Renter’s insurance provides extra coverage for both the landlord and tenant of a rental property. It protects the tenants’ leased property from damage or theft, while adding an extra safety net for the landlord as well. Most landlords will have some sort of personal or commercial insurance policy in place for their properties, but this coverage only goes so far and renter’s insurance is essential to fill in the gaps.
Overall, renter’s insurance is incredibly beneficial to both parties, making for a smoother relationship and providing greater peace of mind. It would seem like an essential part of renting a property, right? Turns out that less than half of tenant’s in Canada have renter’s insurance. Here are a few reasons why tenants insurance is essential for both landlords and renters:
Why It’s Good for Landlords
1. It helps identify bad tenants.
Tenant insurance is very cheap, usually costing between $10 and $50 per month. If one of your tenants refuses renter’s insurance, it may be a sign that they are not financially stable, or that they do not care about your property. While there are certainly valid reasons to turn down renter’s insurance, but having a potential tenant do so should send up a “red flag” and indicates that this may not be an ideal tenant.
2. Your tenant’s liability insurance provides an extra buffer beyond your own coverage.
Commercial and homeowner policies generally cover the building itself and some features of each unit. However, your tenants’ furniture and other belongings are not covered in the event of fire, disaster or theft. Additionally, your commercial policy may not provide liability protection in the event that a guest gets injured on your tenant’s premises.
While you likely aren’t required to cover any damages in these scenarios, the relationship with your tenant may be soured and there is still the possibility of a lawsuit. Renter’s insurance provides an extra buffer, allowing for additional coverage beyond your current policy and insures against any claims that could raise your deductible.
3. Some companies may require it.
Some buildings and condo corporations simply require tenants to have renter’s insurance. Whether you are renting out a condo or subletting your apartment, this type of insurance is always a good idea. Depending on your situation, you may want to refer to your lease or purchase agreement to verify whether or not your tenants need to have renter’s insurance.
Why It’s Good for Tenants
1. It’s relatively inexpensive.
The great thing about tenants insurance is that it’s relatively inexpensive (upwards of $10/month), often available for the price of a few cups of coffees. There are a handful of necessary expenses associated with renting a property, so a few more dollars a month for extra coverage and peace of mind is well worth it. Most providers will allow tenants to adjust their payment schedule, making it easy to incorporate into their monthly or yearly budget.
2. It provides coverage for additional living expenses (ALEs).
Dealing with the aftermath of a fire, natural disaster, or other property damage can be extremely stressful. The emotional aspect of losing your belongings is tough, and that’s before you even consider the financial burden.
If your property is damaged beyond repair, chances are you won’t be able to continue living there right away. At the very least, you’ll have to pay for a place to stay — whether a hotel room or a new apartment — in addition to the rent for your old property. Other factors, such as your daily commute and food costs, might also contribute to higher expenses during this time.
Renter’s insurance covers many of the additional living expenses (ALEs) that you’ll incur while you’re waiting for your original apartment to be repaired. As a result, it can help to relieve some of the financial burden from a disaster. Contact your insurance broker to learn more about what ALEs are included in your renter’s insurance coverage.
3. The value of your belongings add ups.
If you think that you don’t own anything expensive or essential to replace, you might choose to opt out of renter’s insurance. But try doing the math on what you currently own, and you’ll be surprised how quickly things add up.
A full wardrobe of clothes, basic furniture, and a few simple appliances can easily amount to ten of thousands of dollars — all of which could be lost in the event of a fire, flood, or burglary. Then imagine how tough it would be to live without your belongings, especially if you have no way of replacing the, and you’ll see why renter’s insurance is important.
Renter’s insurance provides protection and peace of mind to both the owner and tenant. It’s a great way to weed out bad tenants and develop relationships with good ones.
At Oakville Insurance Brokers, we’re well-versed in renter’s insurance and can help you find a policy that suits your needs, call 905-845-0391 today or contact us here.