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 the 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, you’re not. Securing tenant insurance is equally as 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, as opposed to the 97% of homeowners who pay for coverage.
What is tenants’ insurance? Renter’s insurance — also known as tenant’s insurance or tenant coverage — can protect your belongings, provide housing options during a disaster and add protection in case of legal trouble. Here’s what you need to know about how tenant insurance protects you.
Why should you buy tenants insurance and what it covers
A common myth is that your landlord’s insurance will cover you in case of an incident or catastrophe. If your oven malfunctioned and started a building fire, tenants insurance would protect you. If a flood displaced you from your rental until further notice, tenants insurance would protect you.
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. In fact, the personal liability portion of your tenant coverage is vital, says Bartel, as it covers unintentional injury to another individual and also provides for the cost of legal defence. For example, if a passerby slipped on a chunk of ice outside of 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 often shop the market to find the best coverage. 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 the type and amount of coverage you need, the location of your rental, the construction of the unit, your history of insurance claims and the insurance company, itself. The Insurance Bureau of Canada (IBC) is a great resource when researching potential businesses that are licensed. Bartel also recommended that those doing research online use an incognito browser when shopping for insurance. “This way, you avoid getting bombarded with marketing emails or ads after exploring.”
The average price for tenants insurance is $300 per year, according to Statistic Canada. This $25 per month is a small price to pay for peace of mind.
How to complete the purchase of tenants’ insurance?
Once you have found the insurance company that has a reasonable rate and package for all of your coverage needs, there are some critical details they’ll expect from you to complete the policy. First, they’ll need your name, date of birth and address.
But it doesn’t stop there. The provider will also need-to-know the square footage of the rental property, what type of property it is, the age of the unit and finally, a rough estimate of how much your personal belongings cost. To ensure you get an accurate estimate, it’s always a good idea to take inventory of your property. Include electronics, clothing, jewellery and household items. Lastly, the insurance agency will need your banking information to set up monthly or annual payments.
Although it may seem silly to get tenant insurance if you are not a homeowner, it’s not. While emergency funds are great, but they aren’t always the only way to secure your assets. For a small monthly cost, you can protect your belongings and yourself from financial catastrophe with tenant coverage.