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Is tenant insurance mandatory in Ontario?

by Corben Grant on 12 May 2022

Everyone deserves to feel safe and secure at home whether they rent or own. Though it may seem like a safe space, there are unexpected events that can go wrong at home and leave you with serious damage. Luckily, we have this great thing called insurance that can help you recover in these unexpected circumstances.

Just because you don't own the home you live in, that doesn't mean you can't be insured against damage to your property and belongings. In fact, tenant insurance can be relatively low cost and can prove well worth it when the situation arises.

If you are a renter, especially if you are renting for the first time, you may not fully understand how renters insurance works. Do I need to get it? How much does it cost? What does it cover? These are all common questions that renters have. Unfortunately, it is possible to go all the way to signing a lease without actually understanding when and why you should use tenant insurance. Tenant insurance is also great for landlords to know about because they will be able to advise their tenants on how to protect themselves. In short, tenant insurance can benefit both the tenant and the landlord.

In this article, we will cover everything you need to know about tenant insurance for rental homes and answer whether you should have a tenant insurance policy.

What is tenant insurance?

Tenant insurance, also known as renter's insurance, is exactly what it sounds like in the name. Similar to home insurance, renter's insurance protects you as a renter and your belongings in the event of an unexpected scenario like a flood or fire and other liabilities.

The important difference is that as a tenant, you do not own the building you live in. For this reason, it would be useless for you to pay home insurance (though you probably do pay for it in part and indirectly through your rent costs). Therefore, renter's insurance protects you and your belongings but stops short of the structure itself, which is the responsibility of the property owner.

What does tenant insurance cover?

There are three major areas that tenant insurance coverage is concerned with. These are your belongings, liability coverage, and living expenses. In general, the amount of coverage you have for your renter's insurance policy will be up to you to decide. Higher coverage may cost more and be a bit more involved in setting up, but you will be more protected as a result.

Contents coverage

The contents of your home are anything you own inside the unit. These can be big things like appliances and furniture as well as smaller things like jewelry, clothing, and electronics. You may own a lot of things that don't cost too much on their own, but the sum total value of all your belongings can be expensive and if you lose a lot all at once due to something like a fire, the cost of replacement can be prohibitive. Renter's insurance allows you to protect yourself by claiming some of the value of your belongings if they are destroyed.

Personal and legal liability coverage

Liability insurance protects you in an event where you are held legally responsible for injury to someone else or damage to their property. For example, if a guest slips and falls, you may be liable to be sued for their injury. Another example may be if you are responsible for a fire that damages other units or their belongings.

Additional living expenses coverage

It's one thing to try and replace your damaged belongings, but if your home is damaged to the point that you are unable to live there, the costs of relocating or finding alternative living arrangements can be very expensive as well. For example, if your rental unit catches fire, they may be able to repair the unit but for a time you will be required to live elsewhere. A tenant insurance policy that covers additional living expenses can help you in this scenario.

This coverage can help you to pay for a hotel or a temporary rental while your home is unavailable and can even cover things like food costs while you are displaced.

What is not covered by tenant insurance?

While tenant insurance can help you in many situations, it is not necessarily a catch-all. The things not covered by tenant insurance are generally excluded either for being the fault of the tenant, being too rare of a situation, or being beyond the scope of the policy. Here are some examples of things that are not covered:

  • Insect infestation
  • Damage to property by pets
  • Rare circumstances like earthquakes, tornados, or riots (area dependent)
  • Damage or theft to your car, even if it is parked at the home

Who pays tenant insurance?

As a tenant, your landlord has no responsibility to protect your personal belongings and it is your duty to take out a renters insurance policy if you choose to do so. Your landlord's insurance policy will cover the home itself, so you do not need to worry about covering those with your personal insurance policy.

Claims towards your tenant insurance policy will be paid out by your insurance provider. Your landlord has no obligation to provide you with any compensation if you do not have a tenant insurance policy.

Is tenant insurance mandatory?

In Ontario, tenant insurance is not legally mandatory. This means you do not need to take out a tenant insurance policy if you feel it is not necessary or you would like to save money, however, you do expose yourself to more risk in this scenario.

That being said, though there is no legal requirement to take out a tenant insurance policy, there is also nothing stopping a landlord from requiring it in their own lease agreement. A landlord is allowed to make acquiring tenant insurance a part of the lease terms and may require you to do so prior to, or shortly after, moving in.

Is tenant insurance recommended?

If tenant insurance is not legally mandatory in Ontario and your landlord does not require it, you might be wondering if you should bother getting it. The general advice would be that tenant insurance is recommended. The costs for even the most minimal insurance policy are minuscule compared to the costs that you could be hit with in the event of an accident.

Going beyond that, being sued, losing your belongings, or being displaced from your home can be very stressful experiences. This can quickly drain your finances and may even force you to take time off work, making it even harder to cover costs. In this instance, tenant insurance offers you an incredible value for peace of mind alone.

There is some added cost to tenant insurance and you may feel that you are willing to risk being unprotected to save some money. While this is a way to cut down on your expenses, there are far better ways that you can save your money and the amount you spend on tenant insurance can easily pay for itself should you ever need to make a claim.

Can I make a tenant get tenant insurance?

As a landlord, you can ask that your tenants get tenant insurance, but why should you? There are a few reasons you may want to ask your tenants to get insurance.

First of all, it’s simply in their best interest and they may not know about the option. By informing them or requesting that they do, you are in some ways doing your tenants a service.

There are also benefits to yourself as well. For example, if something goes wrong while the tenant is renting, they may come after you to collect damages. Whether or not this would be a legally sound attempt on their part, you will still need to deal with the process. By requiring renter insurance, you eliminate the possibility of any complications if something goes wrong.

Finally, by requiring any potential tenants to get tenant insurance, you can have some confidence that you are renting to reliable individuals. If a tenant is unable to be approved for tenant insurance, is unable to cover the added financial burden, or is simply unwilling, you may want to reevaluate if they are right for your property. Do I think people who aren't able to get insurance should be rejected from housing? No. But it is your choice as a landlord to do so if you see fit.

How much does tenant insurance cost?

The cost to the tenant for getting tenant insurance is going to depend on how comprehensive the policy is. The average cost of a basic tenant insurance policy in Ontario is about $300 a year, or about $20-$30 monthly. The cost of tenant insurance can go up as you add coverage for additional valuable items. Other factors like the type of building you rent, its location, your personal insurance, and your credit history can affect your tenant insurance rates.

You may also opt to pay a deductible, or a certain amount of money that you will personally cover on a claim. The higher a deductible you opt for, the lower your rates may be.

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