The Ultimate Guide to Renters Insurance

Perception can often obscure facts, and many renters believe that since they don’t own a house, they won’t be eligible for any insurance benefits. Perhaps because of this, less than half of Canadian renters have renters insurance. What exactly is renters insurance, and why is it important to have a policy?

Understanding the basics of contents and liability insurance for tenants may help you feel secure, knowing that you are protected by renters insurance. You may be held liable as a tenant for any damage you do to your home, as well as any unintended harm you cause to those who live in or visit the house, for example, If someone slips and falls in your rented condo, you may be held financially responsible for the injured person’s damages.

A landlord will typically require tenants to have insurance as a condition of their renter’s agreement contract. This article will make it as easy as possible for you to understand renters insurance, without any confusing technical jargon.

What is renters insurance?

Renter insurance or tenant insurance is a form of property insurance that protects the insured against liability claims while also covering damage to personal property. This covers accidents that may occur in your rental but isn’t caused by a structural issue (which is your landlord’s responsibility) such as theft, vandalism or damages caused by a fire accident. Renters insurance covers anything from a single room to a whole house or mobile home.

While you are not required by law to have renters insurance, your landlord may include it in your rental agreement or contract. Renters insurance covers both you and the landlord by ensuring that, regardless of what occurs on the property, either the renters insurance or the landlord’s insurance will compensate you.  For example, if a flood or fire damages your personal property in a rented apartment, the building is protected by the landlord’s policy, but your personal property would only be covered by a tenant or renters insurance policy.

Why do you need renters insurance?

Renters insurance will often serve as your financial safety net. It will kick in and assist you if there is loss or damage caused by designated perils such as theft, arson, vandalism, some forms of water damage, and a variety of other inconvenient events.

It provides financial compensation for lost property and any legal costs incurred as a result of injuries for which you are responsible. Since your landlord’s insurance policy does not cover your belongings in the event of injury, a break-in, or a fire, renters insurance is critical as you will be legally liable as a tenant for any damage you do to any part of your home, as well as any accidental harm caused to visitors or 3rd parties.

What does renters insurance cover?

A typical renters policy protects your personal belongings, pays for temporary relocation costs if you need to move due to covered repairs, and provides liability coverage in the event you are sued for negligence. As a result, you can make sure that all of your personal belongings are secured under this coverage.

Personal belongings, liability, additional living expenses (ALE) and medical expenses are the four of the basic coverage policies of renters insurance.

Personal belongings – Renters insurance covers the contents of your rental home. Fire, robbery, vandalism, plumbing and electrical malfunctions, some weather-related destruction, are some examples of perils this policy would protect you from. A renters policy is for tenants and protects personal property damages caused by incidents such as hail, explosions, and riots. Floods and earthquakes, however, are not covered and require separate insurance policies.

LiabilityLiability insurance covers you up to a certain amount if you are sued for an accident or other damages caused by someone at your place of residence. It also covers harm caused to others by you, your relatives, or your pets. It covers all court decisions and legal costs up to the policy cap, which is normally $1,000,000 but can go up to $10,000,000.

Additional living expensesThis coverage ensures that if your home is rendered uninhabitable due to one of the covered perils, you will be compensated for temporary accommodation.  Accommodation fees, restaurant meals, short-term rentals, and other costs incurred when your home is being renovated are all covered.

Medical expensesYour renters insurance quote has the option to add medical expenses coverage. This form of policy will cover medical costs for visitors who are injured at your accommodation, but it does not extend to you or anybody else who lives there. 

What isn’t covered renters insurance?

You should be aware that many items are not immediately covered by most laws, including sewage backup into your home, earthquakes, floods, and other “acts of God“. However, these items may be protected for an extra premium.

Five categories that are not covered by renters insurance:

Select natural disasters – Most basic renters policies exclude natural disasters such as earthquake and flood coverage, but some companies can sell it as an add-on for a fee. If you’re at risk for these perils and your renters insurance policy doesn’t cover them, you’ll need to purchase a separate flood or earthquake insurance policy for your personal property.

