Tenant Insurance, also called renter’s insurance or content insurance is very similar to a home insurance policy. The main difference is that there is no coverage for the building or house. That is the responsibility of the landlord who owns the property and this coverage is not extended to the tenant. For example, in the event of a fire, theft, vandalism, water damage, etc the tenant is responsible for his or her expenses to replace items lost, renting a new place during repairs, or any legal cost for damage caused to others.

Tenant insurance coverage is specifically designed to protect a tenant’s personal property, liability, and additional living expenses in the event of a claim. Often, renters take tenant insurance to cover their contents such as jewelry, electronics, clothing, furniture, sporting equipment, etc.

Although tenant insurance is not mandatory in Ontario, it is very much recommended as it benefits both the Landlord and tenant. In some cases, lease agreements will include a requirement for the tenant to have an insurance policy. However, this stipulation is put in the lease by the individual landlord and is not a requirement of the Government.

For the landlord, the tenant’s insurance adds a layer of liability protection. If someone is hurt on the rental property, the tenant’s policy would respond first. It also helps reduce the possibility of a lawsuit and mitigates any possible disputes. If an incident does occur, without coverage the tenant might try and blame the Landlord, leading to unnecessary legal fees and court battles. Tenant’s insurance can also act as a screening tool for potential tenants as it could be a red flag if the tenant will not insure themselves.

Also, if there is a claim, a Landlord’s insurance premiums can increase or be canceled if there are too many claims. If a tenant has renter’s insurance, it may cover all or a portion of the loss which can potentially lower or prevent the Landlord’s premiums from increasing.

Renter’s insurance is very affordable for the tenant and can vary depending on the following:

  • The amount of coverage chosen
  • the city rental property located in
  • the type of structure (i.e. apartment, condo, townhouse, house)
  • which insurance company is used
  • any claims history

If the landlord requires the tenant to have insurance, they can require the tenant to provide proof of that insurance only once, or on an annual basis. Looking out for your renters shows that you are not only concerned about receiving their monthly payment but that you are a responsible and reputable Landlord.

Requiring renter’s insurance gives the Landlord peace of mind that your tenants have a recourse to recover losses and are properly covered. Whether the rental property is an apartment building or house, having an insurance policy to protect the tenant and their belongings is always a good idea.

Have other questions? ACCL Property Management can help. Contact us to discuss your property management needs.

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