Renters Insurance: Can Landlords Legally Require it? What About Pet Insurance?

By Eric Weld, MassLandlords, Inc.

The question of renters insurance and whether it can be legally required as a condition of starting a lease in Massachusetts is open to debate. The letter of the law leaves this point vulnerable to different interpretations and case precedents are few, as we will examine below.

Dogs will be dogs. Renters insurance may not cover property destroyed by the resident pet that belongs to the renter, but it will likely cover pet-damaged property belonging to visitors in the rental. (image: CC BY-SA 4.0 Wikimedia)

The practice of requiring new tenants to buy renters insurance coverage as a condition of opening a lease is not uncommon, but is it legal? Especially when a renter has a pet, many landlords want their new tenant to carry liability insurance to cover any potential property damage caused by the animal, as well as injuries – from a dog bite, for example – to visitors to the property. Some require the purchase of liability insurance as a move-in condition for renters with pets.

Regardless of the law or legal interpretations, buying renters insurance is a good idea. That much is not disputed among home providers and advisers. And many landlords would prefer that their tenants purchase insurance coverage, to protect their personal possessions and to minimize liability in the case of a mishap in or around the rental.

Renters insurance, or tenant’s insurance, is highly recommended to cover renters’ personal property and liability. But requiring tenants to buy renters insurance is legally risky in Massachusetts. (image: Nick Youngson CC BY-SA 3.0 pix4free)

Is It Legal in Massachusetts to Mandate Renters Insurance?

A strict reading of M.G.L. 186, sec. 15B, the Massachusetts Security Deposit Statute, explicitly states that there are four fees that landlords and property managers are legally allowed to collect from new lessees: 1) first month’s rent; 2) rent for the final month of the lease; 3) a security deposit equal to or less than the first month’s rent; and 4) payment for the purchase and installment of a new key and lock.

This law states by inference that collecting payment from a prospective tenant to pay for renters insurance purchased on behalf of the tenant is unlawful because it would be payment in excess of the four upfront fees allowed. The law also states that the practice of charging an additional “pet security deposit” is illegal.

This reading of the law would equate such additional fees to charging an application fee, move-in fees or amenity fees, all of which are illegal in Massachusetts.

A legal precedent in this case provides a basis for future decisions. Hermida v. Archstone is a 2011 class action suit argued in U.S. District Court, D. Mass., in which the plaintiffs, Maeve and Jefflee Hermida, sued Archstone Reading properties for charging renters an amenity fee as a condition of moving into apartments at several locations. The Hermidas paid $475 as part of their move-in fees, a charge that Judge William G. Young ruled violated Ch. 186, sec. 15B.

Judge Young cited the law’s four allowed move-in fees, stating clearly that charging an additional fee, such as an amenity fee, pet fee or move-in fee, as a required condition of starting the lease, is illegal.

In another precedent case, Perry v. Equity Residential Management L.L.C., U.S. District Court Judge Rya Zobel applied a strict reading of Sec. 15B, invalidating Equity’s practice of charging application fees, amenity fees and pet fees as move-in conditions for new tenants.

While these court decisions may have stopped many landlords and property management companies from charging amenity or other move-in fees for services such as a community pool, fitness center, laundry facilities or a media center, questions remain.

And however unequivocal the security deposit statute may seem, it doesn’t clearly address a lease provision that requires a tenant to procure their own renters insurance policy without money exchanging hands between the tenant and landlord. Nor does it address a circumstance in which a property owner builds the cost of additional insurance coverage for renters into the monthly rent.

What About Requiring Tenants to Buy Their Own Renters Insurance?

There is scant case history explicitly addressing the practice of requiring new tenants to buy their own renters insurance.

However, in a 2012 case in federal district court of Massachusetts, Judge F. Dennis Saylor cited the right of a landlord or property manager to require tenants to purchase liability insurance. The case involved seven tenants who sued their landlord, Simpson Financing Limited Partnership, which owned a building called the Highlands at Dearborn (Peabody), where the plaintiffs lived.

