Requiring renter’s insurance is one of the simplest, most effective ways for Washington landlords to protect both their investment and their tenants. These policies cover personal belongings, accidental damage, and liability, minimizing disputes and financial losses when unexpected events occur.
A clear insurance requirement also signals professionalism, promotes responsible tenancy, and helps ensure that everyone living in your property is financially prepared for the unforeseen.
At North City Law, our Washington tenant insurance attorneys help landlords draft, review, and enforce insurance requirements that comply with the Residential Landlord-Tenant Act (RLTA) and align with your property’s unique risk profile.
What Insurance Products Should Washington Landlords Understand?
Requiring renter’s insurance benefits both landlords and tenants. It protects tenants’ belongings from fire, theft, or water damage and includes liability coverage for accidents. This reduces disputes, minimizes financial risks, and promotes responsible tenancy, helping landlords safeguard their properties with minimal additional costs to tenants.
What Are the Main Reasons to Include Renter’s Insurance in a Lease?
Tenant’s Ability to Pay Rent
With renter’s insurance, tenants have an extra safety net that helps limits their chances of experiencing financial crisis in the event of a loss—For landlords, this means crises are less likely to result in late and/or missed rent payments.
Risk and Liability Reduction
Requiring renter’s insurance reduces legal risks and costs by covering a broad range of tenant liability claims. Insurance payouts are also often easier to access than court-awarded damages.
Protection for Neighbors
Renter’s insurance can cover damages one tenant’s actions might cause to neighboring units, providing additional protection for the entire property and its community–A neighboring tenant can sleep easier knowing neighboring units are likewise insured.
Increased Resources for Repairs
Just like with auto insurance, renter’s insurance increases the available resources for repairs and damage mitigation, even if the tenant could potentially pay out of pocket.
Forward-Thinking Tenants
Requiring renter’s insurance can attract responsible tenants who value stability while deterring less responsible tenants.
What Is a Master Policy, and How Does It Work?
A master insurance policy is a specialized form of coverage typically purchased by a landlord, property owner, or homeowners’ association to protect an entire building or multi-unit community. It generally includes structural coverage for common areas and shared systems, along with liability protection for incidents that occur in those spaces.
Importantly, a master policy is distinct from a traditional landlord policy. While both offer protection for property owners, a master policy allows for customized, named-perils coverage on a unit-by-unit basis—often overlapping with the coverage provided by individual tenants’ renter’s insurance. This means it can be tailored to address risks associated with specific units or building types.
A landlord policy, on the other hand, covers the entire property as a whole. It typically combines elements of a homeowner’s policy and general liability insurance, providing protection for the structure, common areas, and the landlord’s personal liability. It may also include coverage for lost rental income and other tenancy-related risks. Because of its comprehensive nature, most lenders require landlords to maintain an active landlord policy as a condition of their mortgage.
A Washington renter’s insurance lawyer can help evaluate whether a master policy, landlord policy, or a combination of both offers the most effective protection for your property. Surety Bonds and Security Deposits.
Security deposits are a sum of money paid upfront by a tenant to a landlord or property owner as a safeguard against damages, unpaid rent, or other liabilities during a rental agreement. Once the lease ends, the deposit is typically refunded, provided the property is in good condition and all terms of the lease have been met. By comparison, bonds work by requiring tenants to pay part of a security deposit amount to a third–party bond company, which agrees to pay for damages up to the security deposit amount. Bonds are not insurance policies though—When a bond company pays out to a landlord, it will look to recover the cost from the tenant.
Can Landlords Charge Fees Instead of Deposits?
Yes. Under RCW 59.18.670, Washington landlords may offer tenants the option to pay a monthly nonrefundable fee instead of a traditional security deposit. This arrangement—often called a “deposit replacement” or “rental security program”—functions much like a risk surcharge or insurance premium, helping landlords offset potential losses from tenant damage or unpaid rent.
Unlike one-time non-refundable application, administrative, or cleaning fees, these monthly fees are ongoing and must comply with specific statutory requirements. For example, landlords must provide tenants with clear written disclosures outlining the terms of the alternative payment program and must allow tenants to opt out by paying a standard refundable deposit instead.
These nonrefundable fee arrangements can offer landlords improved cash flow and reduced administrative burdens while giving tenants more flexibility in managing upfront move-in costs. In some cases, landlords may also use collected fees to purchase bonds, insurance, or comparable products to further mitigate financial risk.
A Washington landlord-tenant attorney can help ensure your lease agreements and payment structures comply fully with RCW 59.18.670 and related regulations.
What Are the Benefits of Requiring Renter’s Insurance and Similar Products?
Enhanced Tenant Stability
Requiring renter’s insurance helps tenants cover unexpected costs, reducing missed rent and evictions. The reduced risk can also allow landlords to accept smaller deposits, making rentals more accessible and reducing vacancies. Other products like master policies, bonds, and fees in lieu can have similar benefits, particularly when they are presented as a set of options.
Mitigated Risk of Loss
These products also help mitigate the risk of loss to a landlord and their property. For instance, when a tenant causes damage, renter’s insurance can cover the repair costs, mitigating a landlord’s likelihood to need to file high-deductible claims on their own policy. If insurance proceeds are available relatively quickly, then repairs can be completed promptly and with more certainty, especially compared to legal action for attempting recovery of losses after the fact.
Legal and Financial Protection
Insurance products can also help redirect liability claims away from landlords and tenants, reducing legal risks and associated costs for both parties. It’s also worth noting that, in Washington State, a tenant’s failure to maintain renter’s insurance can serve as potential just cause for eviction if it has been made a term of the lease. However, it is crucial for landlords to consistently track and enforce these related policies to ensure compliance and protect their legal standing.
Why Lower Rents with Insurance Requirements Benefit Everyone
Like allowing lower deposits, requiring renter’s insurance allows landlords to lower rents slightly while maintaining profits, as reduced risk benefits both parties. Tenants gain financial protection, and landlords ensure stable rental income. Over time, this approach promotes a more secure and profitable rental portfolio. In some cases, mortgage lenders also offer discounts and other incentives for high proportions of tenants carrying insurance.
Get Guidance from a Washington Tenant Insurance Attorney
Whether you manage a single rental unit or a multi-family property, requiring renter’s insurance is a simple way to protect your investment and promote financial responsibility among tenants.
At North City Law, our tenant insurance lawyers help Washington landlords draft clear lease provisions, verify coverage, and enforce compliance with state and local law. We’ll ensure your insurance requirements are both effective and enforceable.
Contact us today to schedule a consultation with a Washington tenant insurance attorney and learn how to safeguard your property while building stronger, more secure tenancies.
Disclaimer
This article is provided for informational, educational, and marketing purposes only and does not constitute legal advice. The content is current as of its publication or last review and may not reflect the latest legal developments. Do not rely solely on this information—consult a qualified attorney regarding your specific situation.