HOME INSURANCE FOR THOSE WHO ARE RENTING
One of the advantages of renting an apartment, condo, or home is that tenants tend to have fewer annual fees than owners. School, welcome and property taxes are some of the costs of homeownership that tenants are able to avoid. While there is an obvious financial benefit to circumventing these costs, one thing renters shouldn’t skimp on is insurance.
Tenants often forgo renters’ insurance because it’s not mandatory under the law, and there’s a commonly held assumption that they will be covered under the building’s insurance policy, but that’s simply not true.
“There are two different policies: the owner’s insurance covers the building and everything that belongs to the building like floors, walls, kitchen cabinets and counters, etc.,” said Caroline Phémius, spokesperson for the Insurance Bureau of Canada, “whereas the tenants’ insurance covers the tenants’ belongings and their personal liability.”
Having coverage of your personal belongings is incredibly important, even if you only need basic coverage.
“Tenant insurance helps protect your assets and ensures there is something protecting you and your lifestyle in the event of loss of the contents of your rental,” said Claudia Argento, real-estate broker with Abbey and Olivier Agency. “We hear about residential buildings burning down in the news all the time; what would you do if your rental unit was uninhabitable or suddenly damaged by fire? The situation would be stressful as is, but being able to replace your belongings through rental insurance and not out of pocket would make the transition a bit more financially tolerable. At the end of the day, tenants often have just as many belongings to lose as homeowners do.”
Aside from being able to replace your things in the event of a loss, renters need insurance to protect themselves in case they’re ever held liable for damages.
“If the tenant is being sued by the building’s owner or by other tenants and is found responsible for damages to the building — for instance, if he fell asleep while smoking — his insurer will take his defence and pay for the damages he caused,” Phémius said.
Moreover, if the tenant is being sued by the building’s owner and by other tenants and is found not responsible for the damages, the tenant’s insurer will cover the cost of the tenant’s defence in court, she added.
The insurer will also provide the tenant with an allowance to temporarily relocate if their rental unit is unlivable following the initial event that started the claim.
“Without insurance, the tenant will have to pay for his own defence in court, for the damages to the building, for his own belongings, and probably for the damages to other units if the fire expanded,” Phémius said. “And the tenants won’t get any relocation allowance.”
All this considered, the need for renters’ insurance is obvious. But that doesn’t mean you should sign the first policy you’re offered. In fact, renters should shop around for the best rates and coverage for their situation, the same way they would when purchasing car or life insurance.
When considering a handful of policies make sure that you’re comparing apples with apples. Different policies may have different rates depending on the amount of coverage, so make sure that the policies you’re considering all offer the same type of coverage, deductible, and so on.
“It’s always best to talk with an insurance broker about the different types of insurance that you would require or are eligible for,” Argento said. “Most, if not all, banks do offer this type of insurance and it is quite affordable.”
That said, doing your research ahead of time and working with proper experts can save you headaches down the line.
“Only brokers and insurance agents are allowed to sell home insurance,” Phémius said. “The Autorité des marchés financiers provides a register of firms and individuals allowed to sell insurance.”