If you rent a home in Canada, you face unique risks as a tenant, which is why having an insurance policy is crucial. Tenant insurance is a type of coverage made specifically to protect tenants by keeping their best interests in mind.
So, what exactly is tenant insurance? And what does it entail? Continue reading to understand.
Tenant insurance defined
What is tenant insurance? Let us set the record straight right off the bat. Tenant insurance, which you may also hear referred to as tenant insurance, is a type of insurance that protects policyholders from the risks that come with renting a home. As a form of home insurance, there is a lot of overlap between homeowner’s insurance policies and tenant insurance policies, with both offering contents coverage, liability coverage, and additional living expenses coverage.
In addition, you can often add the same types of extra protection to both types of policies, like overland water coverage or sewer backup coverage. One key difference between the two types of policies is that homeowner’s insurance includes dwelling coverage, which protects against damage to the physical structure of the home, whereas tenant insurance does not.
This is due to the fact that the tenant does not own the home they are residing in, and therefore, damage to the physical structure of the unit is not their responsibility but the responsibility of the landlord. When you purchase tenant insurance and an incident occurs, you must file a claim with your insurance provider to receive compensation.
Standard coverage
Like all types of insurance, tenant insurance offers standard and optional coverages, enabling tenant to customize their coverage based on their budget and unique living circumstances. Keep in mind that tenant insurance can vary depending on the insurance company you choose. However, here is a closer look at what the majority of standard tenant insurance coverage will include:
Liability coverage
Liability coverage is similar to the kind of liability protection included in typical home insurance plans. Its goal is to safeguard you in the event that you or any of your guests unintentionally cause damage to some else's property.
Another feature of liability coverage is that it protects tenants against third-party claims of bodily injury. For example, if one of your friends comes over to your home and injures themselves, you will have liability protection should they file a claim against you. This coverage will then pay for the cost of lawyer fees, medical bills, settlements, and any other expenses incurred during the process.
Personal property coverage
Contents coverage, also known as personal property coverage, is another important aspect to a tenant insurance policy. Should your personal belongings be damaged or stolen from your rented property, personal property coverage will cover the cost of replacing or repairing your items.
For example, if a fire destroys the interior of your home, personal property coverage will reimburse you for any clothing, jewellery, furniture, and other personal belongings. Just keep in mind that the covered perils listed in your insurance policy will vary for each insurance provider.
Common perils include fire damage, vandalism, theft, and certain types of water damage. To ensure there are no gaps in your insurance, make sure to ask your insurance provider what perils are not listed in your policy. You may need or want to purchase additional coverage to ensure you are comprehensively protected.
Additional living expenses coverage
If the rental property is damaged and you have to move while it is being repaired, the additional living expenses coverage will go into effect. For instance, if your house floods due to malfunctioning plumbing, fire damage, or other insured losses, you might have to move until it is safe to return.
The cost of storing your personal belongings in a storage facility and other related fees such as hotel bills may also be covered under additional living expenses coverage, depending on the specifics of your tenant insurance policy.
Optional coverage
As we mentioned, to ensure you have enough coverage with your tenant insurance policy, depending on where you live and the condition of your rental unit. Here are some extra coverage options you may want to think about:
Overland water insurance
A form of flood insurance known as "overland water protection" can shield your possessions against water damage resulting from freshwater. For example, this kind of coverage is able to protect you from flooding brought on by a river nearby or an overflowing lake, an excessive amount of rain, or snowmelt from nearby mountains.
Ultimately, overland water coverage is beneficial if your rental property is close to a large body of water and you live in a ground-level unit or a basement suite.
Sewer backup insurance
This kind of coverage can shield you in the event that sewage or wastewater backs up into your living space through your home's drains. This is particularly common in basement suites and areas with high rainfall throughout the year. Investing in this type of tenant insurance is a game-changer if you live in a rented home that's at risk of sewage backup. Without this coverage, you are responsible for cleanup and repairs.
