If you rent your home, tenant insurance—sometimes called renters or contents insurance—is something you’ll want on your radar. It protects what you own, covers you if someone gets hurt in your space, and can even pay for a place to stay if your rental becomes unlivable due to a covered loss. Some policies go the extra mile with optional perks like identity theft protection.

All of these different coverages are rolled up into one inexpensive and easy to get insurance policy. Yet, despite all it offers, tenant insurance is often misunderstood and confused with landlord insurance. Let’s fix that!

How does tenant insurance work?

As a renter, tenant insurance protects your money interests. You’re the policyholder. This means you’re the one who can submit a claim, if needed, and you’re the one to get any payout coming when approved. It’s a myth the landlord’s policy will do the same for you which is why it’s so important to have your own coverage. Renters insurance looks after you, while your landlord’s policy looks after them.

What is covered by tenants’ insurance?

Tenant insurance is about more than your personal belongings – which is why calling it ‘contents insurance’ doesn’t really cut it. Here’s why. A standard tenant insurance policy includes coverage for:

·      Your personal belongings (all of the stuff you own) whether it’s at home, in your car or with you while travelling.

·      Your liability if you unintentionally cause injury to someone or damage their property. Stuff like this could end up in a lawsuit and this liability coverage will help defend you against it.

·      Extra expenses if you can't live in your home because of an insured loss , like fire. You’ll get financial relief to help you find, and move into, a new short-term place to live.

There are optional coverages you can add to your policy too. They cost extra but are definitely worth considering.

For example, not all water damage is covered under a standard tenant insurance policy. With some optional coverages – sewer backup and overland flooding – your belongings will be protected, your costs will be offset if you need to temporarily move, and repairs for improvements or renos you did will be covered as well.

·      Sewer backup insurance will cover damages when water backs up or escapes into your rental through a sewer, sump, septic tank, or floor drain.

·      Overland flooding insurance will cover damages when water enters your home through ground-level windows or doors. Torrential rains, melting snow and spring run-off are common culprits when the weather outside comes indoors.

Did you know? About 40-50% of renters go without tenant insurance.^{1 2} You might think you don’t have much to insure, but you do. Look around your home. From your bedroom and closet to your living room and kitchen, you have big ticket items. And, the cost to replace them will add up quickly, especially if you have to do it all at once.

Is tenant insurance legally required in Canada?

No, having tenant insurance isn’t required by law, unlike auto insurance.

That said, your landlord is allowed to make it a condition of your rental or lease agreement. You may even be asked to show proof of a policy if it is. But you don’t need to share all the policy details with them. Instead, you can easily get a one-page Certificate of Insurance from your insurer. This will only include high-level information like your name, address, and coverage details and will do the trick as proof.

Whether tenant insurance is required by your landlord or not, having it is a good thing. Accidents happen and no matter how careful you are, your neighbours might not be as diligent. Tenant insurance can help make you financially whole again so you can replace what you’ve lost when things go wrong.

Can I get evicted for not having renters insurance?

In short, the answer is no if it wasn’t a prerequisite when you first moved in. Renters insurance isn’t required by law so you can’t be evicted for not having it. But a landlord can require a tenant to have it as part of the original lease agreement. In this case, you do have to have it, but it must be stated in the agreement’s paperwork.

Do I need tenant insurance?

YES! (Sorry, didn’t mean to shout there.) Even if your landlord doesn’t require you to have it, renters’ insurance is worth it – even if it’s just for the security of knowing you’ll be okay. Here’s some food for thought while you decide:

·      Fire insurance claims average about $56,000. It’s not just the fire itself that causes damage; it’s the smoke and water too.³

·      Whether it’s theft, water damage or fire, the average renters’ insurance claim adds up to about $5,900.⁴

·      Roughly 40% of renters own a cat or dog. Your tenant insurance could offer some coverage related to pet liability as well as damage to other people’s property.⁵

What are the benefits of tenants’ insurance?

Having tenant insurance doesn’t stop bad things from happening but it will come in helpful when bad things happen.

·      Guidance and advice: Your insurer can help you at a time when you’re most stressed. The unknown is scary but your insurance claim won’t be your insurer’s first - by a long shot! They’ll know what to do, even when you don’t.

·      Access to pros: Many insurers have trusted partners they work with. From lawyers to contractors, your insurer can usually refer you to experts in the field.

·      Financial security: When ‘it’ happens, it’s usually costly - but not if you have tenant insurance. With tenant insurance, your out-of-pocket expenses are usually limited to your deductible.

How much is tenant insurance?

We crunched the numbers and found that $382 per year is the median cost of tenant insurance with Sonnet. Some pay more, some pay less. To put this cost into perspective, you can get renters insurance for a whole year for the average cost of two concert tickets for one night! Or, if concerts aren’t your thing (but numbers are) it comes out to about $1.05 per day. A Loonie and a nickel!

Why do ‘some pay more, some pay less’ you might ask? It depends on everyone’s unique info. Your cost, for example, will depend on:

·      The amount of coverage you need. How much would it cost to replace your furniture, clothing, housewares, electronics, and all the other stuff you own? It’s more than you think.

·      The property type. A condo or apartment often costs less to insure than if you rent a whole home. There’s simply less space to fill with possessions and keepsakes.

·      The location of your rental unit. How close is the nearest fire hydrant or station? Is the neighbourhood prone to claims? Things like these, will affect what you pay.

·      Your claims history. It’s true, past claims are used as a way to predict the future. A single claim isn’t usually a red flag, but it’s safe to say that repeat claims are.

How to choose the best tenant insurance policy

You’re already well on your way - the fact that you’re doing what you can to learn about the ins-and-outs of tenant insurance deserves a high-five! The rest is easy peasy: 

·      Size up how much coverage you need for your belongings. With Sonnet you can choose from $30,000 to $250,000 in coverage.

·      Get a tenant insurance quote. Whether it’s with us or not, get a quote. You’ll see how affordable rates truly are and how much protection a policy offers.

·      Buy the policy that offers you the coverage you need at the best price. You can buy a policy online, in minutes. And, with Sonnet you can rest easy knowing that online doesn’t mean on your own. 

Rent can be expensive, but tenant insurance isn’t. Why risk going without, when having it will give you peace of mind knowing that your stuff is protected.

Sources
1 https://www.cbc.ca/news/canada/toronto/displaced-st-james-town-fire-struggling-without-insurance-1.4805210
2 https://canadianunderwriter.ca/news/industry/how-many-canadian-renters-lack-tenant-insurance/
3 Average fire claim based on Sonnet tenant insurance claims paid out in 2021.
4 Based on Sonnet tenant insurance claims paid out in 2021.
5 Sklar Wilton, Sonnet Consumer Segmentation and Brand Growth Study, 2021.