Tenant Insurance 101

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Tenant Insurance 101

As students across the country prepare to hit the books, many of them are also getting ready to live away from home for the first time. But as they pack up their furniture, clothes, laptops, tablets and more, are they also packing their insurance?

Chances are no. Statistics Canada reports that fewer than 50 per cent of all Canadian renters have tenant insurance. While many renters likely believe it’s another expense they just can’t afford, they may be leaving themselves vulnerable to unforeseen costs and liabilities. Considering the relatively low cost of tenant insurance, not carrying coverage may be an unnecessary risk.

Three reasons why you should invest in tenant insurance:

1. Contents coverage
One common explanation for not getting tenant insurance is that many renters don’t think their possessions are worth very much or that they are not important enough to insure. Some renters also believe they will be covered by their landlord’s policy. But most building owner’s policies only cover the structure itself, not tenants’ personal belongings.

While you may feel that your possessions don’t hold much value, you might be surprised how quickly it adds up if you think about everything you own — furniture, clothing, shoes, jewellery, entertainment and sporting equipment, electronics and more. If you had to replace all your belongings at once, could you afford it?

Tenant insurance can help cover the cost of replacing your stuff if it’s unexpectedly damaged, ruined or stolen in a covered situation such as fire or theft.

That said, coverage has limits and the maximum amount your policy will pay for personal property losses will apply. You will be faced with a few choices when it comes to purchasing a content coverage policy, so be sure to discuss your needs with your agent or broker. For instance:

  • You’ll want to set coverage limits that reflect your current situation. Creating a home inventory can help you assess the value of your belongings and determine how much contents coverage is right for you.
  • You may also find that certain items — such as music instruments and sporting equipment like bicycles — have limited coverage under a standard policy. You may need to determine whether additional coverage for these specific items (often under something referred to as a “special endorsement”) is something you should get.

2. Liability Coverage
Another form of protection typically offered in a tenant policy is liability coverage. This coverage is designed to help protect a renter from paying out of pocket for certain costs if they are found legally responsible for property damage or injury.

While no one ever expects accidents to occur, they do happen. For example, if you accidentally start a fire in your kitchen and it causes damage to your unit (and maybe even your neighbours unit too!); you may be held responsible for repairs. If a guest to your home trips and falls over something, you may have to cover the costs of the injured person’s damages.

As with other coverages, limits apply to the amount a policy will pay out after a covered loss. A standard tenant policy usually covers $1 million in liability. Be sure your coverage fits your needs.

3. Additional Living Expenses
What if the home you are renting becomes damaged by a fire and you’re unable to live in it? Where would you go? How would you take care of yourself? Tenant insurance usually includes coverage for additional living expenses, such as hotel bills and meals, up to a certain dollar value.

BONUS: Many renters also don’t realize that their tenant insurance can even help protect them when they are away from home. For example, if your belongings were stolen from your car while you were away on a road trip, your tenant insurance may help you re-coup the cost of the stolen items. Or if during a game of backyard baseball you accidentally break a window at a friend’s house, your tenant insurance could help offset the cost of the damages.

How much does tenant insurance cost?

While the cost of your tenant policy will depend on a variety of factors unique to your situation, including how much coverage you need, the location of the building, and how the building was constructed, a typical tenant policy usually falls between $12 and $25 a month (or the price of two to four fancy lattes).

However, sometimes, tenant insurance doesn’t even cost a thing! Students living away from home while attending school can potentially be covered under their parents’ home insurance policy, but it is always best to check with an insurance provider to be sure and to understand any limitations.

Just remember that as a renter’s circumstances evolve, their insurance needs will change too. It is recommended that renters review their policies whenever entering each new life stage, such as moving to a new location, or moving in with a partner.

A few other things a student renter should consider:

1. Roommates: If sharing a property with roommates, each resident should have their own insurance coverage and everyone should be named on the lease. If only one person is listed, that person can be held accountable if someone is injured or if damages occur to the rental unit.

2. Campus Accommodation: Students living on-campus should review their rental agreement. Most will state that the school is not responsible for the loss or theft of personal property. Students living in a campus residence should also have their own insurance to cover theft or damage.

3. Expensive Items: Tenants should be aware that there are limits for coverage on some items. If a student is covered under their parents’ home insurance, or for someone looking to purchase their own tenant insurance, they should consider adding extra protection for expensive items with a personal articles endorsement, which provides special coverage for items that go beyond the “standard” policy, such as a high-end laptop.

Do you have any questions about tenant insurance? Let us know if the comments below.