At the start of the lease, Simpson Partnership had required the plaintiffs to purchase liability insurance for at least $25,000 in coverage, and advised that they also purchase coverage for their personal contents, which most of them did. Simpson also informed the plaintiffs that they could either purchase their own insurance policies in the coverage amounts specified, or be added on as insureds to a policy owned by Simpson, and pay the extra coverage amount as part of their rent. They all agreed to the latter option.

Later, when the building caught fire, the plaintiffs’ belongings were destroyed and their insurance coverage was paid as guaranteed by the landlord’s insurance company. However, the plaintiffs sued Simpson, arguing several lawful breaches, including a violation of M.G.L. Ch. 186, sec. 15B, the law restricting additional upfront lease fees.

The plaintiffs’ chief complaint was that the landlord was negligent in storing a pile of highly flammable mulch near the dwelling, which became the source of the fire when a cigarette was inadvertently discarded near it.

Judge Saylor ruled in favor of Simpson for the sec. 15B charge, stating that “Simpson could legally require that plaintiffs purchase liability insurance.” The court also added that the landlord could have mandated that the plaintiffs (tenants) purchase their own property insurance.

Furthermore, Judge Saylor ruled that Simpson was not committing a legal violation by giving the plaintiffs the option to be added to the existing insurance policy and to pay the additional charge as a part of their rent.

No Binding Case Precedent

Lower federal court decisions (other than the U.S. Supreme Court) are not considered to be binding on state courts. Therefore, the Simpson Partnership case is not a strictly binding precedent, though it may be used as a persuasive decision.

In other words, if you end up in court being sued for a violation of M.G.L. 186, Ch. 15B, for requiring your tenants to buy insurance to cover their personal belongings, the Simpson case cited above may not offer a conclusive precedential argument.

Still, considering the above cited cases together can provide a framework for landlords and property managers thinking about mandating renters insurance.

Requiring your tenants to pay up front, outside of base rent, for renters insurance purchased by the landlord on their behalf is a clear legal violation and could carry severe penalties. This may include repayment of any illegal fees charged, along with robust interest and attorney’s fees. Requiring illegal fees can also be judged as a violation of M.G.L. 93A, the Massachusetts Consumer Protection Act.

This also pertains to the practice of charging a per se pet security deposit, or any upfront fees meant to cover potential damage caused by a pet.

However, mandating that tenants purchase their own renters insurance, for liability or coverage of personal possessions, as a condition of starting a lease, may be within legal territory.

Differing Opinions Among Attorneys

Opinions among attorneys vary slightly, but there is consensus to interpret this issue conservatively.

Kate Higgins-Shea, an attorney with Lyon & Fitzpatrick in Holyoke, Mass., who focuses partly on landlord-tenant and housing law, advises against requiring renters insurance as a move-in condition in all cases.

“I read this law very conservatively,” said Higgins-Shea, who regularly advises her clients on the topic. “I suggest not requiring renters insurance. You can strongly encourage it, you can make a suggestion.” Even in the case of mandating renters to buy their own insurance with no money paid to the landlord, “I still read it the same,” she said. “You’re still requiring the tenant to pay somebody.” M.G.L 186, ch. 15B states that it is illegal to charge any move-in fees beyond the four specified. “It doesn’t stipulate whom to pay the fee to,” notes Higgins-Shea.

Adam Sherwin, founder and principal of The Sherwin Law Firm in Charlestown, who specializes in housing and real estate law, agrees with Higgins-Shea.

“I’m always very cautious about these matters,” Sherwin told MassLandlords. “I tell landlords I wouldn’t require [renters insurance for tenants] but I would certainly encourage it.”

He’s aware of the Simpson Partnership case decided in Essex County – the next county north from his firm in Middlesex County – awarding property owners the right to require that their tenants buy renters insurance.

