What is tenant insurance and why do you need it? A guide for renters in Canada

When you’re looking to rent a place, there are some important decisions to make. You have to find the right place, plan your budget and understand your responsibilities. And there’s another big question: Do you need tenant insurance?

In this article, we’ll look at how tenant insurance (also known as renters insurance) protects your personal belongings and covers your liability, plus what to consider when choosing your coverage.

You’re not legally required to take out tenant insurance in Canada, but it’s an excellent way to help with unexpected expenses you may face if you experience a covered loss, so you can enjoy peace of mind on a day-to-day basis. 

Tenant insurance is an insurance policy that protects your personal belongings (the contents of your place) against covered risks like theft or fire, for example. In other words, it’s contents insurance for the things you own. But that’s not all! It also includes liability coverage, which protects you in case you accidentally harm someone else or damage their property.   

Wondering why you should insure a place you don’t even own? Doesn’t landlord insurance have you covered? Actually, your landlord's property insurance covers the building itself, and things like the roof and the plumbing. It doesn't cover your possessions or your personal liability. So if, say, your sink overflows and water leaks, causing water damage to your furniture or electronics, the loss typically won’t be covered by your landlord’s insurance policy.   

And if someone gets hurt or their things are damaged while they're at your place, without tenant insurance, you won’t have protection against any bodily injury or property damage you’re held responsible for.

Also good to know: Although you're not legally obliged to take out renters insurance in Canada, your landlord might require it.  

A tenant insurance policy protects you in a variety of situations.

Most renters insurance policies cover common risks like fire, theft and certain types of water damage. They also cover your liability. But what if you want extra protection or higher limits for jewelry or art? Or for things like groundwater damage or sewer backup, or even earthquake coverage? Optional coverages are a way to personalize your protection to meet your own specific needs.

Home insurance claims for water damage are increasing at a considerable rate across Canada, according to the Insurance Bureau of Canada. Water damage can be caused by many things, including a leaky roof, burst pipes or even a sewer backup, and it can cause significant damage. To learn how to protect yourself, check out our guide to water damage.

Have you ever tried to add up the value of everything you own? Even if it seems like you don’t have that much stuff, you might be surprised at the total. So you have to ask yourself: Could you afford to replace everything if something happened? 

Computers, bicycles and appliances aren't cheap, but tenant insurance generally covers the cost to repair or replace your personal items, under certain conditions. If the things you own are worth a lot of money though, you might want to consult with your insurance provider to make sure you have enough coverage.  

As previously mentioned, liability coverage is automatically included with your tenant insurance. It protects you if you accidentally cause bodily injury or property damage to someone who doesn't live with you. The best part? It goes with you everywhere, even outside the country. If, say, you forget to turn off the faucet in your hotel room, you could be covered. This coverage could also take care of legal expenses and compensation you may be required to pay if you’re sued.

If your tenant insurance covers a loss (like fire damage), it might also cover additional living expenses you may incur. The cost of temporary housing while you're not able to return to your home as well as meals and transportation are examples of additional living expenses. 

Tenant insurance doesn't cover everything though, and different insurance companies may have different exclusions. For example, water damage from natural disasters or underground events (like sewer backups or inland floods) usually isn't covered by basic policies. Earthquakes are often excluded as well, though optional coverage may be available. To make sure you have the coverage you need, it's best to talk to your insurance provider.

Choosing the right tenant insurance isn't just about finding the lowest price. You also want to take a close look at what's covered, what isn’t and the specific conditions of the policy. And before you start shopping around, it's really helpful to make a list of your belongings so you'll have a better idea of how much coverage you'll need.  

When it does come to cost, a number of factors play in. The type of coverage is one of these factors. For example, is it an "all-risk" or a "named perils" policy? All-risk generally costs more but offers more comprehensive protection. Named perils policies only cover the specific risks listed. There are pros and cons to both—the key is to find the coverage that meets your specific needs. 

To make an informed decision, focus on the factors that will matter most if something goes wrong. Before you buy your policy, be sure to look at: 

Your deductible: This is what you pay out of pocket if something happens. A higher deductible may lower your premium somewhat, but you want to make sure you can afford to pay the higher deductible if you have to make a claim. 

Your coverage: Compare the total estimated value of your personal property to your policy’s coverage limits to make sure you have enough coverage. 

Exclusions: Some risks (like earthquakes and certain types of water damage) are typically excluded. Check to see if you need extra coverage to fill in any gaps. 

Once you've got a good idea of what you need, take the time to shop around until you find the right combination of price and coverage. Don't settle for the first quote you get!

• Compare prices and coverage: Get at least two quotes so you can see the differences in cost and coverage.
• Understand the policy: Talking directly with different insurers can help clear up any questions so you know exactly what’s covered and who you should contact if you ever have to make a claim. 

Just like auto insurance, tenant insurance premiums can vary. They depend on things like the value of your belongings, where you live, your claims history and any optional coverages you add to your basic policy.

Your tenant insurance premimum isn't just a random number—it’s based on various factors, such as: 

• Value of your belongings: Your premium depends largely on how much coverage you choose. A higher coverage amount could increase your premium, while a basic amount may lower it.
• Where you live: A densely populated neighborhood with a higher risk of theft or vandalism can mean a higher premium, while a rural or low-risk area might mean a lower one.
• Type of dwelling: The costs for apartments, condos and houses can differ.
• Your claims history: If you’ve submitted multiple claims in the past, your premiums could be higher.
• Your deductible: A higher deductible may help lower your premium, but make sure you can afford to pay the additional amount out of pocket if you have to make a claim.
• Safety features: Installing a monitored security system or water damage prevention devices (automatic shut-off values, leak detectors or backflow prevention systems) could reduce your risk—and your premium.

There are things you can do to lower the cost of your tenant insurance without compromising on coverage. Some of these simple measures can save you money each year: 

1. Increase your deductible: A higher deductible could help lower your annual premium but make sure you can afford it if you have to make a claim.
2. Bundle your insurance: Some insurance compagnies offer multi-line discounts if you combine home and auto insurance.
3. Choose a group plan: You may be able to access group insurance rates if you're an alumnus of certain schools, or professional association, if you're member of certain professional associations.

On average, tenant insurance costs between $150 and $600* a year (that’s less than $35 a month on average). And here’s something you might not know: The cost has nothing to do with how big your home is. You could live in a small apartment with a lot of expensive stuff, or you might live with your family in a big house with relatively little to insure. And keep in mind that basic coverage varies by insurer: A lower price might not be better for you if it means less coverage.

If you’re trying to choose tenant insurance that really fits your situation, there are a few things you might want to think about:

• Protect your belongings (and yourself): Tenant insurance helps you avoid significant financial losses if you have a covered loss and need to make a claim.  It could also cover your personal liability if you accidentally cause damage or injury to someone who doesn’t live with you.
• Figure out what you need: Take the time to compare coverage options, exclusions and deductibles so you can find a policy that’s right for you. 
• Ask for advice: An insurance agent or broker can walk you through what’s covered (and what’s not) so you can make an informed decision.
• Get started: You can get a quote online or reach out to your insurer when you’re ready to move forward.

Find the right coverage for your needs and get a quote.

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* Cost estimate provided for informational purposes only.

These tips are provided for information and prevention purposes only. They are general in nature, and Desjardins Insurance cannot be held liable for them. We recommend using caution and consulting an agent for comprehensive, tailored advice.

Certain conditions, exclusions and limitations apply. They are subject to change or termination without notice and may vary by jurisdiction. The terms and conditions of the coverages described are set out in the insurance policy, which always prevails.