How tenant insurance protects renters
If you’re a renter, did you know covering your belongings will likely cost less a month than a daily cup of coffee?
It’s an affordable way to protect your things since you own more items than you may realize. More than 51 per cent of Canadian renters surveyed said they would have trouble replacing their belongings without insurance. Not surprising since the average renter has about $35,000 worth of personal property. That includes everything from furniture to expensive laptops. With today’s rising costs, many renters would find it even harder to replace these items on their own.
While tenant insurance is not mandatory in Canada, an increasing number of landlords are requiring proof of tenant insurance. Premiums are calculated in much the same way as other property insurances. Some factors include where you live, the location of your unit in the building, the condition and year of the building and its security features. The value of what you are insuring is also considered.
The Insurance Bureau of Canada recommends when purchasing tenant insurance (also known as renter’s insurance), that you keep an updated record of everything you own, also known as a home inventory. Taking pictures or videos of your belongings also helps, in the event you need to make a claim.
What it covers
Tenant’s insurance covers your possessions in your apartment and while you are away. It’s a common misconception that damages to a rental unit or personal belongings are covered under the landlord’s policy. That is not the case. A landlord’s insurance policy covers property damage outside of rental units and to the building, loss of rental income and liability for injuries that may occur on things such as icy walkways or in common areas.
Here’s what your tenant policy would cover:
Contents: These are your belongings. This includes everything from clothes, television, furniture and more. If there’s a fire in your apartment building that affects your unit, it would cover the cost of replacing what you lost. Most policies are in the range of $30,000 in contents. An insurance broker can help you determine what coverage amounts are suitable for your personal situation.
Personal liability: Tenants may be liable for any damage they cause to the building or unintentional harm caused to others who live in or visit the property. This covers up to the limit chosen – usually $1 million or $2 million – for any amount you’d have to pay someone who successfully sues you and the cost of the lawsuit. This also includes a pet that causes injury to another person.
Additional living expenses: This provides you with compensation for additional living expenses if your residence is uninhabitable from an insurable loss. It is subject to certain limits outlined in the policy.
What it doesn’t cover
Tenant insurance does not cover everything. This includes damage from floods and sewer backup. Nor does it cover earthquakes, landslides, and other hazards. You may be able to add extra coverage to insure against some of these risks. Typically, policies do not cover damage from wear and tear, contamination, war or terrorism or nuclear incident.
Optional coverages
With the help of your broker, you can customize your tenant policy by adding certain endorsements that would increase your coverage. This could include, for example, jewelry, fine art, expensive sports equipment, identity theft (which some standard policies may include), sewer backup or overland water.
5 ways to get discounts
1) Bundle your auto and tenant insurance. Most insurers will give you a 10 – 20 percent discount for bundling your policies. It also helps them to better negotiate on your behalf in the event of a claim.
2) Install an alarm/security system. If you have already done so, be sure to tell your insurer. In addition, if your landlord has, tell your provider. It will likely secure you a discount since your unit is even more secure.
3) Choose a higher deductible. This will lower your premiums but be sure that you can afford to cover the higher cost of the deductible in the event of a claim. Think about whether the property you’re insuring is more than the $500 or $1,000 deductible so you know your big-ticket items will be covered.
4) Pay annually. This will help save you on interest and administrative fees.
5) Compare. Your broker will shop the market on your behalf and ensure the policies offer the same level of coverage.