Why should my landlord be involved with me insuring my own stuff?
February 29, 2012 6:42 AM   Subscribe

Can my landlord require that I add them to my renter's insurance when I renew my apartment lease? And is this normal? (Michigan, USA)

I've been renting my current apartment for 4 years. My lease is up in about a month, and my renewal letter just came. The letter says, in part, that "due to changes in state law, any tenants who wish to renew must sign a new lease" and also "tenants will also be required to obtain renters insurance, and add [name of apartment complex] as an additional insured". It's not clear from the letter if the renter's insurance requirement is due to the "changes in state law", or if it's unrelated.

This seems weird to me. I've had renters insurance the entire time I've been living there, although I wasn't required to. But why would the landlord want me to add them to my insurance as an "additional insured"? And what does that even mean? Renter's insurance just covers my stuff right, not the building? They probably have the building insured already. So why would they get money if my belongings were damaged or burglarized? Or does "additional insured" mean something else?

I really don't know what to think of this. Is this normal? Should I be uncomfortable with this? Any insight is appreciated. I recognize that you are not my lawyer and responses are not legal advice. The apartment in question is located in Michigan, USA. Thanks Mefites!
posted by Vorteks to Law & Government (7 answers total) 1 user marked this as a favorite
I found this link which may give you some insight into the landlord's motivation for this new requirement.
posted by miaou at 6:56 AM on February 29, 2012

I had to do this for my apartment in NC. It was about $80.00 for the full year.
posted by oceanjesse at 6:56 AM on February 29, 2012

Best answer: Here's the thing. You may be "renewing" your lease, but what you're probably doing is signing a new lease, not a continuation of the old one. The terms of the new lease need have very little to do with the old lease, because the two agreements are, legally speaking, distinct. Now there may or may not be a term in the old lease which provides for a renewal under the same terms, but that could go either way.

Requiring tenants to have insurance is pretty much standard in commercial leases. It's a bit unusual in residential leases, but there's no reason it can't be done. Most landlords don't do it, because requiring renters' insurance imposes extra costs on tenants and can price them out of the market. On the other hand, some landlords might require it, not only for financial responsibility reasons, but as a way of weeding out poorer and/or less responsible tenants. There isn't anything legally wrong with this.

In any case, I think you misunderstand what renters' insurance is and what it does. Renters' policies tend to be just like homeowners' policies in that they have two coverage parts, property and liability. The property side provides coverage for your personal property. But the liability side provides coverage to you for a wide variety of possible losses, e.g. your dog biting a neighbor, someone getting hurt in your apartment, etc.

The additional insured concept is basically saying that if someone else can be held liable for damages you cause, they get coverage under your policy too. This doesn't make any more coverage available than there was before, nor does it protect the additional insured from any losses not caused by the owner of the policy, so it's not a hugely valuable protection. Which is why insurance companies basically add those endorsements for free most of the time. But if, for example, your dog bites a neighbor, and the neighbor sues both you and the landlord, your insurance policy would act to protect both you and the landlord.

Ultimately though, this probably isn't that big of a deal. Leases almost always have an insurance term in them. This one just says that you have to have it. You've already got it, so no harm done.
posted by valkyryn at 6:56 AM on February 29, 2012

But why would the landlord want me to add them to my insurance as an "additional insured"? And what does that even mean? Renter's insurance just covers my stuff right, not the building?
If you burn the building down, your landlord can sue you--or if your landlord is insured, in effect his insurance company can sue you. That doesn't do him much good if you are broke. But your renters' insurance will pay up.
posted by massysett at 7:30 AM on February 29, 2012 [1 favorite]

We have a requirement for renter's insurance in our leas as well, and to add our landlord as an "interested party" if I remember the wording correctly. When we were looking around (Jersey City area) most of the larger apartment complexes had this requirement.
posted by lyra4 at 7:30 AM on February 29, 2012

My landlord in Massachusetts requires this as well (both that I have insurance, and that they are listed as an "additional insured"). I had insurance anyway before they started requiring it, and adding them as an additional insured cost me nothing except a 5 minute phone call to my insurance company.
posted by Nothlit at 8:14 AM on February 29, 2012

Response by poster: Thanks everyone. And thanks to @Valkyryn especially. I think I understand now!
posted by Vorteks at 10:05 AM on February 29, 2012

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