“It’s a gray area,” he said. “I still take a cautious approach. Massachusetts is very strict about upfront fees. You wouldn’t want to be the test case.”

Richard Vetstein, principal of Vetstein Law Group in Framingham, Mass., agrees that it is clearly illegal to require a payment for renters insurance as part of upfront move-in deposits. However, when asked if it is legally allowed to require renters to buy their own insurance as long as no money is paid to the landlord, Vetstein responded, “Yes,” it is legal from his perspective.

However, Sherwin added, given the minimal benefit to landlords from requiring their tenants to buy renters insurance, is the risk worth it? He doesn’t think so.

What About Requiring Separate Pet Insurance?

As stated, charging tenants upfront fees, such as an extra security deposit, to cover a pet in the rental, is not legal.

As for requiring tenants to buy separate pet insurance to cover potential damage caused by a pet: it might be legal, but more importantly, it’s not necessary. Most renters liability insurance policies already include pet damage to people or property not belonging to the renter.

Policies vary among insurance companies, so, as with the purchase of any insurance policy, specific coverages should be checked. But it is standard for renters insurance policies to cover both injury liability, in case a renter’s pet harms a visitor in the rental property, and property damage liability, as when a pet damages someone else’s property (think: a damaging doggy accident that ruins the carpet).

Renters with pets may want to purchase separate pet insurance to cover veterinary bills in case of potential pet injuries or sickness. They should also be aware that, though renters liability insurance may cover damage to others’ property, it does not typically cover either 1) injuries to the renter or others living in the rental caused by the resident pet; or 2) damage to the renter’s personal property or that of others living in the rental caused by the pet. (Some renters insurance policies also may not cover specific dog breeds, such as pit bulls, or exotic pets, such as reptiles, wolves or other naturally undomesticated animals.)

The Cost of Renters Insurance

While Massachusetts renters insurance rates are slightly higher than the national average, they are still very affordable. Average renters insurance premiums run between $15 and $30 per month, according to Mass.gov estimates. The average coverage amount for that monthly fee is $20,000 of personal property coverage and $100,000 of liability coverage with a $500 deductible.

In other words, renters insurance is relatively inexpensive.

Despite the low premium price in comparison with the coverage amounts, only 41% of renters nationally carry renters insurance, according to a 2018 poll from the Insurance Information Institute.

The same survey also found that many renters mistakenly believe that their landlords’ insurance will protect their personal property if it’s lost or damaged due to burglary, fire, flood or other mishap.

At the minimum, renters should be aware, and maybe informed by their landlords, that homeowners or business insurance carried by their landlords, and covering the premises in which they reside, will likely not cover their personal belongings in the case of damage, destruction or loss. Landlords insurance is meant to cover damage to or loss of the building and premises, not personal belongings, except for those provided by the landlord as part of the lease. MassLandlords lease agreements, for both fixed term and Tenancy at Will, include clauses clarifying that landlord’s insurance does not cover residents’ contents.

It’s in landlords’ interest to point this out to their tenants, and to recommend (but, perhaps not require) that they buy their own insurance policies for liability and personal property damage. It’s possible that if your tenant loses property due to fire, burglary or other natural disaster (no fault of their own) and they do not have insurance coverage for the loss, they may come after you to cover the damages, especially if they suspect and can prove that the rented property wasn’t sufficiently safe and secure.

Encouragement, Yes; Requirement, No

No law exists in Massachusetts or any other state requiring renters to purchase insurance coverage. It’s just wise and economical for renters to do so.

As part of the move-in process, renters should be informed about the risks of forgoing renters insurance, and clearly advised that their personal belongings, if left uninsured, are vulnerable to loss or damage. Encouragement to buy renters insurance should accompany that initial information.

But, according to attorneys in the state, information and encouragement should be the limit of a landlord’s insurance assistance. Requiring tenants to buy renters insurance as a move-in condition, they say, may be asking for legal trouble.