Rounding it up
Renter’s insurance, or tenant insurance, is a way to protect yourself from loss and liability if you live in a rented home.
There’s no legal obligation to have renter’s insurance in Canada; however, your landlord might require it.
When selecting an insurance policy, consider the total coverage amounts for things like personal asset coverage, third-party liability, voluntary medical expenses, and additional living costs.
Whether you rent an apartment, house, or condo, at some point, you’ve probably asked: do I need renter’s insurance in Canada? Is it even worth the extra expense? What does renter's insurance cover?
Although renter’s insurance isn’t required in Canada, it can be a great safety net for anyone looking to protect their belongings while they live in rented accommodations. Even though the majority of landlords have insurance on their property, there’s no guarantee it’ll fully cover the costs of any items you lose in a fire, flood, or another kind of disaster.
Let’s take a quick look at the pros and cons of getting renter’s insurance so you can decide if it’s right for you.
What is renter’s insurance?
Renter’s insurance, or tenant insurance, is a type of insurance policy that’s designed to protect tenants from liability, loss, or damage. It provides you with a financial safety net in case of an emergency or natural disaster in your rented accommodation.
What does renters insurance cover?
As a general rule, you can expect Canadian renter’s insurance to cover the following:
Most loss of or damage to the personal possessions inside your rental
Some loss of or damage to personal possessions outside of your home
The cost of accidental damage to your rental accommodation and the surrounding building
Liability, if other tenants or visitors to your building were injured due to the accidental damage that you caused
The cost of living expenses if your rented accommodation becomes uninhabitable due to some natural disasters
As you can see, there are a lot of things that tenant insurance can protect you from. For example, if there was a fire in your rented apartment, a quality renter’s insurance policy could help cover the cost of your damaged or lost possessions. It can also protect you from liability if you accidentally caused a fire (in a cooking incident, for example) and that fire also damaged other apartments in your building or injured one of your neighbours.
What does renters insurance NOT cover?
As you evaluate renters insurance policies, it’s important to understand what usually isn’t covered. Again, this depends on your policy but, generally, your renters insurance in Canada may not cover:
Certain types of natural disasters: damage caused by sinkholes, flooding, sewage backups, and earthquakes are not automatically covered. You may have the option to pay an extra premium if you want to include this coverage.
Damage caused by bugs and pests: if you ever fall prey to a pest or bug infestation at your rented residence, you would need to pay from your own pocket to take care of the damage inflicted to your personal belongings.
Unique and expensive items: certain types of valuables, such as antiques, jewelry, gold coins, art, and pricier electronics may not rbe covered if their value exceeds what the insurance company can afford to pay out.
Is renter’s insurance required in Canada?
There’s currently no law in Canada that requires tenants to purchase renter’s insurance. Most people choose to buy it for their sense of security and peace of mind. There are many benefits to having tenant insurance, so it’s worth thoroughly investigating your options before you decide that it is or isn't for you.
Can landlords require tenant insurance in Canada?
While there is no legal requirement for renters to get tenant insurance in Canada, it is legal for your landlord to require you to have a policy.
A landlord is fully within their right to require you to have tenant insurance as part of your lease agreement. Landlords are allowed to include renter’s insurance as a condition of occupancy and they can even require you to show proof of purchase of a policy before you move in.
This might sound a bit bizarre, but it’s worth remembering that tenant insurance protects renters and landlords. If you don’t have renter’s insurance, the full brunt of any damage to that rental property will fall on the landlord and their homeowner’s policy. That policy will usually pay the cost of damages to the property, but it doesn’t cover the loss to the tenant’s personal belongings.
How to choose a tenant insurance policy
If you’ve decided that renter’s insurance is the right choice for you, then it’s time to start looking at different policy options. Each tenant insurance policy offers slightly different coverage and some are more comprehensive than others. This can make it difficult to determine which plan is right for you.
As a general rule, keep an eye out for policies that offer the following coverage:
Total property coverage: this protects you from loss and damage to your property, either as a result of theft or some sort of disaster. Many plans will also cover your personal belongings if you’re temporarily away from your home, such as at work.
Third-party liability coverage: while total property coverage protects your assets, third-party liability coverage protects everyone else’s too. This includes protection for your rental if you were to cause damage, or to your neighbors’ apartment if you cause a flood or fire that spreads to their home. It will also usually provide financial protection if you get sued for your role in a disaster.
Voluntary medical payments: in the unfortunate event that someone gets injured at your home or due to damage that you cause, voluntary medical payments coverage can help protect you financially.
Additional living expense coverage: should you be forced to leave your home due to damage in your building or rented apartment, additional living expenses coverage will help pay for your alternative accommodations.
Do I need renter's insurance?
Even though there is no legal requirement to have renters insurance in Canada, there are many benefits to having a policy. A quality tenant insurance policy can protect you from loss, liability, and damages in an unforeseen emergency. While insurance policies are another expense to pay for and keep track of, they also provide peace of mind when things don’t quite go according to plan.
Gaby Pilson is a writer, educator, travel guide, and lover of all things personal finance. She’s passionate about helping people feel empowered to take control of their financial lives by making investing, budgeting, and money-saving resources accessible to everyone.