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What is tenant insurance?

Make sure your personal belongings and contents are protected. Compare renter's insurance quotes today to find your cheapest option.

When people buy a home, they need to get home insurance to protect their largest investment. If you rent, you may not be insuring your home – but what about your valuables and liability? A survey conducted by TD Insurance in August 2021 revealed more than four in ten renters don’t have a tenant or renter’s insurance policy.

An older survey from 2018 that appeared in Canadian Underwriter asked Canadians why they don’t have tenant insurance. The reasons for not having this type of insurance vary, including:

“It’s too expensive.”

The most common response by far was that renter’s insurance is too expensive, with slightly less than half of those surveyed giving this reason for not having coverage.

While most renters in Canada are justified in wanting to save money, tenant insurance is some of the most affordable coverage you can get. This type of insurance policy can start at as little as $10 per month, meaning that you can likely get basic protection at a price well within your budget.

“I have nothing to protect.”

About a quarter of respondents thought they didn’t need insurance. Well, there’s your clothes, your laptop, TV, and many other items that you need to buy if everything you have gets damaged. Maybe it’s not much, but you definitely have to cover some costs in case of a fire or burglary.

“My landlord already has an insurance policy.”

Approximately 17% of respondents thought they were covered by their landlord’s insurance policy. While your landlord will likely have coverage for the home itself, it won’t cover any of your items (contents) or your liability. If you were to cause a flood or fire that leads to damage in other units, your landlord’s insurance policy wouldn’t cover you.

How much is tenant insurance?

Tenant insurance is inexpensive. Basic policies are advertised as low as $10 per month, but most Canadians require more coverage than a $10 policy can provide.

Realistically, you can expect an adequate renter’s insurance policy to cost between $20 and $50 per month. A survey of users in Ontario showed that tenants pay a little less than $20 per month on average for an Ontario tenant insurance policy. The insurance company Aha Insurance puts the average closer to $38 per month. And an experiment by the website Money Genius estimated an average price of $40.82 per month when comparing insurance rates for an apartment in Hamilton, Ontario. 

You may find that your tenant insurance quote comes in higher if you have additional needs that require extended coverage. A basic home insurance policy has limits on items like jewellery, fine art, and even bicycles. If you have valuables that may extend beyond the limits in your policy, consider adding an endorsement to cover those items in their entirety.

What does tenant insurance cover?

Renter’s insurance covers your expenses for three major categories: loss or damage to the contents of your home, third-party liability, and the cost of additional living expenses if your home becomes unlivable because of an insured peril like fire or flooding.

Contents insurance for tenants

This includes any of the items that might be damaged from a disaster or stolen from your rental space. In other words, without contents insurance, you’ll pay out of pocket to replace your damaged or stolen items. Most home insurance companies recommend a minimum of $30,000 to $40,000 of coverage to ensure all of your electronics, furniture, appliances, clothing, and other belongings are protected. 

If you have large collections or expensive valuables, you may need to name them on your policy and pay a slightly higher monthly premium. Keep in mind that your insurance provider may require receipts or photos as proof that you do own the items.

Renter’s liability insurance

Liability covers you in case you are sued for damage to other units from flooding or causing a fire that spreads to other apartments. It also protects you in case someone injures themselves or damages their property in your unit and sues you to recoup their expenses. Most policies start coverage at around $100,000, but it’s wise to increase that coverage to at least $1-million if you can afford it.

Additional living expenses 

This coverage pays for your extra costs in case you’re unable to live in your home because of damage caused by an insured peril like fire, smoke or flooding. Some tenant insurance policies also extend additional living expenses coverage to include evacuation orders. Common covered expenses include hotel stays, restaurant meals, transportation, laundry, storage and utilities.

Note the key word here is additional. Your insurance policy won’t pay for any expenses you were already responsible for like a similar commute to work.

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What does tenant insurance not cover?

Tenant insurance covers you in the event of a loss, but that coverage has its limits. Most tenant insurance policies exclude:

Subletting your place: Short and simple – most policies will not cover you if you sublet (or Airbnb) your rented unit to somebody else. If that person does not get his or her own tenant insurance, you are carrying the risk on your own. This is especially important when it comes to a third-party liability claim.

Your roommates: Your tenant insurance policy only extends to those who are specifically named on it. If your roommate causes a fire or loses contents, your policy will not extend to them and vice-versa.

Actual cash value vs. replacement costs: Your renter’s insurance may provide different coverage based on which of two insurance calculations is used to determine the value of your items:

  • Replacement costs: An insurer will pay you enough to substitute your damaged item with a similar one at today’s costs. For example, if your 10-year-old sofa were damaged by smoke, insurance would pay for you to get a similar new one. 
  • Actual cash value: An insurer considers what you would pay for that item today and subtracts any depreciation. For example, your insurance company might give you $200 for your 10-year-old sofa and you would be responsible for the difference.

Replacement cost coverage is marginally more expensive than cash value coverage for contents, and usually well worth the few extra dollars a month.

Is tenant insurance mandatory? 

Generally speaking, any type of homeowner's insurance, including tenant insurance, is not required by law in Canada. However, most landlords require their tenants to carry a minimum level of coverage as a condition of the lease. And even if a policy isn't a precondition on your lease, you should still consider making the purchase to protect yourself ahead of time – you wouldn't want one housing stipulation to put you in long-run financial trouble. 

The bottom line

Tenant insurance is important coverage that protects you and your belongings when you’re renting a home. Compare home insurance quotes online to find the best price on the coverage you need.

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