Landlord Insurance: What Is It & How Does It Work?

Do you own multiple residential properties? Then you’ve likely been thinking about transitioning one into a rental property. Renting out a residential property is a fantastic way to generate additional income with a small amount of effort. All you have to do is spruce up the place, find renters, and voila! 

You’re officially a landlord!

But, before you start advertising your space and looking for potential tenants, you should take a minute or two to learn the ins and outs of landlord insurance in Canada. Landlord coverage is an extremely important aspect of owning a rental space, as it can financially protect you and give you peace of mind.

Continue reading to learn the basics of landlord insurance Canada.

What is landlord insurance and why is it important in Canada?

In short, landlord coverage is a type of insurance that financially protects rental property owners from unforeseen losses related to their detached home, duplex, condo, etc. 

In most cases, landlord insurance features the following types of coverage:

Property damage — Landlord insurance covers damage to the rental property (floors, heating and cooling appliances, walls, furniture, etc.) caused by a covered event, like fires and heavy winds if you are renting out an owned condo. This aspect of landlord coverage is important because it financially protects you if an unforeseen event damages your rental property. If you are renting out a detached home, duplex, etc. your landlord insurance also covers the physical building and outbuildings (garage, pergola, deck, etc.).

Rental income replacement — Landlord insurance rent coverage ensures the replacement of lost rental income when a tenant vacates the property due to a covered loss (for example, the rental property burns down and the tenant needs to relocate while the space is being re-built). This aspect of landlord coverage is important because it ensures that you don’t miss out on any rental income from your tenants if an unforeseen event renders your property unliveable.

Third-party liability coverage — Landlord insurance covers legal expenses if a third-party injury, death or property damage occurs on the rental property and the claim is caused by negligence on landlord's part. This aspect of landlord coverage is important because it financially protects you from legal fees.

Landlord insurance isn’t required by law in Canada, but we highly recommend investing in a policy. If one of these instances occurs and you have landlord coverage, you won’t have to cover the losses by yourself.

Please note that landlord coverage does not financially protect tenants — tenants who want to protect their belongings can speak with their Surex insurance advisor about purchasing tenant insurance (more on tenant insurance shortly).

Is landlord home insurance different from traditional home insurance in Canada?

Technically, there is no such thing as “landlord home insurance” in Canada.

Landlord coverage and home insurance are two separate products with their own sets of rules, regulations and coverage levels.

Homeowners insurance is meant to protect properties that policyholders live in, whereas landlord insurance protects a property that is rented out by tenants.

That being said, if you live in one portion of a property and rent out the other (for instance, you rent out the basement of your duplex and live on the upper floor), you can invest in both home and landlord insurance or amend your current homeowner’s policy to include coverage for the rental suite.

Be sure to chat with your Surex insurance advisor about the best way to protect your property if you share it with a tenant.

Landlord insurance Ontario — does it protect tenants?

As mentioned earlier, no, landlord coverage does not protect tenants in Ontario or any other Canadian province. Landlord coverage is meant to protect the building, property owner’s belongings and other aspects of the property that are listed on the policy.

Tenants that want to financially protect their belongings can speak with their Surex insurance advisor about the benefits of investing in renter’s insurance.

Renter’s insurance protects tenants’ belongings from risks like theft, vandalism and other unforeseen events, like house fires. Renter’s insurance policies also feature third-party liability coverage, which adds an extra layer of protection. All in all, renter’s insurance provides tenants in Canada with peace of mind.

Bonus — Want to learn about the benefits of purchasing tenant insurance as a post-secondary student in Canada? Click here for more info!

Is landlord insurance expensive in Canada?

The average price of landlord coverage in Canada is comparable to a traditional homeowners insurance policy.

That being said, the price of landlord coverage is heavily influenced by a number of unique and individualized factors.

Some of these factors include:

• Size of your deductible
• Types of items covered
• Location of the rental property
• Value of the rental property
• Type of heating
• Type of endorsements added, like sewer backup and flood coverage

Be sure to keep this in mind before making a final decision about purchasing a landlord insurance policy for your rental space.

Want to save on insurance in Canada? Start by contacting Surex!

Are you looking for your very first insurance policy? Have you been thinking about shopping around for a new provider? If so, you should reach out to your Surex insurance advisor as soon as possible!

At Surex, we do everything that we can to make finding high-quality car, home, tenant, etc. insurance quotes as fast and straightforward as possible.

Unlike insurance agents (who “push” products from a single insurance company), our team of advisors (also known as insurance brokers) works with a variety of reputable carriers throughout the country. Working with a variety of insurance companies gives us the ability to supply you with a number of unique, personalized quotes from Canada’s top insurance carriers.

Not to mention, we can help you find and compare quotes over the phone and online. Offering multiple options gives you the flexibility to pick the platform that you feel most comfortable using.

Call or visit our site today to receive a collection of car, home, renter’s, etc. insurance quotes in ten minutes or less!

What have you learned about landlord insurance Canada?

As you now know, landlord insurance for rental property may not be legally required, but it’s still an essential asset for rental property owners in Canada. 

As a reminder, landlord coverage does not protect tenants — tenants that want to protect their belongings can invest in a renter’s insurance policy.