Seller’s Renters Insurance Is Often Missing

The Overlooked Risk That Exposes Everyone

Sellers staying in the home after closing often think: “I don’t need renters insurance…I used to own the house.” Unfortunately, that assumption creates one of the biggest liability gaps in leaseback transactions.

Why Sellers Become Renters Overnight

The moment escrow closes:

• Seller no longer owns the home

• Seller’s homeowners policy typically terminates

• Seller becomes a tenant

That means their personal property and personal liability are no longer automatically protected.

What Renters Insurance Actually Covers

A renters policy protects the seller-turned-tenant by covering:

• Personal property

• Personal liability

• Loss of use

• Legal defense if someone is injured due to their negligence

⚠ The buyer’s policy does not cover the seller’s belongings or personal liability.

Why Buyers Are Also at Risk

If the seller has no renters insurance:

• Buyer’s landlord policy may become the first line of defense

• Claims may escalate into lawsuits

• Buyer may face uncovered losses

That’s why renters insurance isn’t just a seller issue—it’s a transaction risk issue.

What Smart Real Estate Agents Do During Leasebacks

The most proactive agents:

• Require renters insurance from the seller/tenant

• Set minimum liability limits

• Require the buyer to be listed as Additional Insured

• Coordinate with the buyer’s insurance agent to confirm that policies align & coverage dates match leaseback terms

This protects both sides of the transaction.

Final Takeaway for Agents

Leasebacks are not just real estate agreements—they are insurance and lending events. Real estate agents who understand this reduce risk, prevent disputes, and elevate their professional value.