Is Tenant Insurance Necessary?

You just rented your first apartment, do you need to have insurance? You don’t need to insure the home or condo, that’s the landlord’s responsibility. However, there are three areas where insurance is very useful for tenants:

Contents insurance
The Landlord’s insurance does not cover your own possessions such as furniture, appliances, artwork, jewelry and electronics. You can insure either the actual cash value or, for a higher premium, the replacement cost (with no allowance for depreciation). A standard policy will protect against normal risks, and you can pay a bit extra to cover less common risks.You might think that if your possessions are damaged or destroyed by someone else’s action, for example a flood from another apartment, you would be covered by their insurance. But you’d be wrong – you’d have to sue them to get compensation. Contents insurance solves that problem.

Personal liability insurance
If you accidentally hurt someone, or if someone gets injured on your property you can be liable for damages and legal costs if you get sued. Liability insurance is designed to protect you legally; a typical policy will cover up to $1 million and you can increase that to $2 million with many insurers. While liability insurance isn’t mandatory in Ontario, most landlords will require it as a condition of renting from them. This protects the landlord from being sued if someone is injured in your apartment.

Additional living expenses insurance
If your apartment is flooded or significantly damaged, you may have to move out until the repairs are completed. With an insurance policy that includes additional living expenses, you can often get coverage for meals and a hotel or temporary rental. Even if the problem came from another apartment, but affected your apartment, the coverage will generally apply.

How much does tenant insurance cost?

The cost of your tenant insurance will depend on a number of factors, including:

• The deductible level you choose. The higher the deductible, the lower the premium, but the more you will pay out of pocket for each claim.
• Your credit score
• The amount of contents coverage you need
• The amount of liability coverage you want
• The location and construction of your unit (concrete vs wood frame, etc)
• Whether you have a home security system
• Your claims history – the fewer claims you make, the lower your premium

Typically, your insurance policy will cost somewhere around $20-$25/month. You can get coverage from most insurance companies, and can often save money by bundling your tenant insurance with other policies.

Is tenant insurance mandatory?

Tenant insurance isn’t mandatory in Ontario, although most landlords will require liability insurance as a condition of renting from them. This protects the landlord from being sued if someone is injured in your apartment. As for contents and living expenses insurance, even though they aren’t required, it definitely makes sense to get them!