What is tenant insurance? – MoneySense

What is tenant insurance? 

Tenant insurance is a form of home insurance that protects renters and their personal belongings from theft, fire loss and other common risks. If something happens to the possessions on your property, tenant insurance covers the cost of replacing or repairing them.

It also protects renters against liability. According to the Insurance Bureau of Canada (IBC), tenants are legally responsible for property damages—accidental or otherwise—and for any injuries their visitors may suffer. If you’re not properly insured and you cause a grease fire that results in smoke damage to your apartment, you could owe for more damages. Say, your neighbour’s apartment and communal areas outside of your rented space, you’ll have to cough up all the related expenses. Similarly, if someone slips and falls in your rental, financial responsibility falls squarely on you, not the property owner. Tenant insurance is there to protect you in instances like these.

Watch: What is Tenant Insurance?

What’s covered by tenant insurance? 

Basic tenant or renter’s insurance policies typically include three different types of coverage: 

Contents insurance: This covers the cost of replacing or repairing the items in your rental, if they are damaged or stolen. Policies typically include contents coverage up to a specified dollar amount. In some cases, it may not cover all your valuable possessions (like fine jewellery and collectibles, which are subject to coverage limits), so be sure to discuss what items are covered before purchasing a policy. If you need, you can purchase additional contents coverage.

Liability coverage: This covers the cost of lawsuits brought against you, if someone is injured in your home or if you cause an accident that damages someone else’s property. Most basic insurance policies offer $1 million to $2 million dollars in liability coverage. Always confirm the amount of liability coverage included in your policy, because you can raise or lower the amount of coverage based on your needs.

Additional living expenses: If you have to leave your rental space while it’s being repaired, this coverage will pay for additional expenses, like hotel bills, meals and moving costs (also subject to limits). The key word here is “additional.” This means it will cover anything above and beyond your regular expenses. So, for example, if your rent is $1,500 a month and you now have to pay $2,000 a month to stay in a hotel, your insurance will cover the additional $500 a month.  

What’s not covered by tenant insurance?

Certain perils are excluded from tenant insurance, unless otherwise stated in the policy. These include: