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March 1 2016

Do I Need Tenant's Insurance Coverage?

Do tenant's really need Tenant Insurance? While the short answer is yes, approximately one half of all renters don't take out any Tenant Insurance according to the Insurance Bureau of Canada.

Following are the most common reasons why every tenant needs tenant insurance.

Reason #1: The Landlord's Insurance protects the Landlord and not the Tenant
Many Tenants assume they are covered by the Landlord's insurance policy but the reality is that the Landlord's policy typically only protects the Landlord (it covers the structure of the rental property) and does not protect the Tenant's possessions, the Tenant's cost for temporary lodging or the Tenant's liability to others. 

Reason #2: Could you replace all your items if damaged?                        
It may not seem like you and your fellow occupants have that many possessions, or consider them to be expensive belongings, but consider how much it would cost to replace all of them at once out-of-pocket. Even replacing just your clothing, furniture, electronics, and other valuables adds up to a large bill. Taking a home inventory can help you see how it all adds up and help you determine how much coverage you need. 

Reason #3: Protection for more than just your belongings
Tenant insurance doesn't just to protect items. Perhaps far more costly than replacing your possessions are your liability risks. As a tenant, you are financially responsible for any damage to property and injury to people you may cause. If you left your washing machine running and a burst hose caused damage to both your neighbours' and the Landlord's property, you would be responsible for the repairs, not your landlord. Repair costs and replacements can quickly add up. It's not limited to property; if someone injures themselves in your residence, you're also responsible. Tenant insurance protects you in the event of a liability lawsuit.

Reason #4: Keep life going if disaster strikes
In the worst case, significant damage to your residence can leave you without a place to live. When a disaster renders your apartment unlivable, it doesn't mean your life stops. The costs for a hotel room, alternate rental, or potentially even meals can rapidly become a large bill. Additional living expenses coverage through your tenant insurance can cover these unforeseen costs when a covered loss forces you from your home.

Reason #5: Your Tenancy Agreement requires you to have Insurance
More often than not, your Tenancy Agreement will require you to have Tenant Insurance and the Landlord won't rent to you if you don't provide proof of insurance coverage. Your landlord's concern is to protect yourself, your fellow all tenants and itself from the risk of catastrophic incidents. As one example of a recent incident experienced by an tenant, a tenant's overloading of an electrical circuit with electronics equipment caused a fire which resulted in $140,000 in total damages to the tenant's and landlord's possessions and property and the tenant's insurance covered 100% of the replacement costs, damages and additional living expenses.  

Reason #6: Little Cost for Substantial Peace of Mind
You may look at Tenant Insurance as another costly expense in addition to your rent, but it is, in fact, very affordable protection that will provide you with substantial peace of mind. Premiums typically start at less than $20 per month (see for one coverage provider's options). Considering how much it would cost you to replace your personal items on your own, to pay for a third party's damages or losses, or to pay for a liability lawsuit, the cost is nominal.