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What Does Tenant Insurance Cover?

Thursday, 8 April 2021

You finally found the perfect new apartment to call home and you’ve started the exciting process of moving. Maybe you’re noticing how much stuff you own and realize how costly it could be to replace it all, or perhaps one of your lease conditions requires you to have tenant insurance. Hopefully you have heard about tenant insurance to some extent, but maybe you’ve never looked into how it could be beneficial to protect you and your belongings – that’s why we are here! In this blog, we will answer all your questions about tenant insurance including: What is tenant insurance? What does tenant insurance cover? How much does it cost?

What Is Tenant Insurance?

Tenant insurance, (aka renter’s insurance), is similar to home insurance in a sense, but the main difference is that tenant insurance protects your personal property and not the physical building in which you live. A basic tenant insurance policy is comprised of three components: personal liability coverage, contents coverage, and additional living expenses. For a very affordable cost, tenant insurance can save you thousands in a lawsuit, spare you the heavy cost of repairing/replacing your personal belongings, and provide financial support for alternative living arrangements while your unit is under repair from a covered loss.

What Does Tenant Insurance Cover? Personal Liability

Did you know that as a tenant you can be held legally responsible for damage you cause to your building? You can also be held liable for unintentional harm or injury caused to visitors and other tenants from a fire or flood in your unit. While tenant insurance is not mandatory in Canada, many landlords do make it a requirement for these reasons. Personal Liability coverage helps cover legal costs if you are sued for damages to third-party property or injury. Most basic policies start at $1 million liability coverage, but you can also upgrade to $2 million for a slightly higher premium.

What Does Tenant Insurance Cover? Your Personal Belongings

What does tenant insurance cover? One of the main components of tenant insurance is Contents Coverage. Contents Coverage will reimburse you for damaged items in a covered claim. Before you agree to a policy, pay close attention to what damage your insurer will cover. It may be that an earthquake, sewer back-up or overland water coverage isn’t included unless you specifically add them to your policy.

When you decide the amount of coverage to get, get a general tally of how much it would cost to replace your personal belongings. Start with big ticket items such as major electronics, appliances, jewelry, and furniture, and then work your way down to the smaller items. If you have special collections of jewelry, artwork, sporting equipment, etc., you can ask your broker to either increase your overall coverage or insure individual items for an added cost. When you consider how much it could cost to replace items stolen or damaged in a fire, tenant insurance is well worth it!  

When you purchase a policy, you should understand these two terms that determine how your insurer will calculate the value of items in a claim.

  • Replacement Cost: in the event of a covered claim, items will be repaired to their original condition or replaced with new items of like kind and quality with no deduction for depreciation.
  • Actual Cash Value: An insurer considers what you would pay for that item today and subtracts any depreciation based on the age and condition of the item.

What Does Tenant Insurance Cover? Additional Living Expenses

If something terrible were to happen to your apartment rendering it unlivable for a time, it can be stressful and costly to find an alternative living arrangement. This is another great reason to have tenant insurance. With Additional Living Expenses coverage as a part of your tenant insurance policy, your insurer will provide a set amount for your living expenses while your place is being repaired from a covered loss. At the time of purchase, make sure you know how much your insurance company provides and if the amount is capped. The great thing about purchasing a policy with Billyard Insurance Group is that our brokers take the time to explain coverage to our clients and are always here to answer your questions about insurance!

What Tenant Insurance Does NOT Cover

There are certain limitations to tenant insurance that you should understand so that you can protect yourself and know the risks.

  • Tenant insurance does not cover the building itself. Your landlord should have property insurance to cover claims for the building.
  • Ask your insurance broker if there are any perils excluded in your policy (ie. earthquakes).
  • Tenant insurance does cover you if you sublet your apartment to others or use it for a vacation rental program. If the subletter doesn’t get their own tenant insurance policy, you are on the hook to pay for any damage to your belongings, or legal costs resulting from injury or damage to others in your building.

The Average Cost of Tenant Insurance in Canada

The average cost of a basic tenant insurance policy in Canada is around $20/month. Premiums vary based on risk factors such as your location, unit, insurance history, deductible, and many others. Read our blog about the average cost of tenant insurance that explains it in more detail.

So, what does tenant insurance cover? Tenant insurance does more than just coverage for your belongings, it also offers the peace of mind that you are protected financially if something unforeseen happens in your new place. As you settle in and make this new apartment your home, get a free tenant insurance quote from one of our BIG brokers! We are happy to answer any questions you have about tenant insurance. Contact us now!

By: Amy Legault