Tenant insurance is a special type of home insurance designed exclusively to protect the interests and finances of those who live in a rental home in Canada. If you think rental insurance is right for you, or you're still on the fence about whether this added expense fits into your monthly plans for spending and saving, where you get your policies can impact your coverage and premium costs.
To help you navigate the process of obtaining a tenant insurance policy you can feel confident in, take a look through our guide to learn more about where you can find a personalized renters insurance quote and save money while doing so.
Do I need renters insurance in Canada?
There's a common misconception surrounding whether or not it's illegal not to have renters insurance. Which raises the questions, do I really need renters insurance in Canada? Is tenant insurance mandatory? The short answer is no, there's no law that states renters insurance or home insurance is a legal requirement in Canada. So, rest assured that you can't be evicted for not having renters insurance.
That said, your landlord can require you for insurance purposes that you have your own home insurance policy as a condition in your lease agreement. They can also issue a landlord rent increase once a year (or other duration that they wish), and depending on which province or territory you live in, the percent of the rental increase will vary.
So, if you're crafting your first budget, we suggest leaving a bit of leeway just in case your landlord unexpectedly notifies you of a rental increase. It's also important to mention that your landlord's insurance does not extend to you as a renter.
Landlord coverage is a type of home insurance designed to protect the interests and finances of your landlord in the event something happens to the physical rental structure and other detached structures on the property that causes damage and from liability claims.
What is a tenant insurance policy?
Now, what exactly does tenant insurance cover? While the details may change slightly between insurance companies, here is what a standard tenant insurance policy includes:
Contents insurance for your personal belongings
Imagine a scenario where some sort of damage occurs within your rental unit that affects your personal belongings. Without a tenant insurance policy in place, you'd be responsible for paying for any repairs or replacement costs associated with the property damage that occurs to your items, which could end up costing you hundreds to thousands of dollars at the end of the day.
This is where contents coverage comes in handy. With contents insurance, any property damage that occurs to your personal belongings as a result of a covered claim listed in your policy will be reimbursed to you by your insurance company. Common risks included in a standard renters insurance policy include fire, theft, and vandalism. However, keep in mind that most insurance companies do not provide coverage for water-related damage. You may need to purchase additional coverage for this type of damage.
Tenant liability insurance
The next portion of a basic tenant insurance policy is personal liability insurance for renters coverage. Let's say you have a group of friends over to your rental apartment to celebrate a birthday. As the night goes on, people start to head out, when all of a sudden someone slips and falls, hitting their head on the corner of your kitchen counter.
If any type of bodily injury or property damage occurs to that person as a result of them falling, you could be held legally responsible for damages. But, with personal liability coverage, should a third-party claim be filed against you, your tenant insurance will cover the cost of medical bills, repairs or replacements, legal fees, and any settlement funds that arise from a lawsuit, put to your policy coverage limits.
Additional living expenses
The final aspect to tenant insurance is additional living expenses. In the event your rental unit is damaged significantly to the point that it is no longer safe to live in, this portion of your insurance coverage will pay for your accommodations, meals, and other expenses during the period where you are unable to live in your home.
Optional tenant insurance coverage
There are a few situations where you may wish to purchase additional coverages to supplement your standard tenant insurance. Just note that the types of insurance listed below will cost more than what's offered with basic coverage:
Overland water damage
Overland water damage is a type of property insurance that protects your belongings in the event they are damaged by overland flooding. For example, if you live near a freshwater lake or river, you're more at risk of experiencing flood damage is more likely, which is where this policy would come in handy by reimbursing you for your prized possessions that may get damaged.
Sewer back up
Sewer backup is another optional property insurance tenants may wish to consider, especially if they're living in a basement suite. In the event sewage backs into your home following a period of heavy rainfall, a plumbing clog, or other issue, it can result in substantial damage to your interior and your personal belongings. With sewer backup insurance, you can have peace of mind knowing your items and finances are protected.
Identity theft
In the event someone breaks into your rental property and steals your personal identification information, such as your driver's license, banking information, social security number, passport, and any other important documents with the intention of committing criminal acts, your identity theft coverage will provide you with compensation to replace your items.
What is not considered a covered claim?
Generally speaking, tenant insurance will not cover water damage, stolen vehicles, and other specific events listed in your policy. Knowing what is and isn't considered insured damage is essential when purchasing tenant insurance policies, as it can vary between providers.