Additional personal property coverage
If you own high-ticket items like technological equipment, jewellery, artwork, or other expensive valuables, purchasing additional personal property tenant insurance may be a wise investment. Remember, not all perils are covered under a standard personal property insurance plan. By purchasing additional personal property coverage, you'll be protected from further perils and ultimately have coverage for any repairs and replacements.
What is not covered by tenant insurance in Canada
Now that you know what tenant insurance covers in Canada, let’s find out what it doesn’t cover. The truth is that insurance policies don’t cover everything. You should always read the terms and conditions of your policy carefully to confirm what is and is not covered. If you need help understanding your policy, reach out to BrokerLink and ask an insurer to review it for you. They can answer any questions you have about your coverage, including what is and is not covered. However, generally speaking, the following is a list of what your tenant insurance policy will not cover:
Certain types of weather-related incidents or natural disasters
As mentioned above, policyholders are only protected against damage caused by insured perils. Even if you purchase all perils coverage, there are several types of risks, namely weather-related ones, that will not be included. Examples of natural disasters that tenant insurance policies typically do not cover include sinkholes and earthquakes. Flooding and sewage backups will also not be covered unless you add overland water coverage and/or sewer backup coverage to your policy.
Intentional damage
Any damage intentionally inflicted by the tenant will not be covered by tenant insurance.
Tenants living in units illegally
If you are illegally occupying a unit or you do not have a legal contract outlining the parameters of your lease, your tenant insurance policy is unlikely to cover you.
Bug and pest infestations
Tenant insurance policies do not cover damage caused by bugs or pest infestations. Thus, if your unit falls victim to bed bugs, termites, or cockroaches, you will need to cover the cost of damages, including extermination fees, on your own.
Unique or valuable items
Unless you purchase personal valuables coverage, most standard tenant insurance policies do not cover you for highly unique or valuable items. Examples of such items include antiques, jewellery, musical instruments, rare coins, artwork, or particularly expensive electronics.
What is the purpose of tenant insurance?
Tenant insurance serves several important purposes to tenant in Canada, including the following:
Protection of personal property
Tenant insurance covers the loss or damage to your personal belongings such as clothing, furniture, devices, and other belongings from unanticipated and unintentional events like fire, theft, vandalism, and more.
Protection from liability claims
A personal liability policy protects you if someone is injured while in your rented home. It also covers personal liability if you accidentally cause damage to your landlord's property, including the physical building you live in. Regardless of whether you're found legally responsible or not, it provides financial protection by covering the cost of lawyers, medical expenses, settlement funds, repairs, and replacements.
Additional living expenses
If your rental unit is no longer safe to live in due to a covered claim, your tenant insurance can pay for any additional living expenses while you are unable to live in your home. This includes the costs for temporary housing, meals, and other additional expenses you may have while your home is being repaired or rebuilt. Think of all the money you could potentially save by purchasing an insurance plan compared to the expense of potential additional costs associated with a claim.
Coverage for medical payments
Tenant insurance also helps pay for any medical expenses if a guest is injured in your rental, regardless of who is legally responsible for the incident.
Ultimately, the purpose of tenant insurance policies is to provide peace of mind by protecting you from financial losses associated with unexpected insurance events. For an affordable cost, you can protect your finances and your interests based on your unique needs.
Is it a good idea to get tenant insurance?
Yes, it is a good idea to purchase tenant insurance when you don't own the property you live in outright. Renting a home comes with unique risks that can seriously impact your personal finances, should something go wrong.
With tenant insurance, you'll have peace of mind knowing your personal property is protected from damages or losses, which could cost thousands of dollars in replacements when compared to the premium amount you pay each month. Overall, it's a small investment that can yield significant benefits in the long run.
What happens if you don't have tenant insurance?
If you don't have a tenant insurance policy in place as a renter, there are a couple of risks you'll be taking, including the following:
Loss of your personal property
Without tenant insurance, if your personal belongings are damaged or stolen due to unexpected events like a fire, theft, or vandalism, you will be responsible for replacing them with your own money. This can be very costly, especially if you own more expensive items.
