Do I need tenant insurance? Everything you ever wondered about insuring your rental

[For many young people in their first rental, insurance often seems unimportant because they feel like they don’t own much. But you might be surprised all the things a good insurance policy will cover.]

Today almost a third of Canadians rent their living accommodations, and in some places that rate is even higher — about half of Quebeckers are renters. People who rent rather than own their homes might be empty-nesters who don’t want to maintain big family houses anymore, people at any stage of life who can’t afford or don’t want to get into the housing market, new Canadians who are renting before they transition to home ownership, or students living away from home.

But only about half of all renters currently purchase tenant insurance, estimates Leonard Sharman, senior communications consultant with The Co-operators. Students often don’t, he observes, either because they’re covered by their parents’ home insurance policy while they’re away at school or because they think it’s more expensive than it actually is.

A standard Canadian policy usually includes basic coverage of $50,000 to replace contents, about a million dollars for liability, says Sharman, “which could come into play when somebody is at your apartment and slips and falls and injures themselves and you’re held liable for medical costs and so on after a lawsuit. Or if you cause a fire in your unit that you’re held liable for, you could be on the hook for the damages for the entire apartment building.”

Tenant insurance covers the cost to repair or replace personal property you own, wear or use in your rented space — your clothes and jewelry, furnishings and electronic devices, with some limitations and exceptions. It may cover living expenses if your dwelling becomes unfit to live because of a claim. “‘Additional living expense’ coverage pays you in a case when you need to be out of the apartment,” says Sharman. “Hotels and meals can be covered for days or weeks when people aren’t allowed to be in their homes.”

“You may not think your possessions are worth a whole lot, especially if you’re a young person, but if you looked around your place and thought about losing everything … we deal with this pretty regularly,” says Sharman. “Fort McMurray’s on my mind these days,” he adds. “We have a lot of people there who were renters and who lost practically everything they owned.” The Co-operators has 665 claims from renters in Fort McMurray and the surrounding communities, “and we’re just one company,” he says. “So if 50 per cent of tenants didn’t have insurance, imagine how many renters lost everything? It’s tragic.”

“Neither home nor tenant insurance is a mandatory product — it’s good practice, but it’s not mandatory,” says Steve Kee, ‎director of media and digital communications at the Insurance Bureau of Canada. “Most insurance companies offer contents insurance. The important thing is for people to understand what’s in their place — people who rent may have a considerable amount of stuff and jewelry, or a student may not have much more than a TV and a computer,” he says. “A simple call to your insurance representative explaining what you have and they can outline some of the options that are available to you.”

Cost will depend, of course, on the insurance company you choose and the value of the possessions you want to insure. Other factors might be your claims history, where your dwelling is located and how it was constructed. Tenants can usually choose between two types of coverage, “all risks” and “named perils,” which only insures against risks that are specifically listed.

“Every insurance policy has limits,” says Sharman. In a typical renter’s policy there might be limits for the value of jewelry within the broader coverage – so, maybe $2,000 within the $50,000 – and there’s generally a deductible depending on what the cause of the loss is,” he explains, although more coverage can always be purchased. You can also usually decrease monthly charges by increasing the deductible, he notes. Besides coverage for theft of your possessions, personal liability for your visitors and water or fire damage to your unit and the things in it, tenant insurance can also be purchased that covers things like loss and accidental breakage of your possessions and you can even insure yourself against losses and expenses you might incur such as time taken off work or legal costs if you’re a victim of identity theft.

“People may think that they’re already covered by their landlord’s insurance, but damage to a building caused by tenants or their guests may be the tenants’ own responsibility,” says Jason Patuano, director of communications for Belair Direct. And, whether a person is an owner or a renter, “from a liability standpoint that’s their own responsibility” if someone is injured in their home and they get sued, he says. “They have to have insurance – or they’re the ones who will have to pay for that.”

“There’s definitely more education to do in terms of the importance of having tenants’ insurance,” says Patuano. “You never know what could happen, and it’s important that people are well-protected. At $15 to $25 a month it’s not expensive when you’re investing in the peace of mind knowing you’re well-insured,” he adds. “Compared to your cell phone or to get cable … it’s not much.”