Reader Question: Do I need a tenants insurance policy when I rent?

fire alarm, fire, symbolIt Pays To Do Your Research

 

A reader question was in my email inbox about tenants insurance and whether you need it or not if you are a renter.

The most important tip I would give is to read the terms and conditions before you agree to anything.

One thing many of us do is sign on the dotted line or agree to a policy without reading it in full until it comes time that you might need it and find out you’re not covered.

Dear Mr.CBB

I’m moving out of my parents house for the first time into my own apartment and was wondering if you could answer a question for me please. Do I need a tenants insurance policy when I rent?

Thanks for any help you can give me.

SG

The easy answer is, Yes. Any time you rent an apartment, condo, town-house or house you need tenants insurance also called Renters Insurance. No matter what you think, you need it and don’t ignore the value of a cost-effective insurance policy.

According to Insurance In Canada, Many Canadians 35 and under don’t have tenants insurance. When you sign the lease you should make sure that you have that handy insurance policy in your hands. Don’t move in and then think about it afterwards. Anything can happen the minute you step foot on a property for the first time.

I’ve talked to a few acquaintances we know who believe they don’t need it because they have nothing of value so who cares or they simply can’t afford it.

That’s the wrong attitude to take because there is more to it than what you own. You need to factor this small cost into your budget as it is a must-have not a nice to have policy. Some landlords are now even requesting that you to get tenants insurance.

 

What  is Tenants Insurance?

 

Tenants Insurance in Canada is an insurance policy that protects you and the contents of your home in the event of  fire, theft, damage etc.

It may also include the belongings in your vehicle due to theft or a break and enter. I also found out it may cover your property if you are a student away from home, upgrades made to a rental unit or potential living expenses if you need accommodations due to an insurable claim, according to Insurance in Canada.

Don’t forget about public liability another reason why it’s so important to have tenants insurance.

Did you know that your landlord/building owner is not obligated in any way to aid you if there was to be an emergency such as a fire in your unit or home which caused damage to your apartment even worse the entire building or complex?

Your landlord/building owner is also not liable if someone were to break into your home. You as a renter are not covered under your landlord/building owners insurance policy. This was something that I would have never thought of living in a new country but later learned.

When I purchased my first flat or apartment whichever takes your fancy, the main property was insured by the company owning the freehold. Even so, I still had to buy separate buildings and contents insurance for my portion.

There was an instance in the same area where all the leasehold tenants bought out the freehold and split the buildings insurance costs between them by covering the whole building leaving them with just separate contents insurance to pay for.

It just goes to show that when people unite they can achieve something for the good of the group rather than just looking out for number one. Power to the people.

Although rare, this instance was in the UK and I cannot verify that this scheme would work in the same manner in Canada.

 

True Story

 

Our mate went to work one day and forgot to blow out a candle that was lit. His pet knocked the table and the candle fell over. Needless to say the fire department was dispatched to his apartment building and the fire was put out.

Although the table was cheap and damaged beyond repair many lives were at risk, the pet was at risk as well as extensive damage to an entire building.

If you don’t have tenants insurance others may come after you for money. You may also be on the hook if a guest or visitor slips and falls and injures themselves while inside your residence.

  • Can you replace all of your belongings?
  • Can you cover the loss of any other tenants?

No, then keep reading……

 

Why Should You Have Tenant Insurance?

 

You should have Tenant Insurance for 2 main reasons in my opinion or at least this is what would scare me enough to get it.

Liability, Personal Liability

As described above in the event a guest gets injured inside your own living area and decide to bring you to court and sue it’s best to be covered.

If you lose you may be on the hook for court fees and settlement fees. You don’t want to be paying out-of-pocket for these charges.

Your entire financial world can be turned upside down in an instant. This may also protect you or a guest in case damage is caused to the building not only your apartment but to the entire building.

 

Contents Insurance/Coverage

 

This coverage is mainly to cover the contents of your rental unit and lets you replace or repair your possessions if they were damaged, lost or stolen in the event of an insured incident.

It’s always best to read over your policy so you are aware of what is and what is not covered and any limits. You can insure the contents of your rental for replacement cost including depreciation or you can also insure the contents for full replacement value.

Obviously the price may go up with full replacement value and I’d keep all receipts as well.

Contents insurance also covers property that is not in your home but in your vehicle as it is considered by most insurance companies a “property” and most auto insurances will not cover things like a stolen wallet, CD’s  DVD’s, Cell phone, Laptops, Netbooks, E-readers etc.

 

How To Provide Proof Of Contents?

 

Below are some tips on what we do as home-owners so we are protected and keep these important documents in a fire-proof box which you can do as a renter as well:

  • Take Pictures of our belongings
  • Take a Home Contents Inventory of everything we own of significant value
  • Take video of our home including make and model shots of your contents (we don’t do this but in the event you don’t own a camera this is another option)
  • Keep all bills and receipts of products of value that we have purchased

Make sure that you keep all the above in a safe spot like a safety box that is fire-proof, upload pictures and email them to yourself or keep them in an on-line file that is not on your hard drive. What if your computer gets damaged or stolen and all your proof of ownership is now gone? Cash, Jewellery and Technology are HOT items for would be thieves.

Keep in mind if you have a $40,000 engagement ring you will need to disclose that or any other jewellery  or very expensive items as this may have to be itemized and specific to your policy or a separate policy and may have specific coverage limits.

We learned this from a friend of ours had to have her wedding ring itemized and it was something she didn’t know about until talking to her insurance agent especially since it was worth the cost of a nice car.

