With one of the lowest vacancy rates in the country, Connecticut’s rental market is tight. Finding an affordable unit can be tough, and for lower-income people and those without savings, security deposits can put even more rental housing out of reach.
In Connecticut, landlords can ask for up to the equivalent of two months in security deposit in addition to the first month’s rent. For tenants over 62 years old, the limit for a security deposit is up to one month’s rent. The payments help landlords cover any damages or leases that are broken before their established term. But these upfront payments can make affording shelter challenging, especially as rents continue to rise.
State Rep. Quentin Williams from Middletown hopes to suggest alternatives next legislative session. He chairs the state’s housing committee and said he wants to put a lot of his energy into security deposit alternatives like damage insurance.
“This is a low-cost way for those that can’t put $1,000, $2,000 or some places like New Canaan where some of the rents are $3,000. You're talking about $6,000 just to be able to enter. That’s just to be able to enter, that doesn’t even include your first month’s [rent],” Williams said during a legislative roundtable at the state’s third annual affordable housing conference.
So how does damage insurance work?
Tenants would pay non-refundable damage insurance added to each month’s rent in lieu of a lump sum security deposit. If there were damage or arrearages, the property owner would file a claim with the insurance company.
The hope is that the option would offset some of the costs for relocation in a state where about a third of renters don’t have $2,000 in savings for emergencies.
“It would give a low-cost entry to an apartment that I think is a win-win for everyone,” Williams said.
Legislation that proposed to give Connecticut landlords the option to accept damage insurance was raised in the 2022 session, but it died before making it to the Senate floor.
During the public hearing phase, advocates for both property owners and tenants opposed the proposal as written, calling for a deeper analysis.
They raised concerns about the legislation leaving many questions unanswered, like how the insurance would operate, how it would protect renters and what would happen if the premium went unpaid.