Liability problems
If someone is injured in your unit or if you accidentally cause damage to someone else's property, you could be held liable for damages. This includes lawyer fees, medical costs, settlements, and other expenses that can significantly put you in debt.
What is the difference between tenants insurance and homeowner insurance?
Tenant insurance and home insurance are two types of property insurance that are meant to protect policyholders from unique insurance risks. However, these coverages are designed for two different groups of people. Here's a closer look at how these policies differ:
Tenant insurance
Renters insurance is essentially designed for those who do not own the property they live in. It focuses on protecting the policyholder's belongings and providing liability coverage in the event that property damage is caused or someone is injured in the unit.
Homeowners insurance
Home insurance is specifically designed for homeowners who own both the home and the land that it sits on. It offers comprehensive coverage to the physical structure of the home, any personal property within the home or land, liability protection, and coverage for any other structures on the property.
How much tenant insurance coverage do I need?
How much coverage you need as a tenant really depends on several things, such as the current market value of all your items, the type of rental home you live in, your individual budget, and your personal liability risk.
What we suggest doing is taking inventory of your personal belongings, such as your furniture, electronics, clothing, jewellery appliances, and other items. You can then roughly estimate the cost of replacing each item, which can help you determine the total value of your personal property.
Further, consider what potential risks you may face while living in your unit. Do you live near a large body of water? Is your building older and known to experience recurring plumbing problems? Would you be able to afford a lawyer in the event a liability claim was filed against you? Ask yourself these types of questions, as it can help you determine your insurance limits. You may also want to estimate how much money you would need to live elsewhere if your rental is damaged and is deemed unlivable.
We also recommend taking a look at your budget and how much you can afford to pay in monthly insurance premiums. For example, opting for a higher coverage limit will increase your premium and vice versa. The key here is to find a balance between coverage and affordability.
The last thing you need to do is consider your deductible. Choosing a higher deductible can lower your monthly payments. However, just keep in mind that a higher deductible means if you were to file a claim with your insurance company, you would need to pay more out of pocket before the insurance kicks in.
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Does renters insurance cover damage to the landlord's property?
Renters insurance mainly covers personal property, liability, and additional costs. However, there are some circumstances where your policy may cover the cost of damage to your landlord's property.
For example, if you accidentally cause a fire, water damage, or other damage to the rental home, your liability insurance can provide coverage and pay for the property damage. Keep in mind that whether or not your renters insurance will cover accidental damage will depend on your insurance company and your individual policies. Therefore, we suggest reaching out to your specific insurance provider to get a copy of your policy so you can see what is and isn't covered.
Is renters insurance mandatory?
No, renters insurance policies are not mandatory. However, many landlords require that their tenants purchase a tenant insurance policy as a condition of their lease agreement. Insurance policies are ultimately there to keep both renters and landlords safe.
So, even if your landlord does not require you to have coverage as a term within your lease agreement, it's still a good idea that you purchase renters insurance from a reputable insurance company.
How can I purchase tenant insurance?
Buying tenants insurance can be daunting. But once you know how to start, the process is fairly straightforward. Here is what you need to do:
- Assess your needs: Take a look at your belongings, potential risks, and your rental home and consider your unique coverage needs.
- Get quotes: Shop around online for insurance quotes with different insurance companies. You can contact them directly, check their website, or visit them in person.
- Compare policies: Check coverage limits, deductibles, premiums, and what's not included. This way, you can find a policy that best suits your needs.
- Choose a policy: Choose a policy you feel confident in, including your limits and deductibles.
- Fill out documents: Lastly, you'll need to fill out documents for your insurance and make your first payment.
It's as easy as that!
How much does tenant insurance cost?
While the amount you pay in insurance will vary based on several factors, Canadians can expect to pay anywhere between $15 to $30 a month for comprehensive coverage. This affordable amount is a minimum investment that can provide financial protection that outweighs the initial cost.
How is the cost of tenant insurance calculated?
