Why Tenants Should Consider Renter’s Insurance
Protection worth having and worth the money
What Is Renter's Insurance?
Renter's insurance is a policy designed for individuals who rent out the property. Since the tenant doesn’t own the property they’re renting, this insurance protects the valuables and offers liability coverage if issues arise in the tenant's apartment. Not all renter’s insurance policies are the same so it’s important for the tenant to understand their specific policy, including the what’s covered and the amount of coverage.
Landlords buy insurance to protect their property and cover their liability, and tenants should do the same. A renter’s insurance policy can protect their greatest possessions and offer coverage in the event that an accident or disaster strikes. Here are six reasons why tenant insurance is a good idea:
6 Reasons tenants need renter’s insurance:
Tenants Aren’t Covered By Landlord's Insurance:
It’s not uncommon for tenants to think they’re covered by their landlord’s policy for the building only to find out they actually weren’t. Landlord’s insurance only protects the physical structure of the building and whatever the landlord owns. If anything were to happen, for example a fire in the building and the tenant didn’t have insurance, the insurance for the building wouldn’t cover any of the tenant’s possessions.
Many tenants don’t purchase renter's insurance because of the money it would cost. What many tenants don’t know is just how affordable it can actually be to purchase renter’s insurance. Most policies can range between $200 and $500 a year, and the cost varies depending on a few factors such as the location and the amount of coverage.
A renter's insurance policy will normally include liability protection. For example, if a friend comes over and falls on your property, most renter’s insurance policies offer liability protection that’d have you covered. The amount depends on the terms of the individual policy and should be considered when choosing between policies. Get your licensed insurance advisor to help you make the right decision for your needs.
Fire and Wind Coverage:
A renter’s insurance policy protects a tenant's possessions if they are lost or damaged by a fire or by wind, such as a tree falling on the property. Depending on the policy, the tenant policy would either receive actual cash value for their possessions or the replacement cost, the latter of which are slightly more expensive.
When a tenant chooses a renter’s policy, they can also be covered if there’s a theft or burglary at their property. The amount and type of coverage that they’d receive depends on their policy and what it states.
Landlords, get some additional protection
Tenant insurance policies are an added protection for landlords and worth considering. Suppose there was an accident in the tenant's unit that caused damage to the property. In this case, the renter’s insurance policy would be targeted first, resulting in the landlord having to file a claim with the tenant’s insurance company first.
4 Reasons tenants aren’t purchasing renter’s insurance
They Don't Know About It- Many tenants don’t purchase renter’s insurance because they didn’t know that was an option for them. They may have health insurance and car insurance, but they think insurance relating to the home counts as homeowners and as a renter this wouldn’t be an option.
Expense- Some renters aren’t purchasing insurance because of the costs associated. They’d rather risk living in the property without it than having to pay the added expense.
It’s not top of mind- Some tenants know about renter's insurance, but fail to purchase it to focus on things they’d rather spend money on.
They don’t see the value- Tenants might think renter's insurance is a waste of money as they don’t own high valued possessions or think it’s only for theft. They’d rather risk unfortunate events happening without being insured than having to pay to be covered.
Many people don’t know that there are savings to be had on their auto policy if they bundle it with their tenant policy. Sometimes the savings on the auto policy is very close to the cost of the tenant policy itself, so it’s almost a freebie in some cases. However, it depends on the location and insurance company, i.e. this wouldn’t be the case in Alberta.
What Is Not Covered By Renter's Insurance?
Unfortunately, renter’s insurance won’t cover everything. Tenants should purchase separate insurance for expensive items because the full value normally isn’t covered by the policy. In addition, renter’s insurance likely does not cover damage from flooding. If this is a concern, a separate flood insurance policy should generally be purchased
Advise Tenants of Renter's Insurance
Landlords should let their tenants know about renters insurance as an option. As a landlord, it’s best practice to include a renter’s insurance addendum as part of the lease agreement to illustrate that the tenant's property isn’t covered under your insurance policy.
In some provinces, it’s required for tenants to purchase renter’s insurance so it’s advised to check your local landlord-tenant laws to determine the rules in your area.