We get asked it by renters all the time: I don’t have much stuff, why would I buy insurance? The answer: a renter’s insurance policy covers so much more than your personal belongings! Plus, it sets you up better for the future.
Here are some of the main reasons why we recommend every tenant buy renter’s insurance:
Contents Coverage – Should your personal property be lost, stolen, or damaged by an insured peril (such as fire, water, lightning, wind, hail, vandalism), your renter’s insurance policy will cover the cost to replace it. This includes property you take with you on vacation, so if your luggage is lost in transit, stolen from your rental car, or damaged in a hotel fire, renter’s insurance covers you.
The premium of your renter’s insurance policy is based off of how much coverage you need for your personal belongings. Most people underestimate how much coverage they truly need for their contents because it’s hard to quantify your possessions like that. Sentimental items that mean a lot to you may not cost much to replace, and that couch you got third-hand from your ex-roommate’s great aunt’s cousin doesn’t seem like it’s worth much now, but to buy a new one would be a major expense.
Here are a few things to remember when determining your coverage limit for personal property:
- Only you know how much coverage you need. Your broker may be able to give you a rough idea, but the amount you need depends on both the quantity and quality of your contents.
- Consider the value to replace your possessions brand new. That hand-me-down couch will be replaced with a new couch of similar quality, and all your second-hand shirts will be replaced with brand news ones.
- This limit is for all your belongings, from electronics to socks, dishes to make-up. If your home or apartment were to burn down, and you lost everything inside, what would it cost to replace it all with brand new items? (Personally, I am always surprised by how much socks cost, and I own many pairs of socks.)
- Anything that you would (legally) take with you when you move out is considered your personal property. The fridge and stove your apartment came with are the landlord’s property, but that chest freezer you bought, the toaster oven you inherited, any small appliances that came with you, all need to be included in your contents limit.
If you are not sure where to start to come up with a number for this, ask your broker to provide you with an inventory booklet, which will help guide you.
Additional Living Expenses – Also called Loss of Use, Additional Living Expenses covers you if you are unable to reside in your home due to an insured loss. (E.g. The basement suite you live in floods, and you cannot live there while it’s being restored.) Under this coverage, which is automatically included in tenant insurance policies, living costs you incur above and beyond your usual living costs (for instance, staying in a hotel for a few days during repairs) are covered.
Worldwide Personal Liability – One of the very best reasons to purchase any kind of residential insurance is for liability coverage. Included in all tenant policies, personal liability insurance covers you, anywhere in the world, should a lawsuit be brought against you for your actions. Similar to the third-party liability on your car insurance, personal liability covers the defense and settlement costs if you cause unintentional property damage of bodily injury to a third party. Intentional and criminal acts are not covered, nor are any claims related to your business pursuits (you should have a CGL for that) or your automobile (you should have auto insurance for that). You may need liability insurance if a guest at your home is injured on the premises, or if you cause damage to the building in which you live.
Note: personal liability coverage is especially important if you have a dog. As the dog’s owner, you will be held responsible for any damage or injuries caused by your pet. According to Canadian Underwriter and the Ontario Trial Lawyers Association Blog, payouts for serious dog bites can be anywhere from $10,000 to more than $60,000, depending on the severity of the attack and the lasting damage caused.
Insurance History – By purchasing a tenant insurance policy, you are building an insurance record for yourself. If you plan to buy a condo or a house in the future, having a history of being insured will bring the cost of insuring the home down (especially if you hadn’t made many claims). Some insurance companies will not insure your home if you have a spotty insurance history (for instance, if you have let your previous insurance policies lapse or have gaps in coverage), and others will impose higher deductibles for people with no prior insurance. Basically, by buying renter’s insurance now, you are proving you are a responsible insured, and setting your future self up for success.
There are a few other things to know when buying renter’s insurance:
- Most of the time, renter’s insurance is pretty affordable. For a basic policy, you could pay as little as $15-$20 per month. The cost depends on where you live, how much coverage you require for your personal property, and whether you have a claims-free insurance record.
- Students away at school generally do not need to purchase their own insurance policies, provided they are still dependents of their parents, and that their parents have a valid insurance policy where they live. There are some limitations on coverage for students through parents’ insurance policies, though, so double-check with your broker before you decide not to buy your own tenant policy when you go away to school.
- Increasingly, landlords are requiring their tenants to purchase renter’s insurance policies to help protect the buildings they own and to keep their own insurance costs down. By requiring tenants to have their own insurance policies, landlords are less likely to have to make claims against their building insurance for damage to the unit and liability if someone is injured on the premises.
- Getting a quote is fast and easy! We will ask for a few details about the building/suite you live in – like the address, how is the unit heated, and whether it is an apartment building or a detached home – and a few details about you (your date of birth, occupation, and insurance history), then we can get you a quote in minutes. For an online tenant insurance quote, click here.
No matter where you live, whether you own or rent, you should be covered by an insurance policy.
For more information of why renter’s insurance is important for everyone, visit the Insurance Bureau of Canada’s webpage.