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Do I have to get tenant insurance?
You are not legally obligated to get tenant insurance but a landlord may require that you get insurance before they rent an apartment to you.
Landlords have property insurance for the building or house itself but this doesn’t include coverage for the contents of your rental unit. There is a common misunderstanding that if there is a flood or a fire that was caused by a neighbouring unit or by the landlord themselves, that they will cover the damages to your contents. Without insurance you would be required to pay the replacement costs yourself.
Another misconception is if you cause damage by accident to other units or your landlord’s home, that you won’t have to pay for the damages. If you are held responsible, you can be sued and expected to pay. These are some important reasons why you might consider getting tenant insurance even if your landlord doesn’t require it.
What is covered in a tenant or “renter's” insurance?
There are different policies you can get depending on where you purchase your insurance (private insurance companies and some banks). In some cases, you can customize the types of protections you pay for depending on your specific needs.
The standard features for most plans include:
- Contents: Covers loss of personal belongings (furniture, clothing, electronics, jewelry)
- Personal Liability: Protects you if someone hurts themselves while visiting your home or you accidentally cause them injury.
- Additional Living Expenses (ALE): Temporary living expenses, including meals and a place to live, if you cannot live at home due to loss or damage.
In some cases, if you have fine art work or special jewelry like an engagement ring or other types of expensive jewelry, you can pay extra to have special coverage for those. How much money you want your contents to be covered for will affect your premium or yearly fee. A premium is the financial value determined by the insurance you must pay yearly for the type of coverage you require.
How much does insurance cost?
Depending on the range of coverage you choose your premium will vary. You can choose your own deductible and this will also affect your premium. You can have basic coverage for as little as $25 a month. When you consider how much it would cost you to replace all the items in your home like computers, electronics, jewelry, clothing and furniture it is worth the security of having renters’ coverage.
What is the deductible?
A deductible is the amount of money you have to pay toward a claim before your insurance starts paying. For example, if there’s a broken pipe and your apartment is flooded and there are $15,000 worth of damages and your deductible is $5,000, your insurance will not cover the first $5000 of the damage. In other words, they will cover $10,000. You can choose different deductibles and this will affect the total of what you pay for your insurance policy. Typically, the higher the deductible, the lower yearly coverage you will have to pay.
What is personal liability?
Personal liability is coverage for when you accidentally injure someone or they get hurt while in your home. For example, if your kitchen floor is wet and a guest slips and breaks their leg, or if you are tossing a ball around at the park and you accidentally hit someone in the face with the ball and break their teeth they may sue you for damages. In these cases, the liability portion of the insurance would cover the costs associated with the injured person’s medical bills and recovery.
Why would I need additional living expenses coverage?
If there is a fire or flood and you have to temporarily move out due to reconstruction, this is where you would need additional living expenses (ALE) coverage. This also applies for situations where the accident did not initiate in your unit but you were also affected by the damages.
ALE covers costs you wouldn’t normally have like staying in a hotel or rental home and meals. If you stay at a friend’s or relative’s home or rent a home with a kitchen it would not cover things like groceries because they are considered normal living expenses.
Where can I get tenant insurance?
There are a lot of private insurance companies to choose from, even some banks offer renter's insurance. You can compare renter's insurance online here:
For More Information
Take Inventory of Your Home - A step-by-step list of how to take inventory of all your belongings and why it's smart to keep a list of all the items you own from The Financial Services Commission of Ontario.
Questions to Ask Your Insurance Agent – This brochure from the Insurance Bureau of Canada answers some common questions about insurance.
Residential Tenants’ Insurance – A presentation by Legal Aid Ontario that covers all the different aspects of tenant insurance. From Your Legal Rights website.
10 Factors that Affect your Premium – How an insurance company determines the premium for your policy. From the Insurance Bureau of Canada.
January 2, 2019