL coverage of the unit. Copy/Paste that info right into your rental agreement. They know the business best, including local specifics.

Also, to clarify further, the LL policy is primarily all about what you own, and your liability exposure. The Renter's policy is all about what they own (personal property), and limited liability exposure for them with regard to damages to YOUR real property, actually caused by them.

REQUIRE New Tenant Get RENTAL INSURANCE?

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