Damage from pests – Damages from termites, bedbugs, mice, and other pests are not covered. Renters insurance agencies consider it your responsibility to keep your rental unit in good repair.

High-value items – If you also have any unusually expensive or valuable items, such as high-end electronic equipment, fine jewelry, musical instruments, or an important collection of art and antiques, you may need to purchase floater insurance in the form of a rider to cover these items. In addition, a separate rider might be needed to cover wind damage in certain areas from hurricanes.

Roommates – Unless your roommate is listed on your agreement, they are most likely not covered. Your roommate should have their own insurance, ideally with the same insurer to make the claim process easier, should anything happen.

Renters insurance policies also do not cover losses caused by the tenant’s own negligence or intentional acts. You should be aware of what your renters insurance does and does not cover in order to decide whether you need additional coverage.

Ultimate Guide to Renters Insurance

Should I get renters insurance if I am a student? 

Student renters insurance can often be obtained through a ‘rider’ on your family’s homeowner rental insurance policy, which should include liability coverage for injury or damage. If this option is not available to students, they should purchase their own separate policy.

While theft and liability insurance isn’t on many back-to-school shopping lists, it’s just as critical as textbooks and computers. You can be vulnerable to a number of unfortunate and expensive circumstances if you don’t have tenant insurance.

Students with renters insurance are covered if their belongings are stolen or if their apartment is damaged. You may compare renters insurance rates with a number of different companies to see which one offers you the best renters insurance for students.

Getting your renters insurance quote

If you’re thinking, “What is the monthly cost of renters insurance??”, then you’ll need to find out how much coverage you’ll require first. A renters insurance estimate is a tailored quote of the cost of your policy. It is determined by a variety of factors which includes:

  • Your personal background
  • Where you live (your neighbourhood or province)
  • The value of your personal possessions
  • Whether or not your home has fire alarms or other security features

These factors influence how likely you are to file a claim and how much it will cost if you do. With all of these factors at play, your renters insurance costs may be drastically different from your neighbour’s. Canadian renters insurance is relatively inexpensive, costing an average of $23 a month. The average renters insurance cost per month in British Columbia is $26, while in Ontario it’s $21.

When you’re about to get a rental insurance quote, you have a few options:

  • Get quotes online or over the phone.
  • Speak with a “captive agent” who is employed by a single company.
  • Consult an independent agent or an insurance advisor who can provide you with quotes from a variety of companies.

Whatever choice you select, we recommend you get at least three quotes — all with the same coverage limits and deductibles — so you can compare prices and see which company is the right fit for your needs. Keep in mind that a captive agent may provide you with only one quote.

How to get your first renters insurance policy

When looking for your renters insurance policy, the first thing you can do is browse around.  Examine what various insurance companies have to sell in your area to get a sense of rates, coverage, and extras. While most renters insurance plans are similar, talking to an insurance agent or advisor may help you dig deeper into the policy jargon to figure out what’s best for you. They will also be able to guide you through the process if you ever want to make a claim on your policy.

So, is renters insurance worth it?

37% believe (incorrectly, we might add!) that renters insurance isn’t worth it. Perhaps they cross their fingers and hope that nothing bad happens to their apartment or their belongings, in which case they’ll be grateful they saved a few dollars on coverage. However, if bad luck strikes, you’ll be glad you spent the extra money on a renters insurance policy as it will pay off many times over. Keep in mind that most rental contracts require tenants to purchase some form of renters insurance. 

Renters insurance offers protection from worst-case scenarios, both by safeguarding you from costs you may not be able to afford and by securing what you have. No matter how much you have in your bank account, renters insurance remains an essential purchase. If you’re looking to purchase renters insurance for as little as $19 per month, you can get an instant policy right now with our partners over at Netsurance. 

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