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 tenants’ insurance.
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 need this type of home insurance. Consider everything you own and keep at home: Furniture, clothes, electronics, books, kitchenware, toiletries, and maybe even a new bike.
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 tenants’ policy, would help you buy replace your belongings. But if you have a particularly expensive snowboard, jewelry collection or a Canada Goose jacket, you may need to pay a little extra to make sure it’s covered.
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 those options are ideal. A tenants’ 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—usually capped at 20% of the value of your contents.
But perhaps the most useful part of getting tenants’ 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 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 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, which provides coverage up to $1 million in a standard tenants’ policy, will kick in and cover those expenses. You may also be able to buy extra liability coverage that increases your limit to $2 million.
Some insurance companies also include bonus protection with tenants’ policies. State Farm policyholders, for example, can add identity protection coverage to standard tenants’ insurance for an extra $25 per year. At The Co-operators, tenants’ insurance covers up to $10,000 in identity fraud protection costs, such as lost earnings and lawyers’ fees. And at SGI Canada, which operates in Saskatchewan, Alberta, British Columbia, and Manitoba, tenants’ policies comes with legal expense insurance: access to a free, unlimited legal advice helpline and up to $50,000 in legal fees for contract disputes, property protection, tax protection and more.
To estimate your insurance costs, get a home insurance quote.