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Tenant Insurance: It’s Not Just About Protecting Your Stuff

Aug. 5, 2021
5 mins
A man and woman sit on a couch with moving boxes on the floor

Whether you rent an apartment, condominium, or house, imagine what would happen if suddenly everything you owned was destroyed. Your furniture, electronics, clothing, all of it gone because of a fire or flood. What would you do? Where would you go? Hold that thought for a second; forget about all your worldly possessions (including your comfy bed).

What would you do if someone visiting your place was seriously injured and sued you for damages? Or what if you were found liable for damages to your rental and your landlord sued you for compensation?

If you have a tenant or renter’s insurance policy, you needn’t worry. But if you don’t, what then?

Consider the plight of a family in St. Thomas, Ontario, who lost all their possessions last January when a fire ravaged the home they were renting. They couldn’t return to the charred house and didn’t have tenant insurance. Or think of the residents of an apartment building in Oshawa, Ontario, that was gutted by fire in March, rendering them homeless and relying on donations from the public for financial support. No one wants to be in that situation. Alas, tragedies like these are regrettably common, and they can happen to anybody at any time.

A recent RATESDOTCA online survey found 38% of respondents do not have a tenant insurance policy. Only 10% do, and of those who do have a policy, 55% voluntarily chose to purchase one and 45% did because their landlords required it. Another 30% said they don’t rent a property, and 21% chose not to answer. When the same survey asked the respondents who do not have an insurance policy why they don’t:

  • 12% said they haven’t thought about it.
  • 8% said they don’t have much to insure.
  • 8% think tenant insurance is too expensive.
  • 5% believe they’re covered under the landlord’s policy.
  • 3% said they don’t have a policy because their roommate has one.

Those responses are concerning, but they’re not unusual. According to the Insurance Bureau of Canada, only about 50% of renters in Canada have tenant insurance.

Let’s untangle what a standard tenant insurance policy covers, and why you should get a policy if you don’t have one.

Why all renters should have a tenant insurance policy

If you haven’t considered getting a tenant policy, you’re taking a tremendous risk. Who or what is backing you up if a disaster unfolds? And think about what you own. Are you sure all your possessions aren’t worth insuring? What if everything you own was destroyed? Contrary to popular belief, tenant policies are not expensive. They typically cost less than $1 a day.

Another common misperception among renters is believing that your roommate’s policy will cover you if something goes awry. It will not unless you’re listed on that policy. Are you? If you’re uncertain, find out.

Lastly, be aware your landlord’s policy protects the building or house you’re renting, but it does not cover your personal possessions, provide you with third-party liability protection, or the cost to live somewhere else temporarily if you cannot return to your home during repairs.

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What does a standard tenant insurance policy cover?

A standard tenant policy usually includes $1 million of liability coverage and $25,000 to cover your personal possessions. The limits on these coverages can be increased if you wish to do so.

Specifically, a tenant policy consists of three types of coverages:

  • Contents. Think about all your possessions — your clothes, furniture, electronics, appliances you own that didn’t come with the place you rented, and other personal items. If your personal contents are damaged, stolen, or ruined because of an insurable loss, contents coverage will reimburse you up to a certain limit. If you own expensive, high-value items such as jewelry or fine art, you can increase your contents coverage to account for them specifically.
  • Third-party liability. Suppose someone slips and falls on your property or is bitten by your dog. Liability coverage protects you from injury and property damage you may have caused by accident. Third-party liability may also include coverage for your legal defence if you are sued.
  • Living expenses. If your dwelling is uninhabitable because of an insurable loss like fire, your policy will provide you with the funds you need to live elsewhere until you’re able to return home.

But take note: a tenant policy does not cover your possessions or provide you with liability coverage if you rent your space to someone else through a service like Airbnb. By doing so, you are assuming all the risk if something goes wrong.

Also, a standard policy will not cover you for a sewer backup or damages from flooding, earthquakes, and other risks, but talk to your broker and ask about adding these optional protections to up your coverage.

If you haven’t thought about getting a tenant insurance policy before or want to get a better idea of what coverage you can get at an affordable price, do a quick comparison of policies and premiums for free. Make an informed decision, protect yourself, and get the peace of mind you need, knowing that help is only a phone call away if something goes off the rails.

About the survey

The online survey was conducted from July 8, 2021, to July 17, 2021, with Google Surveys. The tenant insurance survey sample included 750 Canadians. Survey respondents indicated they were 18 years of age or older.

Liam Lahey

Liam Lahey is a versatile marketer with experience as a staff and freelance writer for many business and technology publications and newspapers. He previously worked as the editor and media spokesperson for RATESDOTCA, handling home, auto, and travel insurance topics.

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