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Tenant insurance

Tenant insurance and why you need It

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Bridget Casey

By Bridget Casey

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While it's not required by law, tenant (aka renter's insurance) is important for anyone who rents their home. Read on to learn about the types of coverage this insurance includes and what you should consider in order to protect yourself and your personal property.

Tenant insurance, often called renter’s insurance, is a property and personal liability insurance policy for renters. It protects the renters themselves, as well as their personal property and any guests in the home — along with the neighbours!

Unlike other types of insurance, renter’s insurance is not typically required by law, but many landlords will require that you have it before they agree to rent to you. Thankfully, tenant insurance is typically very affordable and offers broad protection for yourself and your property against the unexpected.

What is tenant insurance?

Tenant insurance protects you, the home you rent, and all the contents of your home. It insures your home and belongings against theft and vandalism in the event of a home invasion and offers coverage for fire, flood, and other disastrous events.

Your landlord will have insurance for their property, but this coverage does not extend to you as a tenant. It will cover things like large appliances, plumbing, and the physical structure of the building. But you are responsible for getting renter’s insurance to protect yourself and your belongings.

What does tenant insurance cover?

Tenant insurance covers two things: your personal property and your personal liability. This protects you in the event your property is damaged, in the event someone is injured at your home, or if you accidentally cause damage to a neighbour’s property.

  • Replacement costs of personal property: Tenant insurance can protect you by providing the amount of money you need to replace your property and repair your home in the event of a home invasion or a disaster like a fire or a flood.
  • Additional Living Expenses: If you cannot live in your home for a period of time while it is being investigated and repaired after a home invasion, fire, or flood, tenant insurance can provide funds for a hotel stay, a short-term rental, or food costs you wouldn’t normally have if you were still in your home.
  • Personal liability coverage: It’s unlikely but not impossible that someone may injure themselves in your home. Or you or a guest of your home may accidentally damage a neighbour’s property. Tenant insurance provides you protection in the case you face a lawsuit, have to pay someone’s medical bills, or have to pay for the repair or replacement of a neighbour’s property.

READ MORE: The best tenant insurance companies in Canada

Tenants insurance vs. contents insurance

While there’s overlap, tenant insurance and contents insurance are different policies. Here’s a breakdown of the differences:

  • Contents insurance covers your personal property in your home. It protects your belongings in the event of theft, vandalism, or damage.
  • Personal liability insurance protects you in the event that you accidentally damage a neighbour’s property. For example, you could create water damage in another unit if water from your bathtub leaks into the suite of the person below you and ruins their roof.
  • Tenant insurance typically includes both contents insurance + personal liability coverage.

Together, tenant insurance provides you with broad protection against the unexpected.

How much tenant insurance coverage do I need?

The amount of tenant insurance you need will depend primarily on how much coverage you want. You don’t want to be underinsured, but you also don’t want to pay for coverage that you don’t need.

The recommended amount of personal liability coverage is $2 million, but some policies will offer $1 million. When it comes to content insurance, your coverage is determined by how expensive it would be to replace all your belongings in the event of theft or damage.

Many people underestimate how much contents insurance they need, so it’s worthwhile to take the time to make a list of items in each room of your home and their approximate replacement value. Make sure you include small but expensive items like jewelry and electronics, as well as large items like furniture and rugs. You’ll be surprised how quickly it adds up! Most contents insurance coverage starts around $25,000, but you may need $50,000 or more depending on your personal property.

While an event that would force you to replace all your personal property is unlikely to happen it’s not impossible. And if such an event does occur, you’ll be distressed enough without the financial burden of trying to replace everything you own. Renter’s insurance is a worthy financial investment that can help you avoid major financial setbacks and debt.

How much does tenant insurance cost?

Tenant insurance is typically very affordable, but it depends on the size and location of your home and the value of your personal property. A renter’s insurance policy with APOLLO Insurance starts at $19/month, whereas Square One Insurance offers tenant insurance quotes as low as $12/month.

Either way, it’s worth the measly monthly cost. Think about it: you can get thousands of dollars of contents insurance coverage and millions of dollars of personal liability insurance coverage for only a few hundred dollars per year. The peace of mind is more than worth the price, and if you ever have to file an insurance claim, you’ll be glad you have coverage.

Update your renter’s insurance policy when your circumstances change

We tend to get insurance coverage once, and then simply renew the coverage each year. However, you should review your policy every time it’s up for renewal to ensure it’s still meeting your needs. As you age, your life tends to change, and you acquire more property that needs insurance.

Don’t forget to add big-ticket items to your insurance policy, like engagement rings, when major life events happen. I personally had to get additional coverage when I had my child because we moved to a larger apartment and I acquired so much additional furniture and baby gear. Your life changes and your insurance coverage should too!

Do all renters need tenant insurance?

Yes! All renters need tenant insurance. If you have a competent landlord, they will require you to have tenant insurance in order to rent from them. But even if your landlord does not require it, you should still have tenant insurance to protect yourself. After all, it’s your home and your belongings you’re trying to protect!

The bottom line

Tenant insurance is just as important as home, car, and life insurance. It needs to be part of your budget because, if the worst happens, it will save you so much money and stress. Tenant insurance is like having an extra-large emergency fund, except you don’t have to save up a million dollars! This is peace of mind you can definitely afford.

Tenant insurance FAQs

  • Is tenant insurance mandatory in Ontario?

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    No, tenant insurance is not mandatory in Ontario, but that doesn’t mean you shouldn’t have it. Even if tenant insurance is not required by law, many landlords will require that you have it before your sign a lease. A landlord is allowed to decline you as a tenant if you do not have tenant insurance.

  • Does each tenant need renters insurance?

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    You and your roommates can share tenant’s insurance, but it’s preferable that each tenant have their own insurance. This ensures each person has their own personal lability coverage, and it simplifies things if you frequently get new roommates. For example, if you rent to students for the school year.

  • Should my tenants have renters insurance?

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    Yes! If you are a landlord, you should require that all your tenants have renters insurance before they sign a lease agreement to rent from you. You will not be on the hook for their personal property if it’s stolen or damaged, but if your tenant does not have liability coverage and they cause damage to a neighbour’s property or the rental building, you could be the one at risk of a lawsuit.

Bridget Casey Author

Bridget Casey is the award-winning entrepreneur behind Money After Graduation, a Canadian financial literacy website aimed at 20 and 30-somethings. She holds a BSc. from the University of Alberta, and an MBA in Finance from the University of Calgary. She has been featured as a millennial financial expert by Yahoo! Finance, TIME Magazine, Business Insider, CBC and BNN. Bridget was recognized as one of Alberta's Top Young Innovators in 2016.

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