Similar to a car insurance policy or home insurance, a renters policy premium is calculated based on numerous factors, including the following:
Type of property and where it is located
Your insurance will depend on what type of rental you live in, whether it's an apartment building, townhouse, or single-family home, and where the rental is located. You can expect higher premiums for urban areas compared to more rural ones.
Crime rate in the area
Areas with higher crime can often lead to an increased insurance premium.
Risk of natural disasters
Your renters policy may also be calculated based on how at risk your rental home is at experiencing a natural disaster, such as flooding from a nearby lake or river.
Belonging value
Insurers consider the value of your possessions for potential claims.
Total replacement cost of your items
If your items are relatively expensive, you may have to pay more, as the replacement cost will be more for your insurance company.
Household size
If you live with numerous family members or roommates, your insurance provider may require you to purchase a higher coverage level.
If you own pets
Pets can be tricky, especially if you have a high-risk animal or dog. To provide coverage, your insurance company may make you pay more in monthly premiums.
The condition of the property
Older or poorly maintained properties may lead to higher premiums, compared to renters who are living in a newer building.
Your claims history
How many and the extent of any past insurance claims could also affect your premiums? The more claims you have, the more of a risk your provider will see you as to insure.
Type of coverage you choose
If you choose coverage beyond the standard renter's insurance, you can anticipate paying more for the additional coverage.
Deductibles and limits
A lower deductible may cost you more in terms of how much you will need to spend each month.
Discounts
Make sure to ask about discounts. Most companies will provide a discount when you bundle your auto insurance and other policies, belong to a certain professional association, and other scenarios, which can help you save money on coverage.
How can I save on renters insurance?
Looking to save on your renters insurance? Here are a couple of tips and tricks you can put to good use when buying tenant coverage:
Bundle your insurance policies
Consider bundling your insurance coverage with the same provider as companies often provide discounts for this.
Shop around
Get quotes from different companies to find the best rates and coverage for your unique needs. This way, you can choose one that is affordable without compromising your coverage.
Increase your deductible
Consider getting a higher deductible to lower your premium. Keep in mind that you will need to pay more before your insurance kicks in. So, choose an amount you're comfortable with paying.
Improve security in your rental home
Talk to your landlord about installing smoke detectors, alarms, and cameras to increase the security of your living space.
Keep a good credit score
A higher credit score can lead to lower premiums. So, make sure you do your best to keep a healthy score and pay off any debts consistently.
Ask about discounts
Ask your provider about whether you qualify for any insurance discounts. They often have ones for security features, member associations, bundling policies, and others.
Limit your coverage if possible
Consider limiting your coverage to essential protection, if possible. This ensures that you are not paying for unnecessary protection.
Pay for your coverage upfront
Paying the cost of your insurance all at once can help you save from paying administration fees and lower your premium.
How to file a tenant insurance claim?
Never filed an insurance claim before? Here's a general look at the claims process below:
- Reach out to your landlord: Inform your landlord about the incident. You may also have to contact law enforcement if you're dealing with vandalism or theft.
- Document the damage: Take photos or videos of the damage and create a list of any affected items you may find. This will help your adjuster oversee your claim.
- Contact your insurance company: Reach out to your insurance company and give them details about what happened. They may ask you to fill out documents related to your claim as well.
- Stay in contact with your adjuster: Make sure to keep in contact with your adjuster about how your claim is going.
- Get paid: Once your claim is accepted, you'll receive compensation based on the terms of your insurance.
Get quality renters insurance with BrokerLink today!
Protect your home and belongings with comprehensive tenant insurance from BrokerLink. With a plethora of locations across Canada, BrokerLink may be in your neighbourhood! If you want to work with a broker, don't hesitate to visit us at any one of our physical locations!
Can't make it in person? That is no problem. You can also reach us over the phone during regular business hours.
Alternatively, if you're looking for a competitive tenant insurance quote, use our online quote tool for customized rates and coverage tailored to your unique insurance needs!
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