How Much is Tenant Insurance

Tenant insurance, also known as renter’s insurance, is a type of insurance that is commonly ignored.
When thinking about home insurance, most renters think of the big stuff such as appliances, the
physical structure in a house or the whole building. And these are insured by the house owner.
Tenant insurance is not costly. And it comes in handy when your personal property is destroyed or
even stolen. Think of that expensive watch. Or your furniture. Whether your landlord has insurance,
you still need insurance to safeguard your personal property against the insured perils.

What is tenant insurance?

This is a type of insurance that protects renters’ property within the home they are renting from
insured perils. Tenant insurance provides coverage for:
Contents insurance- This provides coverage for your contents. For instance, most renters have all
cherished items in their homes be it the TV, furniture, laptops and expensive jewellery. The damage
or theft of these personal belongings can be expensive to replace or even repair. And even if they
are relatively safe in your home, accidents such as fire, floods and even theft can still occur. Tenant
insurance even extends beyond your home. For instance, if your laptop is stolen on the way to the
office, tenant insurance will likely help with the replacement cost.
Liability insurance- This coverage helps renters cater to costs associated with damage to other
people’s property or if someone gets hurt in their home. For instance, a visitor might trip and fall,
resulting in serious injuries. Similarly, you may damage your neighbour’s property through water
damage by leaving a tap open. The cost of replacing the property or catering to the medical needs of
the injured visitor can be expensive, hence the need for this coverage.
Additional living expenses- This provides coverage for living costs incurred if the rented space
becomes inhabitable due to the occurrence of an insured peril such as fire or flood. It can also cater
for transport and meals until the renter returns home.

So, what is the average cost of tenant insurance in Canada?

Tenant insurance is very affordable. While the cost is determined based on different factors, the
average cost of tenant insurance in Canada ranges between $15- $25 monthly (usually for the lower end policies for people with less than $40K worth of contents in their home) and $180- $300
annually. As we mentioned, different insurers provide different coverage. As such, ensure you are
aware of the coverage provided for each peril as well as any exclusions. For instance, most insurance
providers set limits to specific items such as jewellery.

What factors affect the rate of your tenant insurance?

● Your possessions- How many possessions are you safeguarding? What is the value of your
possessions? Insuring high-value items such as jewellery will raise the cost of your tenant
insurance. Some insurers even put a cap on the replacement cost of some items such as
jewellery.
● Your location- Living in a place that is more prone to risks affects the cost of your tenant
insurance. For instance, people who live in areas with more cases of theft, vandalism, break-
ins or flooding will pay more than those who do not. Proximity to essential emergency
services such as fire services can also lower the rates of your tenant insurance.
● Building specifics- You might wonder why your insurer is enquiring about the specifics of the
building such as the age, heating type and even the square footing. Also, whether your home
is in a high-rise apartment building or basement unit ultimately affects the cost of your insurance given the variance in exposure to risks. People located in basement units may be
more exposed to some risks such as floods compared to those in high-rise apartment
buildings.
● Your claims history- How many theft cases or flooding claims have you made in the past? A
significant number of claims may mean that you are a high risk to insure. To safeguard
themselves, your insurer will charge you higher rates. However, if you have a no claims
history, you will get better rates. You can even use this as a bargaining point for low
premiums.
● Your credit score- Persons with a high credit score end up getting better tenant insurance
rates. This is because there is a correlation between a person’s credit score and level of
insurance risk. All provinces, except Newfoundland, can use your score to determine your
insurance rates.
● Your liability limit- Increasing your limit ultimately increases your insurance rate. While a
standard limit for liability coverage is $1 million, increasing this limit ensures you get more
coverage if an insured peril occurs.
● Your deductible- The higher the deductible, the lower your premiums. While a higher
deductible is a clever way to reduce your tenant insurance premiums, ensure you can remit
the amount while making a claim without straining your finances.
● Additional coverages- You will come across lots of extras when customizing your tenant
insurance. Depending on the perils you are exposed to, additional policies increase your
coverage, but at an extra cost. Among the most common additional coverages include
overland water, full hail, identity theft, sewer backup, earthquake and protection for
valuable possessions.

How can you reduce the cost of your tenant insurance in Canada?

While higher insurance rates often translate to more coverage, you can still reduce the cost of your
tenant insurance and still be safeguarded against perils.
● Pay your tenant insurance annually as opposed to monthly- Remitting your premiums
annually will fetch you better rates as opposed to monthly.
● Bundle your policies- If you have other insurance policies, such as an auto insurance policy, bundling
the two will get you better rates from your insurer. This not only saves you money but also
simplifies the insurance processes such as remitting funds and making claims. A tip to this is
to ensure you bundle your policies with a reputable insurer. You do not want to get stuck
with an unreliable insurance company for all your policies. Moreover, bundling also saves on the auto insurance policy too, not just on the tenant policy.
● Raise your deductible- Increasing your deductible will fetch you lower premiums. However,
remember that you will pay out of pocket if an insured peril occurs.
● Only get the coverage you need- While the insurance rule is to NEVER under-insure, over-
insuring does not give you extra coverage than the market rates. As such, always insure for
things that you want to be covered based on the likelihood of risks occurring.
● Compare tenant insurance quotes with various providers- You would be surprised how
much you can save on the same coverage with different insurers. However, always do your
research, look out for reviews and referrals before settling for an insurance company.

Bottomline

While tenant insurance may seem like an unnecessary cost to some, it is worth every penny.
Accidents happen. Tenant insurance will save you the headache of replacing your items or even that
of your neighbour, among other provisions. Some landlords also require renters to have tenant
insurance before occupying a house.