Guide to Renters Insurance
If you are planning on renting a home or living space within Canada, you absolutely should invest in renters insurance.
Whether you need it will be up to your landlord or management company, as it is up to them whether to require it. In either case, it is extremely advisable to open a renters insurance policy. Having renters insurance is the only way to protect your personal property if your residence is burgled, catches fire,
or is damaged by water.
What Is Renters Insurance, and Will You Need It?
While no one wants to think about these unfortunate situations, they do happen. Being prepared for the worst is far better than encountering the worst unprepared and better still than encountering the worst uninsured. Don’t get caught unprepared; take time to educate yourself about renters insurance, how it works, what it covers, and how much it costs. The more you know, the better prepared you will be for your renting endeavor and in the face of an unfortunate situation.
What Is Renters Insurance?
Renters insurance protects the tenant from eating the cost of damaged or stolen personal property, as well as legal liability. It does not cover the structure or living space in question. Damage to the rented space is typically covered by a landlord insurance plan. While a renters insurance policy is similar to a homeowners policy, the main difference is what is covered. Homeowners insurance covers the home itself, while renters insurance covers personal items within the home. Rather than leaving your beloved personal items to be lost forever and gaining nothing in return, choosing an insurance policy to protect your assets will at least cover the cost of the items lost.
Renters insurance can be purchased by anyone renting a living space, whether it be an apartment, condo, or house. It protects not only lost or damaged possessions, but also you in the event that someone is injured on your property. This means you will not be held liable to pay for injuries if someone happens to trip on your property and becomes injured. Your insurance will cover their medical bills if there is evidence that your property was at fault for the injury. Overall, renters insurance can protect you from all kinds of damage, and that’s what makes it a worthy investment.
What Does Renters Insurance Cover?
Renters insurance has three main coverage types:
Personal Property
Your possessions will be covered if they are lost due to theft, vandalized, or destroyed due to fire, plumbing or electrical malfunctions, or certain weather disasters. Specific perils, which will be included in your policy that you can look over, generally include hail, explosions, and riots. If you are seeking coverage for your personal property from floods or earthquakes, be aware that these specific disasters require a separate insurance policy.
Liability
In the event that a person or property is damaged at your home or due to a certain circumstance in your home, you will be covered in the event that you are sued. This policy covers damage that your pet, a family member, or you may cause, and will pay for court expenses and legal team expenses. Your policy will have a limit of usually around $100,000; however, it can be as high as $300,000. If you are expecting to exceed that amount, look into an umbrella policy.
Additional Living Expenses
If your home is inhabitable because of one of the covered perils or disasters, then you will be provided with a stipend to pay for living arrangements while your residence is being repaired. Hotel bills, meals, temporary rental fees, and more can be covered with your renters insurance policy.
What will be covered is dependent on what kind of policy you choose and what is included in it, and talking to your insurance agent will clarify the type of coverage that best meets your needs. If you are particularly concerned with a specific event, talk to your agent, and they will see what they can do to get it covered and give you peace of mind.
What Renters Insurance Doesn’t Cover
While renters insurance can provide coverage in many scenarios, there are some things that are not covered, including:
Pests and bed bugs
Bed bugs and pests such as rodents are not typically covered in a renters policy since these types of issues usually fall under the landlord’s maintenance.
Earthquakes, floods, and sinkholes
Most policies will not cover these specific disasters, but if you feel your living space is at risk, you might be able to add to the policy with your current insurer or even establish a separate policy with another insurer.
Car theft and damage
Car and renters insurance are completely separate policies. While your car and damage to your car may not be covered by renters insurance, personal property left inside your car is covered by renters insurance.
Roommate possessions
If a roommate’s possessions sustain damage or are stolen, they are not eligible for coverage unless they are on your policy. You could consider adding them to your policy and splitting the cost, but unless you have known them for a while and trust them like you do a relative or spouse, it is better not to risk it.
Be sure to ask your agent about limits for high-value items, such as jewelry. There is coverage for high-value items, but it is typically capped at a specific amount.
Other examples of high-value items include:
- Money, banknotes, and coins
- Computers
- Furs
- Collections
- Firearms and ammo
- Instruments
- Credit cards
These items have coverage, but remember, it is limited. Always check your policy for how much will be covered, and if you would like higher coverage for a specific valuable item, then talk to your agent, and they will work to accommodate your request.
How Much Does Renters Insurance Cost?
In Canada, renters insurance costs roughly $20–30/month. Compared to well over $100 per month for home insurance, renters insurance is a steal. For the price of one fancy dinner per month, you could be buying peace of mind. It can feel like a lot to consider, but the impact it has on your wallet is worth the impact it will have on your quality of life. Prices may vary depending on what you need covered specifically, but don’t let that deter you. Once you find the insurance you want to go with and an agent you trust, you will be able to iron out the details and start living in your new rental property with less stress.
Invest your time in getting quotes and asking questions. Call different companies, check online, and talk with more than one agent—and bes ure to take notes! While preparing for events we hope never happen, it is good to know exactly how much we can expect to recover if an event were to take place. Instead of wasting sleepless nights over what could happen, paying a small price to ease your worries will benefit you immensely. While it’s not a fun thing to think about, it’s worth thinking about and definitely worth purchasing.
Frequently Asked Questions
Can you get renters insurance when renting a room?
While you are able to take out a renters insurance policy when you rent a room, it might not be necessary depending on whether your landlord already has homeowners insurance that extends to you. Some insurance companies allow for rented rooms to be covered in an initial home insurance policy, and some do not. Additionally, if your landlord asks you to take out a liability policy due to a pet you have, they are well within their rights to do so.
Does renters insurance cover cell phones?
If your cell phone is damaged in an incident covered by your policy, such as theft, a plumbing or electrical malfunction, or a specific natural disaster, then yes; in this case, it would fall under personal possessions and be eligible for replacement. If your cell phone is not lost or damaged in any of those situations, then unfortunately, it would not be covered. It should be noted that if your cell phone is issued by your place of work, it is not considered a personal item and won’t be covered under a renters insurance policy.
How does homeowners insurance differ from renters insurance?
In most cases, homeowners insurance does not differ much from renters insurance. The policies can appear nearly identical and cover the same range of perils. The main difference is the price. Homeowners insurance costs over $1,000 annually on average, while renters insurance costs $187 annually on average. The reason for the vast price difference is that homeowners insurance covers not only lost property, but also the home itself.
Now you have the information you need to make an educated decision about renters insurance. The next step is shopping around and choosing the best policy for your individual needs. Remember, when you purchase insurance for your belongings, you are purchasing peace of mind as well.
