Why a renter should be insured

Did you know a Statistics Canada study found less than half of tenants in Canada have renters’ insurance?

This means they are not protected if their home is damaged or if someone is injured on their property. That’s because as a renter you are legally responsible for any damage you cause to any part of your building and for unintentional harm caused to others who live in or visit the property.

If you thought the landlord’s insurance would cover your belongings if your toaster oven caught on fire, damages your unit, and spreads to the rest of the building, you’re wrong. You may have to pay for the damage to not only yours but other units in the complex.

And when you think you don’t have enough to insure, what if you had to replace all your clothing, furniture, or electronics at once because they were destroyed by fire or water damage? Those replacement costs add up.

Many renters assume that their landlord's insurance policy protects the contents of their condo or apartment. They often learn the truth only after it's too late to save their lost belongings, none of which are protected by typical landlord policies that cover damage to the building alone.

There are other risks, too. Statistics from the Insurance Information Institute reveal that renters are 50 per cent more likely to be victims of burglaries than homeowners.

Costs less than homeowner’s insurance

Contrary to what many believe, coverage is a fraction of the price of an average homeowner's policy. With the help of your insurance broker, it can be inexpensively configured to cover most of the major risks a renter may experience including:

• Loss of personal property:A typical apartment commonly contains $10,000-$30,000 in personal possessions. Renters may also have invested money to paint apartment walls, add cabinets or improve lighting fixtures. For a small amount, renters can have their personal belongings and liability covered. Additionally, family heirlooms, expensive jewelry or collectibles can also be protected by an additional rider at a modest extra cost.
• Personal liability:Slips, falls and unforeseen accidents can lead to surprisingly large out-of-pocket costs or damaging lawsuits. A good rental policy covers the costs of emergency care and long-term liability.
• Emergency living expenses:If a fire or storm makes a living space uninhabitable, many renters’ policies will pay for hotel and restaurant bills until repairs are made.

Some landlords now add a rental insurance option to their leasing packages. When calling for quotes, ask about lower rates for units with security systems, smoke detectors, deadbolt locks, and other safety devices. Multi-policy discounts may also be available if you insure your car and home with the same company.

Senior savings could be a possibility for renters over 55. If you are sharing a rental with a roommate, ask if the insurer will allow you to split the premium cost.

Two types of coverage offered

There are typically two types of coverage offered for tenant insurance: all risks and named perils. With all risks, all your contents (except those specifically excluded) are covered. A named-perils policy covers only perils that are specifically stated.

Generally, a standard or basic insurance tenants' policy covers up to $1 million for the amount you'd have to pay someone who successfully sues you. Liability coverage also pays for the cost of defending you in a lawsuit. You can often increase your liability limit to $2 million.

There are typically two ways you can be indemnified, or paid under your policy:

• Actual cash value
• Replacement cost

Remember, an insurer has the right to determine whether an article is repaired or replaced.

Read your policy carefully to determine your exact coverage.

Ultimately, your policy cost depends on many things including:

• how much insurance you need
• the location of your dwelling
• how your unit or apartment was constructed
• your insurance company
• Your claims history.

Your broker’s knowledge will help you sift through the options to find a policy that maximizes your peace of mind while making the most of the freedom and flexibility a renter's lifestyle can bring.

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