As a renter, your landlord should have insurance that covers the building you live in for structural damage. But renters also need insurance to protect their belongings and cover risks like potential liability claims. Read on to learn more about how renters insurance can protect you from events that can be costly without coverage.
What’s the difference between homeowners and renters insurance?
The main difference between renters and homeowners insurance is that a homeowners policy can pay to replace the structure of a home and its damaged contents. In contrast, renters insurance only covers damaged contents and possibly a portion of temporary housing costs. This is why you and your landlord need individual homeowners and renters insurance policies to protect your assets fully.
In the case of condo insurance, condo associations typically have a master policy that covers the structure of a building and shared features like elevators and common spaces. But condo owners need to purchase additional coverage for their belongings and any additions they add to their unit, like flooring or fixture upgrades.
Below, we’ll answer more frequently asked questions about why Canadian renters need home insurance. We’ll also explain how you can secure the best coverage for your home.
Why do I need home insurance as a renter?
As discussed below, renters/tenant insurance isn’t required by law in Canada. Still, there are many reasons why purchasing renters insurance may be necessary to protect you from unexpected losses. For example, in addition to providing monetary compensation for damaged, destroyed or stolen belongings, Canadian renters insurance can pay for legal action (third-party liability claims) if someone sues you after sustaining an injury on your property or if an accident damages someone else’s property. For example, if you accidentally left a tap running and the apartment below you experienced water damage.
Is renters insurance mandatory in Canada?
Renters insurance/tenant insurance is not legally required in Canada. If you’re renting your home, your landlord can’t legally evict you for not having renters insurance. However, your landlord can make purchasing tenant insurance a condition of your lease. So, depending on your rental agreement, you may need to get tenant insurance.
How much is renters insurance?
The best news is that renters insurance typically costs less than homeowners insurance because it doesn’t cover rebuilding a home. Like homeowners insurance, though, the cost of depends on several factors, including:
• Where you live: Insurers consider your address and building type when calculating how much you pay for coverage.
• The value of your belongings: Before purchasing coverage, you need to inventory everything you own. The more valuable your belongings are, the more coverage you’ll need.
• Your coverage limit: You can choose your maximum coverage payout based on the value of your home’s contents. For example, a young adult who just moved to a studio apartment may only need $10,000 worth of coverage. On the other hand, a family renting a three-bedroom house filled with belongings would likely require significantly more coverage.
• The type of coverage you choose: Like auto and homeowners insurance, you can add endorsements to your renters insurance policy. Suppose you have highly valuable items like jewelry, art or electronics. In that case, you can “schedule” them to ensure you receive their total value if they were damaged or stolen. Some insurers also offer options for additional liability insurance, coverage for flood damage and payouts for temporary housing if damage to your home makes it uninhabitable.
• Your insurance deductible: A higher deductible will reduce the annual cost of your policy but your insurance company will pay less if you make a claim. For example, a $1,000 deductible means you’ll only receive a payout of $4,000 from your insurance company if you need compensation for $5,000 worth of losses.
It’s also important to remember that not every insurance company will offer you the same price for similar coverage. That’s why it’s best to compare multiple quotes. Or, you can work with an insurance broker to guarantee you’re getting the best price for quality coverage.
Should my landlord have insurance?
Ideally, your landlord should have insurance. However, landlords are only legally required to maintain rental property insurance in Ontario if homeowners insurance is a condition of their mortgage or they own a commercially insured apartment building. Therefore, it’s a good idea to ask potential landlords whether they have rental property/landlord insurance.
Knowing whether and what kinds of flood insurance your landlord has is especially important if you live in a basement apartment. While most building insurance policies cover damage from events like vandalism, fire and extreme weather like windstorms, flood insurance isn’t automatically included in property insurance policies. Overland flood insurance covers flooding from freshwater sources like rain or snow melt and overflowing freshwater bodies. While sewer backup insurance can pay for repairs and damaged items like appliances if a sewage line breaks and sewage flows into a home.
What if I have roommates?
Unless you’re living with a long-term partner, roommates should have separate policies. Insurance companies will allow 2-3 unrelated individuals to be insured on the same policy, but it’s usually better to have your own coverage. Maintaining separate insurance policies helps ensure you and your roommates don’t have to dispute who gets what in case of a claim payout. In addition, any claims they make won’t impact your premiums and vice versa.
If you live with roommates, you may also want to learn more about how to include or exclude them from your auto insurance policy.
Do students need renters insurance?
Some post-secondary schools require students who live in residence to have insurance coverage for the contents of their dorm rooms. Even if contents insurance isn’t mandatory, it’s a good idea for students to have tenant insurance. This protects their belongings, especially costly items like computers and other expensive tech like TVs and gaming consoles.
In addition, a parent’s homeowners insurance policy can cover a child’s belongings when they move away from home for school. However, an insurer could deny a claim if they weren’t made aware of a student’s new living situation. So, make sure to speak with your insurance provider to confirm that your insurance company can provide adequate tenant insurance.
Now that you know why Canadian renters need home insurance, you can speak with potential landlords and insurers to make sure you’re protected by the best coverage for you and your family.