Where can I get renters insurance?
Getting tenant insurance is fairly straightforward and can take just a few minutes when you know where to look and what to do:
Check online
Most insurance providers nowadays offer potential customers a free online quote. We recommend getting an online quote from different providers, so you can get a better idea about what you can afford. We also suggest doing a bit of research to learn more about what is and isn't covered by each provider, as it can help you find the right coverage based on your individual needs.
Work with a broker
If you're new to the quoting process and aren't sure which companies to work with, you may want to consider partnering with an insurance broker. Brokers work independently and can help you get tenant insurance online, over the phone, or in person from various providers.
Speak directly with an insurance agent
If you'd prefer to work with an insurance provider directly, you can do so by contacting an agent from different companies. Agents have incredible knowledge about multiple products offered by the company they work for and are able to help you choose your tenant insurance, answer your questions, and inform you about how renters insurance claims work.
How much does tenant insurance cost?
Now, you're probably wondering how much tenant insurance is going to cost you. How much does renters insurance cost for an apartment? To be honest, with so many Canadian cities available for renting a home, each comes with its own set of risks that insurance providers will consider. So, while we can't pinpoint an insurance premium cost for you without knowing more information about your circumstances, we can give you an average tenant insurance cost which typically ranges between $15 and $30 a month for basic coverage.
What factors determine your tenant insurance premium?
Okay, so how is homeowner's insurance in Canada calculated then? There's a couple of factors a provider will consider on top of where your rental home is located when determining your premium:
The value of your personal belongings: The more expensive your items are, the more insurance you will need to repair or replace them if an insured peril occurs.
Your insurance history: If you have a history of property insurance claims, providers may view you as being a higher risk to insure, which could translate into a more expensive premium than for someone who has not claims on their record.
Your coverage limits: Opting for a higher coverage limit for personal liability insurance will cost more.
Your credit score: Some companies will do a credit check on customers beforehand. A higher credit score often yields more affordable insurance coverage. Learn how you can build your credit with KOHO and get a free credit score check to make sure you're on the right path.
Deductible options: Your deductible can also affect your insurance rates. Commonly, a higher deductible can help you secure a lower rate, but you will need to pay more out of your own pocket if you need to file a claim.
How can I save on tenant insurance?
If you want to save on monthly expenses and lower your tenant insurance costs, here are some key things you can do when purchasing coverage:
Bundle your policies
One of the best ways to save on your tenant insurance is to bundle your policy with other insurance you may already have, like auto insurance from the same company. Insurance providers often discount premiums to customers who have more than one insurance policy with them as a thanks to those who stay loyal to their company.
Ask about applicable discounts
Numerous insurance discounts are available, such as the claims-free discount, home safety features discount, and more. You'd be surprised at how many savings you're eligible for. So, don't forget to ask your agent or broker about ways you can save!
Pay for your tenant insurance upfront
To avoid administration fees, consider paying for your tenant insurance upfront rather than monthly.
Shop around
Don't forget to shop around and get a tenant insurance quote from multiple providers. Shopping around gives you the best opportunity to compare prices and offerings before signing a contract.
Are my roommates covered under my tenant insurance?
Unfortunately not. Tenant insurance will only protect the interests and finances of the policyholder. If you live with roommates, each tenant needs renters insurance to be covered.
Are bed bugs covered under home insurance?
What about bed bugs? Does renters insurance cover bed bugs? Again, no. Because bed bugs are seen as being preventable and not an expected event, they're considered a maintenance issue, meaning that it's your landlord's responsibility to deal with them.
Does renters insurance cover fire?
Yes, renters insurance covers fire under standard tenant policies. There is no need to add additional coverage for this type of insured peril.
Get affordable tenant insurance coverage with KOHO
Whether you're worried about renting with bad credit, unsure whether to rent vs. own home, unsure about how much of your income should rent be, KOHO is here to be your go-to resource when it comes to all things tenant insurance.
To get a kickstart on your savings, consider opening a high-interest savings account with overdraft protection coverage to make sure you can pay your rent in full and on time each month.
About the author
Grace is a communications expert with a passion for storytelling. This hobby eventually turned into a career in various roles for banks, marketing agencies, and start-ups. With expertise in the finance industry, Grace has written extensively for many financial services and fintech companies.
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