This may include other expensive items so don’t be shy, ask.

 

How Much does Tenants Insurance Cost?

 

It’s important to find the best tenants insurance that will suit your lifestyle. If you want more than a standard insurance policy (we didn’t at the time) you can get add-ons like earthquake insurance, sewer backup, wind-storm, hail and a host of other premium coverages.

When you are looking for renters insurance quotes there are many factors that will influence your renters insurance premium including the neighborhood which many don’t think about.

When searching for quotes we found Insurance policies differ from insurance company to insurance company.

Although you can get cheap renters insurance on-line it’s best to do your homework before grabbing the cheapest policy you can get your hands on. Cheap doesn’t necessarily mean great value.

Typically you will pay a premium that is a fixed amount. Most insurance companies have a set deductible amount which means that they will only cover the cost of an item that is above that amount.

Quite frankly, it depends on the policy you have and the regulations set out in it.

Don’t be shy to ask about discounts through your alumni, your job or professional association like we did. We thought we would ask at the time and sure enough there was a discount for professional associations our agent said.

 

Where To Buy Tenants Insurance?

 

It’s also important to shop around, check for on-line tenants insurance quotes, get referrals from friends or visit your local insurance companies, their agents or through an insurance broker.

I used to compare quotes online in the UK but now I do both calling and online. Some other great places to find Tenants insurance and where we went for quotes in Canada is TD Insurance, RBC Insurance and Kanetix Canada a great comparison site.

We ended up getting an insurance quote by researching through the Kanetix Canada website that ran us about $11 a month at the time when we rented, but worth every penny.

You can also find more information at the Insurance Bureau of Canada another great resource set up for Canadians.

Organize a meeting or phone call to get to know what you can do to protect yourself  and your personal finances with a tenants insurance policy.

Do you have a tenants insurance policy? Have you ever had to use it?

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Mr. CBB
I’m from the UK and now a recent permanent resident in Canada. I bought my first house at the age of 21 after University then my second at the age of 24. I’ve always been fascinated with personal finance, savings, learning to make money and watch it grow while combating debts along the way. Canadian Budget Binder is a place where I get to share my experiences with personal finance and learn about yours along the way. I hope you stick around and check me out on Twitter, Facebook and Pinterest where I am active on all social media sites. Cheers, Mr.CBB
Mr. CBB
Mr. CBB

Comments

  1. My last landlord made me get tenant’s insurance as a condition on my lease, and I’ve just kept it ever since. It costs me less than $200/year, so it’s not a big expense by any means!

  2. Living in geared-to-income housing, we have an annual income review to determine how much we should be paying. Part of that review is providing proof you have tenants’ insurance. I think anyone who doesn’t have it is just plain foolish.

    • I agree with you. It may seem like a few bucks more than one can afford each month but that few bucks is the difference between having stuff now or having nothing at all in case of a problem.

  3. I own a condominium apartment (strata title) and the bank requires that we have something similar to tenant’s insurance. We must insure the apartment’s contents and everything insured inside its four walls against theft, fire, flood, earthquake, and we must have liability insurance against damage to other suites that arises as a result of something that originates within our apartment. If you have tenant’s insurance, this is something you may want to inquire about too. It would be a shame to be out of pocket for your downstairs neighbour’s belongings as a result of an overflowing tub or broken dishwasher!

  4. Christine Weadick says:

    When our daughter moved out to go to college she rented a small apartment. As a condition of her renting in the building she was told flat out she needed to get the insurance as a condition of the lease. We called the agent we have dealt with for almost 27 years now and he just asked for the address of the building and told her how much. I think at the time it was $10.00-20.00 a month. Not a big deal. She still has her coverage for her stuff as well now for her car. Same company. He calls us up about once a year to check on things and see if anything has changed with her as well. Because we have been with the company for so long and she got her insurance through him as well we get treated fairly well and he has been really good with advice and such when she had her car wrecked 3 years ago.

  5. I never had renter’s insurance when I was renting, but now that I’m an owner and I see all of the things that can go wrong, I’m thankful that nothing did go wrong when I was a renter. I would strongly recommend that all renters have insurance. It’s inexpensive and much cheaper than replacing all of your ruined belongings if there was some sort of disaster in the apartment.

    • Yes you were lucky you didn’t have any losses when you were renting. The small amount of money it costs is well worth it.

  6. We advise all of the tenants in our rental properties to purchase insurance to cover themselves. With how cheap it is, I’m amazed at the number of tenants who take the risk and don’t choose to purchase it. We have quality properties but you never know what accident could lead to you losing all your belongings. Better to sleep well at night knowing any losses would be covered.

  7. Yes! Yes! Yes! I ended up being required to make a muli-thousand dollar claim on my tenants insurance when we were renting (in a new building) because of a hot water pipe breaking. For less than $20/month you can sleep soundly!

  8. Laurie @thefrugalfarmer says:

    When we were renting we always had a tenants policy. Never had to use it, but I wouldn’t be without it. Here at least, they’re relatively cheap, and well worth the money.

  9. kathryn_dayle says:

    We are landlords, and we require our tenants to have tenant insurance as a condition of their lease. We are interested in the liability part. Some of our tenants are students going to university. If they considered to be a dependant they may be covered for free under their parents homeowners insurance.

    • Thanks for sharing that information Kathryn,
      My wife told me that when she was in school that she was indeed covered under her parents homeowners insurance.

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