This is a guest post by Begin Insurance, a digital insurance brokerage offering auto, home, business, life and travel insurance in Ontario.
Tenant insurance (a.k.a. renters insurance) is a type of insurance renters need to protect themselves and their belongings, whether they are renting an apartment, a basement or a whole house.
Unfortunately, it is often an overlooked type of insurance. Many renters decide not to buy it, or they don’t realize they need it. We think this is a big mistake. This type of insurance doesn’t cost a lot each month, but you get both protection and peace of mind. If you rent, you should really be considering buying tenant insurance.
Is tenant insurance mandatory?
No, but also maybe. No, because it’s not required by law. Legally, you don’t have to have it for renting, unlike having car insurance for driving. But most landlords nowadays require you to show proof of tenant insurance as a condition of your lease before renting to you. So you might need to buy it before you’re approved for the rental.
Even if your landlord doesn’t require it, getting this type of insurance is still a smart decision. Depending on your building and how much you own, you’re typically looking at a cost of $200-$300/year to protect yourself.
What does tenant insurance cover?
Many renters think that their landlord’s insurance will cover them, but this is simply not true. Your landlord’s insurance doesn’t cover your belongings. If anything happened and everything you own was destroyed, would you be able to afford to replace your belongings out of pocket? Their insurance also doesn’t cover you for any injuries your guests have while you’re living there.
This part of the policy covers you for what you own. When you buy renters insurance, it’s important to consider how much content you want to insure for. We normally advise our clients to start at $30K and see if they need to add more.
That sounds like a lot, right? It’s a good idea to keep a checklist of all the items you own, such as TVs, computers, appliances, furniture, clothing, etc. This way, you get a good sense of how much to insure for. Plus, if anything does happen, you know exactly what needs to be replaced.
Keep in mind that contents coverage doesn’t cover most jewellery, musical instruments, sporting equipment, and collectibles. You will need to add what’s called a Floater to your policy to protect things like wedding rings or prized collections.
Third party liability
This part of the policy covers you for bodily injury or property damage. If a guest is injured or their property is damaged while at your place, they could end up suing you. Third party liability covers you for that; tenant insurance protects you from being sued and losing everything you’ve worked hard for.
Tenants legal liability
What happens if you cause damage to the rental property? Even if it was an accident, you are responsible for it. This liability would cover you for the cost of that damage. If you don’t have it, your landlord could end up suing you.
Additional living expense
And if you need to vacate the property in order for repairs to be made, you could rack up additional living expenses, such as hotel accommodations and travel costs. This part of the insurance policy covers just that, so you don’t have to pay out of pocket.
For many renters, tenant insurance is their first foray into buying insurance after moving out. This means many renters don’t have an insurance record. So what, you ask?
Eventually, you might need to make a bigger insurance purchase for your car or home. The exact way the premium is calculated for these types of insurance varies from insurer to insurer. But one of the major factors in rates is your insurance history. Having a claims-free record, even if it’s for tenant insurance, would help you get better premiums for other types of insurance in the future. It’s smart to start your insurance history.
Just because you’re renting and don’t own the property, it doesn’t mean you don’t have anything to protect. Tenant insurance, like other types of insurance, is about more than just peace of mind. You hope to never have to file a claim, but in case something bad does happen, it gives you the needed protection.
While renter insurance is not an overly complicated product, a broker can help you fully understand your policy so you are getting just the coverage that you need. An insurance brokerage, like Begin Insurance, can help you manage all the insurance products you may need now or in the future.