Tenant insurance is coverage that protects you and your personal items if you rent your home. Industry pros explain how it works and offer answers to your questions.
Photo by Andres Ayrton from Pexels
Tenant insurance, also known as renters or contents insurance, is one of the costs of adulting that seems to have no payback. But the reality is that you likely can’t afford not to have tenant insurance. The cost of a policy (which can range from $15 to $30 a month) is a small price to pay when you consider that it protects your valuables, against liability in case of an accident and, ultimately, peace of mind.
In its most basic form, tenant insurance is coverage that protects you and your personal items if you rent your home. But according to the Insurance Bureau of Canada (IBC), tenants are also legally responsible for property damages—accidental or otherwise—and for any injuries their visitors may suffer. Tenant insurance protects you against that too.
If you cause a grease fire, for example, and there’s smoke damage to your apartment, your neighbour’s apartment and communal areas outside of your rented space, you’ll have to cough up all related expenses. Similarly, if someone slips and falls in your rental, financial responsibility falls squarely on you, not the property owner.
“In the event that someone gets injured, or you’ve damaged something unintentionally, tenant insurance is there to protect you,” says Pete Karageorgos, director of consumer and industry relations at the IBC.
Watch: What is Tenant Insurance?
Basic tenant or renters insurance policies typically include three different types of coverage:
Contents: This covers your personal items. Be sure to discuss what items are covered in basic content coverage before purchasing any policy. In some cases, it may not cover all your valuable items (like jewellery and collections, which are subject to limits).
Liability: Tenant liability insurance protects you if you’ve damaged property, or an accident occurs in your home, and someone is injured. Most basic insurance policies cover $1 million to $2 million dollars in liability if a lawsuit is brought against you. Be sure to confirm liability coverage with your policy. You can always raise or lower the coverage amount based on your needs.
Additional living expenses: If you have to leave your rental space while it’s being repaired, this coverage will pay for additional expenses, like hotel bills, meals and moving costs (also subject to limits). The key word here is “additional.” This means it will cover anything above and beyond your regular expenses. So, for example, if your rent is $1,500 a month and you now have to pay $2,000 a month to stay in a hotel, your insurance will cover the additional $500 a month.
Tenant insurance rates vary across Canada, but standard rates fall at around $15 to $30 per month. Consider that price when looking for a rental, as you will want to factor it into your overall living costs. Having a lot of insurable items and adding on extra coverage is what drives the price point to the higher end.
The price of home renter insurance is determined much by the same questions as home insurance itself. “How old is the building you’re moving into? What’s the size of the rental? What is the total value of your personal items that you need to be insured? If you have a lot of stuff, the insurance will be more expensive,” says Karageorgos.
So, if you’re renting a two- or three-bedroom apartment versus a one-bedroom, there are likely going to be more belongings to insure. Insurance brokers and agents can help you find the best quote for the most coverage. “The best thing to do is shop around or talk to an insurance broker who can compare prices for you and find the coverage that suits your needs,” he adds. (Read more about the cost of insurance for renters here.)
The amount of coverage you will need depends on the value of your belongings and the kinds of accidents you wish to protect yourself from. It’s recommended that you purchase enough renter’s insurance to be able to cover the cost of replacing all your possessions if they are stolen, lost or damaged.
You will also need to decide if your policy’s standard coverages meet your needs or if you want to purchase additional coverage. Common coverage add-ons, known as endorsements, include:
It’s easy to underestimate the value of all your belongings. You may not think you don’t have many big-ticket items and that your other possessions aren’t valuable enough to insure. But what would happen if you had to replace everything—from your entire bedroom closet to the serving plates in your cupboard—all at once? That’s what tenant insurance is for.
To make sure you get adequate coverage, start by cataloging everything you own, including photos and receipts if you have them. You’ll then want to document what each item is worth so that you can estimate the total value of all your belongings. (Read about tips on how to ensure your estimate is accurate and that you have the records needed to back up any future claims.)
When taking an inventory of the items you’d like insured, you’ll be asked whether you would like an actual cash value (ACV) or a replacement value policy. Replacement value policies cost more but allow you to re-purchase the damaged item at its current market value. An ACV policy, on the other hand, takes depreciation of an item at current market value into account; so, while you’ll get some cash back, it’s very unlikely you’ll get back the full amount you paid for an item.
Purchasing renters insurance is pretty simple to do. First, you can compare quotes by phone, in person or online between different insurance providers or with your broker. If you already have insurance for auto, you can usually bundle your coverage and get a discount too. Once you’ve found a great policy and signed up, your provider will usually give you a proof of insurance document to provide your landlord.
Tenant insurance isn’t mandatory in Canada, but it’s a very smart thing to have. In fact, many landlords require proof of insurance before they lease, in the same way not smoking or no pets can be a condition of rental. That means if you don’t comply, you can be evicted. “Landlords want to make sure their tenants and their property are properly protected,” says Karageorgos.
Your landlord will likely ask to see a copy of your policy for its policy number and to review the insurance company. Rental property insurance policies are annual, requiring a review every 12 months. Your landlord may ask for a copy on renewal as well. (Read more about why your landlord may require tenant insurance here.)
Essentially, yes. Tenant insurance, renters insurance, apartment insurance and content insurance are often used interchangeably.
The landlord’s insurance protects the building structure, which includes all structural items that came with your rental unit—from walls and pipes to stoves and bathtubs. But it will not cover your personal belongings, like musical instruments or electronics. It won’t cover damage caused by you or your friends, either, and it won’t cover injuries that happen to you or your guests inside your rental (personal liabilities). Nor will the landlord pay for you to live elsewhere if repairs are needed.
Are you living with a few friends while you go to school, or do you prefer the social life that comes with having roommates? Many insurance companies allow you to share a tenant insurance policy with other occupants, including those who aren’t related to you. Roommate coverage isn’t automatic, so you will have to contact your provider about adding names to your policy. And there may be limits on the number of individuals you can add.
Splitting the cost of tenant insurance with roommates may be tempting. But it’s important to be aware of the risks. A claim filed by your roommate will be reflected in your file and could lead to an increase in premiums—whether you want to be associated with the claim or not.
Not all tenant insurance plans are the same, and some do not cover water damage caused by floods or sewage backup. However, if there is a leak in the unit above that destroys your new leather armchair, tenant insurance usually has you covered. Be sure to ask about water damage when securing a plan.
Many renters will purchase tenant insurance and never have to make a claim. In those cases, policyholders can rest easy knowing their stuff would be covered if something ever did happen. For those who aren’t so unfortunate, there are steps that can help make the claims process as smooth as possible.
You’ll need a copy of your insurance policy and any other detailed records itemizing your insured belongings. From there, Karageorgos says the process is always the same for everyone: “Document the damage. Take pictures to show what items were damaged and the source of the damage (if you are able). And never throw anything out before calling your insurance company.”
Although tenant’s insurance isn’t mandatory in Canada, there are many reasons to consider paying for coverage. It may just prevent you from needing to shell out the money required to replace all your belongings—all in one shot. It’s the kind of thing that seems incredibly unlikely, until it happens. At the very least, with the proper coverage, you can relax knowing that you and your belongings are protected from even the worst kind of once-in-a-lifetime event.
This story was originally published on July 17, 2021. It was last updated on Feb. 16, 2022.
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