Renter paying insurance to cover the entire building as opposed to just their own unit?

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Renter paying insurance to cover the entire building as opposed to just their own unit?

I have just looked over a rental lease for a first floor apartment in a 2 possibly 3 dwelling unit in New Jersey. The lease states that I must pay for insurance covering the premises with not less than $500,000 liability coverage and $300,00 dwelling coverage. In my experience I have only had to keep renters insurance for myself, not homeowners insurance as the amounts above would indicate. Is it legal in New Jersey for the landlord to make the tenant pay for such exhorbitant coverage?

Asked on May 21, 2009 under Real Estate Law, New Jersey

Answers:

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

This is a very interesting question.  I'm not entirely sure that there is a definite answer, in the present state of the law in New Jersey.  I haven't done exhaustive research, but I haven't found anything in the statutes or case law that would let me give you a clear answer.  If you want someone to do the in-depth research required, you can find qualified attorneys at our website, http://attorneypages.com

As far as I know, the lease requirement isn't illegal, by itself.  The real question is whether it's enforceable -- if you signed the lease, but didn't get the insurance, could the landlord have you evicted or get damages for breach of the lease?

So, that leads me to the question, could you get that insurance on the whole building, when you're only renting a part of it?  If you were renting the whole building, you could probably get the insurance.  But to get insurance, you have to have what's called an insurable interest, which means "any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage." That language is taken from N.J.S.A. 17-37A-8(a)(3), which isn't directly on point but seems to be the only place that phrase is defined in the New Jersey statutes as far as property insurance is concerned.

If the insurance companies wouldn't let you take out the insurance, because they didn't think you had an insurable interest, the requirement wouldn't be enforceable, because it's impossible.


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