Mackay Insurance Blog
Many renters don’t think about tenant insurance unless their landlord requires proof of a policy as a condition for renting.
It is all too easy to look at renting as a “no responsibility” situation—you pay for the space you live in and your landlord takes care of the heavy lifting for things like repairs and insurance. Many renters in Canada don’t carry tenant (renter's) insurance!
This strategy can backfire. As a renter, you are exposed to serious liability issues, both in your home and away. The easy and affordable solution is to buy a tenant insurance policy.
In this post, we take a close look at the benefits of tenant insurance so you can decide if now is the right time to take out a policy.
What Is Tenant Insurance?
You can bet that your landlord carries an insurance policy that protects the premises and structure of the building itself. However, for all intents and purposes, your landlord’s policy ends at your front door.
What lies inside your space—your possessions—is not covered by your landlord’s insurance policy.
This means that tenant insurance is the policy you need in order to protect personal items you have spent your hard-earned money to purchase.
The Star reports that tenant insurance often costs less than $1 per day and calls taking out a renter insurance policy a “no-brainer.”
But is it, really? Let’s take a look at exactly what a typical tenant insurance policy covers.
What Does Tenant Insurance Cover?
The typical basic tenant insurance policy covers two key things:
1. Personal property
Your personal belongings will be covered up to a certain dollar amount. You will select the amount of insurance needed to replace your possessions. You can add policy riders if you have high-valued jewelry, cameras or other special property and collections.
Many young renters in particular take the position that their personal possessions are not valuable enough to take out a renter policy. It is important to test out that theory by making a list of your valuables, assigning a dollar value to each. Though you have used your furniture and clothing and perhaps could not sell it for much, most tenant policies insure property for the cost to replace the item with new property—new for old.
For example, you might be readily able to replace your laptop or your watch if one of these items was stolen. But would you be financially able to replace all of your valuables at the same time if your home was broken into and robbed?
As well, if you choose to take your personal property outside your home and put it in the car and your car is broken into, your tenant insurance policy will still cover the loss. The same holds true if a valuable item is stolen or damaged on a trip or while you are running errands.
2. Personal liability
Personal liability is often an area of confusion for many. What does “personal liability” mean? You can be held liable (legally and financially responsible) for actions you take that cause harm to other people or damage to their property.
For example, let’s say you light a candle and fall asleep. Meanwhile, the air conditioning comes on and blows the curtains into the candle flame and they catch fire. By the time you wake up, the fire is spreading from your apartment to nearby units.
Without a renter insurance policy to protect you, you could be held liable for the damage your actions caused to your landlord’s building and other tenants!
Personal liability also covers you in case someone visits you, trips and falls, and decides to sue you. If you are away from home and cause injury to someone else that is not auto-related, your personal liability coverage can also protect you.
Tenant Insurance: Replacement Value Versus Actual Cash Value
You can choose whether to purchase a tenant insurance policy that covers the full replacement value of your personal items or the actual cash value at the time your items were stolen, lost or destroyed.
Opting for a policy that covers the full replacement value ensures you won’t have to dip into your own pocket to account for depreciation or changes in market price.
Tenant Insurance: All Risk Versus Named Perils
There are two types of renter insurance policies: all risk and named perils. Under an all risk policy, only perils that are specifically excluded in the policy fine print will not be covered.
Under a named perils policy, only perils that are listed in the policy are covered.
Perils, as the name suggests, is a term that means bad things that could happen. For example, a flood is a peril. So is a fire. Theft, vandalism, wind damage, water damage, rain or hail damage, even getting struck by lightning, are all considered perils.
Tenant insurance typically covers these types of perils so that if your personal items are lost due to any of these occurrences, you will have coverage to replace them.
Additional Living Expenses Coverage
Tenant insurance also covers your expenses if an insured event beyond your control causes your rental home to become uninhabitable and you need to live elsewhere until repairs can be made. For example, let’s say there was a fire and now your landlord needs several months to make repairs before you can move back in.
Where will you stay? How will you eat? These costs can really add up, especially if you don’t have a friend or family member who can afford to put you up at no cost while you are waiting to move back into your unit.
Get a Free Tenant Insurance Quote!
It is free and easy to generate a quote for tenant insurance. Just visit our quick quote generator tool to get started.
If you have questions or want to speak with an agent personally, give us a call at 1-888-853-5552!