It is well documented that breaking into Canada’s housing market has become an overwhelming challenge for first-time buyers. Buying a house is off-limits for many Canadians, despite Prime Minister Justin Trudeau’s shared equity program. While that’s bad news for the mortgage market, it has meant rentals have boomed in recent years.
For those locked out of the housing market, renting is the only realistic option. However, as a tenant, there are some important things for you to consider. First on your list should be buying tenant insurance.
Like home insurance for property owners, tenant insurance is designed to cover you in the event of damage or a loss. When renting, you face many of the same risks as a homeowner, including fire damage, weather events, and theft.
Why Tenant Insurance Is Important
Many people make the mistake of believing they don’t own a lot. They think the “stuff” they do own does not hold much value. Whether it’s clothes, kitchenware, or electronics, Canadians typically underestimate the worth of these products when it comes to how much it would cost to replace them.
Yes, most of your things are replaceable but think about how much it would cost if everything you own were lost. Look at your TV and other electronics, furniture, clothes, and anything else you have. It doesn’t take long to realize you face a massive financial outlay if you need to replace them.
Tenant insurance helps you avoid that financial burden by covering you against such losses.
What You Need to Know Before Buying Tenant Insurance
Avoid falling into the trap of thinking your belongings are protected as part of your landlord’s home insurance. That is not the case, and the landlord’s coverage will not protect you should something happen to your rental. Many landlords now demand you have tenant insurance before renting.
It is also worth noting that tenant insurance is not expensive. Typically, tenants pay around $200 per year for coverage. That’s less than a dollar a day. Of course, how much you pay depends on your location, claims history, the level of coverage you need, your chosen deductible, and type of building in which you live.
The financial cost of tenant insurance is more affordable than being on the hook for replacing your belongings if something happens to your rental unit.
Types of Tenant Insurance
While there are some differences among tenant policies offered by insurers, most will cover the following:
Contents – This coverage protects your belongings, including household items, clothes, and electronics.
Living expenses – If you are displaced from your rental unit, tenant insurance will cover the cost of a hotel and living expenses.
Liability – If someone who visits your home gets injured and decides to sue you, liability coverage will cover those costs.
There are some exceptions for items that will not be covered by a standard tenant insurance policy – for example, expensive jewellry or art. Most tenant insurance policies put a value limit on these items.
A value limit means the insurer will pay up to the amount specified in the policy. For example, a $5,000 limit on individual items means the insurance company will not replace items that are valued above this amount.
Getting the Correct Level of Coverage
If you undervalue what you own, you may find your possessions are not completely covered if you file a claim. That’s why correctly cataloguing and pricing your items before purchasing tenant insurance is essential.
Luckily, the Insurance Bureau of Canada (IBC) makes this task a little easier with its Personal Property Inventory form. You can print this document and take it with you around your rental unit to take an inventory of your possessions. You will probably be shocked by just how much “stuff” you have.
For more valuable items, take photos and videos to have a visual record of them. If you have receipts for expensive items, keep them safe because they can show the value of those articles should they need to be replaced.
How to Find the Best Tenant Insurance Rates
When looking to purchase any insurance product, shopping around is a great way to ensure you find the best deal, including tenant insurance. By using an online quoting tool, you can quickly find a range of quotes from a variety of insurers that matches the specific insurance requirements you have. By leveraging this information, you can connect with an insurer and buy the best policy at the most affordable price.