So you’re sleeping on an Ikea futon in a studio apartment you can’t really afford. You’re eating ramen out of chipped bowls, fresh from your parents’ basement. And your most expensive possession is a four-year-old laptop that probably won’t live to see another year. Hate to break it to you, but it’s time to stretch your budget a little further and spring for tenant insurance – here’s why.
1. Coverage for contents
Although you might not have a lot of stuff and you think the premiums could cost more than simply buying another second-hand computer, you’ll want tenant’s insurance in the event your place is broken into a fire causes serious damage. Consider everything you own and keep at home – furniture, clothes, electronics, books, kitchenware, toiletries, and maybe even a new bike – what would you do if it all disappeared one day?
Even if all your belongings were sourced from thrift stores and family members, it could still cost a pretty penny to replace everything at once. Contents insurance, part of a tenant’s insurance policy, would help you buy to replace your belongings. If you have a particularly expensive snowboard, jewellery collection or a Canada Goose jacket, however, you may need to pay a little extra to make sure it’s all covered.
READ: What is contents insurance (and when do you need it)?
2. Additional living costs
Plus, if your apartment building burns down or your unit is seriously damaged by a couple of burst pipes, your landlord’s insurance will cover the damage to the building, but you’ll still be out of a place to live until the repairs are complete. Sure, you could move back home, couch surf, or max out your credit card on weeks of Airbnb stays, but none of these options are ideal.
A tenant’s insurance policy will cover additional living expenses – hotel rooms, restaurant meals, moving vans and other costs associated with not being able to live at home.
3. Liability protection
But perhaps the most useful part of getting renter’s insurance is liability protection. Whether you’re renting a basement apartment in a family home or a downtown pad in a condo, tenants are responsible for the damage they cause to any part of the building.
If you forget to turn off the bathtub tap and end up wrecking your apartment as well as those of your neighbours three floors down, you could be held responsible for repairing that damage. Or if a guest slips in the kitchen, you could be responsible for paying their medical bills, lost wages, and any pain and suffering damages a court may award. In both cases, liability insurance, will kick in and cover those expenses. The minimal recommended coverage is $100,000, but to be safe, you should consider increasing your limit to $1 million or even $2 million, if feasible.
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If those three reasons didn’t already convince you to dial the number of a home insurance broker, then the cost factor might. Tenant insurance can cost you as low as $20 per month while on average, Canadian renters only pay about $23 to keep an active policy. So by budgeting just a little tighter each month, you could save yourself thousands of dollars in the long run.
The bottom line
As a renter, you may be trying to save towards your financial goals, but tenant insurance (and any type of home insurance) isn’t a purchase you should be skipping on. With an active renter’s policy, you could be compensated for any damaged or stolen items in the event of a break-in or fire. And if your place becomes unlivable due to an unforeseeable event, you won’t need to worry about the cost of booking a hotel room. Last but not least, any legal fees or medical expenses could be covered if someone injures themselves while they’re over. So at such a low cost each month, what’s stopping you from getting tenant insurance today?