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How Tenant Insurance Protects You and Your Belongings —
Everyone knows that homeowners need insurance. While some of this need is due to lenders requiring home insurance to cover catastrophic damage or loss, there are also horror stories of homeowners who forgot to renew or never bothered to pay for home insurance coverage. It’s enough to scare the willies out of you. But what about renters? If you think you’re in the clear because you are a tenant, think again. Securing tenant insurance is equally important. While you may not suffer the loss of a home due to major damage, you could lose everything you own.
What’s worse is that most tenants don’t realize that this type of loss can have a significant and lasting impact. According to Statistics Canada, only 42% of Canadians have renter’s insurance, compared to 97% of homeowners who pay for coverage. This discrepancy highlights a common misconception among renters about the necessity of tenant insurance.
Why Should You Buy Tenant Insurance and What It Covers
A common myth is that your landlord’s insurance will cover you in case of an incident or catastrophe. This is not true. Tenant insurance would protect you if your oven malfunctioned and started a building fire. Tenant insurance would protect you if a flood displaced you from your rental until further notice.
Kevin Bartel, a sales manager at Freeman Insurance Agencies Ltd. in Alberta, advises all his renting clients to purchase tenant insurance. The policy will cover the loss of your personal belongings (through a covered claim) and will also cover medical and legal costs should you find yourself on the wrong side of a legal claim. The personal liability portion of your tenant coverage is vital, says Bartel, as it covers unintentional injury to another individual and provides for the cost of legal defense. For example, if a passerby slipped on a chunk of ice outside your rental unit and chose to sue, you would be protected by your policy.
How Much Does It Cost?
To find the best rate—the cheapest monthly or annual cost for the maximum coverage you need—it’s always a good idea to contact an insurance broker. A broker works with multiple insurance companies and can shop the market to find the best coverage for your needs. A good way to save is to try and combine renter’s insurance with your auto insurance. By bundling coverage with one provider, you will often get a discounted rate.
(Hint: Shop the most expensive policy first, then add in the additional policy. For renters, this usually means finding a great auto rate and then determining whether or not the provider also offers rental coverage.)
Typically, the cost of renter’s insurance will depend on several factors:
- Type and Amount of Coverage: The more coverage you need, the higher the premium.
- Location of Your Rental: Areas with higher crime rates or susceptibility to natural disasters may have higher premiums.
- Construction of the Unit: The age and construction materials of your rental can affect the cost.
- History of Insurance Claims: A history of frequent claims may increase your premium.
- Insurance Company: Different companies have different rates and policies.
The Insurance Bureau of Canada (IBC) is a great resource when researching potential businesses that are licensed. Kevin Bartel also recommends using an incognito browser when shopping for insurance online to avoid being bombarded with marketing emails or ads after exploring.
How to Complete the Purchase of Tenants’ Insurance?
Once you have found the insurance company that offers a reasonable rate and package for all your coverage needs, there are some critical details they’ll require to complete the policy. Initially, they’ll need your name, date of birth, and address.
However, it doesn’t stop there. The provider will also need the following information:
- Square Footage of the Rental Property: The size of your rental unit.
- Type of Property: Whether it’s an apartment, condo, house, etc.
- Age of the Unit: How old the property is.
- Estimate of Personal Belongings: A rough estimate of the total value of your personal belongings, including electronics, clothing, jewelry, and household items. Taking an inventory of your property can help ensure you get an accurate estimate.
Lastly, the insurance company will need your banking information to set up monthly or annual payments.
Why Tenant Insurance is Essential:
Although it may seem unnecessary to get tenant insurance if you are not a homeowner, it’s actually very important. While having emergency funds is beneficial, they aren’t always sufficient to secure your assets. For a small monthly cost, tenant insurance can protect your belongings and shield you from financial catastrophe. Here’s why it’s worth it:
- Protection Against Loss or Damage: Covers your personal belongings in case of theft, fire, water damage, and other perils.
- Liability Coverage: Provides protection if someone is injured in your rental unit or if you accidentally cause damage to someone else’s property.
- Additional Living Expenses: Covers costs like temporary housing if your rental unit becomes uninhabitable due to a covered event.
- Peace of Mind: Ensures you can recover quickly from unexpected incidents without significant financial strain.
By investing in tenant insurance, you can safeguard your possessions and financial well-being, making it a smart decision for any renter.
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