It seems that every other week, there’s a news story about another apartment catastrophe. From fires to floods, tenants are lucky to escape with their lives, nevermind their belongings. Think you’re covered? Think again. Here, Pete Karageorgos, Director of Consumer and Industry Relations at Insurance Bureau of Canada, shares what you need to know about renter’s insurance.
Don’t count on your landlord
While most homeowners wouldn’t think about buying a property without also getting insurance for it, many tenants, it seems, are happy to sit back and let the responsibility fall on their landlord. Except that’s not necessarily how it works.
“Perhaps 50 per cent of tenants have insurance,” says Karageorgos. “Though, I suspect the real number is much lower than that.”
While some tenants think that their landlord’s insurance will cover them too, in fact, they are mistaken.
“Landlord insurance is for landlords,” says Karageorgos. “It covers the landlord and the building. Tenants will need insurance to cover their own belongings and activities.”
There’s more than meets the eye
There’s also more to renter’s insurance than just your beloved record collection and designer shoes.
“Tenant’s insurance covers your belongings, but also your liability: If someone is hurt in your unit—they trip on your rug, say—and they can’t work and they sue you, or if you’re cooking and start a fire, and it damages the unit,” says Karageorgos.
While the landlord’s insurance might initially cover the repairs to the unit, if the fireman’s report comes back and says it’s due to the tenant’s negligence, the landlord can then sue you for their costs. “Liability insurance covers you if you’re sued or if you by accident start a fire or flood that damages the building,” says Karageorgos.
It pays to have a backup plan
Now let’s say nothing happened in your apartment, but in a different unit in the same building. You’re not on the hook, but you might still need to find somewhere else to live. In this case, not only will tenant’s insurance cover your belongings, but it will also cover the costs of additional living expenses.
“When people are forced from their units, maybe as direct result of fire or flood, or indirectly because local authorities say it’s unsafe to live there, tenants will have coverage under the additional living expense portion of their policy, to cover a hotel, food, and those things that are over and above what your normal expenses would be,” says Karageorgos.
Not all policies are created the same
When it comes to shopping for renter’s insurance, don’t assume all policies are the same.
“It’s critical when looking for insurance to sit down with the insurance representative and go through all the different scenarios, and all the different coverages available,” says Karageorgos. “Understand what perils/events you’re covered for—theft, water, fire, if a pipe bursts or the sewer backs up. Some policies might not cover things like power surges if it fries your television or computer unless you have the right kind of coverage on a policy.”
Of course, the price of your policy will be a consideration as well. “You have to balance your coverage with how much you can afford: your premium, and what sort of deductible you want to have—that’s the portion of your claim you have to pay first before the insurance picks up the rest,” says Karageorgos.
If you’re a student, there’s good news: Your parents’ insurance policy may cover you when you’re away at school. “It’s a question you need to ask your insurance representative,” says Karageorgos.
If you have roommates, however, be sure that everyone you share your space with has insurance too. “Everyone should have their own insurance policy to protect themselves,” says Karageorgos.
Ask lots of questions
Whatever insurance company you go with, make sure your policy has enough coverage to replace your belongings, says Karageorgos. “From a personal property aspect, it should cover all your belongings—not just furniture, but also clothing, linens, kitchenware,” says Karageorgos.
If you already have a policy, make sure you know what you’re covered for and if that provides you with all the protection that you need. “Even the same insurance company will offer different levels of protection. The more coverage available, the more it will cost you,” says Karageorgos.
In the end, tenant’s insurance is all about making sure you’re covered should disaster strike, says Karageorgos. “It protects you if you’re sued. It helps you replace your property if it’s destroyed or lost or stolen. It helps cover costs if you’re forced to find alternative accommodation because an event means that you can’t live in your unit. One never knows what they might encounter,” he says.
As the saying goes, better safe, than sorry.