Do You Need Home Insurance When Renting?

Many people believe home insurance is strictly for homeowners, but that’s simply not true. In fact, most landlords require their tenants to be insured before moving in. Insurance is ideal in either situation, find out the difference between home insurance and tenant insurance to learn more about what each policy covers and does not cover.

If you’re a first-time renter that’s unsure about how insurance for tenants work, and whether it’s really necessary, keep on reading.

What is tenant insurance?

Also known as renters insurance, this important coverage protects those living in a leased house or apartment. Life is full of situations beyond our control. If your residence is affected by a fire or break-in, for example, renters insurance can come in very handy.

Typical coverage includes three basic benefits that will protect you after a covered loss.

Personal property

This will cover the cost of replacing damaged or stolen belongings, up to the limits of your policy. In the event of flood, water leakage, fire, theft or vandalism, renter’s insurance can help protect your belongings while any property damage caused by the incident will be covered by your landlord’s policy. Items can include furniture, clothing, and even jewelry. On the other hand, if you’re covered by homeowner’s home insurance while renting, it may not cover your belongings and if accidents occur, you may have to pay out of pocket for damages.

Liability

If a guest is injured while visiting your home, you could be held responsible. Liability protection will cover your guest’s medical expenses, property damage, and even legal fees if applicable.

Living expenses

Your home may become temporarily uninhabitable after a covered loss. Renters insurance can take care of additional expenses, such as hotel and food bills until you’re able to move back in.

Tenant insurance generally protects what’s inside the home, and don’t typically address what happens outside the home. External areas are often the responsibility of the landlord — as are damages to ventilation units, electrical wiring and heating systems. If you’re unsure, ask your insurance advisor what’s covered under your policy.

What happens if I don’t have tenant insurance?

You won’t be breaking any laws by not having renters insurance, but that doesn’t mean it’s a smart idea to ditch it altogether. Tenant insurance is completely optional but without this important coverage, you could be risking everything you own — plus your overall quality of life.

From family heirlooms to expensive electronics, think of all the valuables in your home. If there was ever a fire or burglary, these things would be destroyed or stolen. Without tenant insurance, you’d receive no financial reimbursement for your loss.

But doesn’t my landlord have insurance?

Yes, your landlord will likely have insurance. But it’ll protect their interests, not yours. Their policy will be designed to cover property damage, liability costs, and loss of rental income. What it won’t cover is the cost to replace your personal belongings, or provide you with liability coverage.

Do students need tenant insurance?

Although tenant insurance may not be a student’s first concern when going back to school, it should definitely be on their radar. Tenant insurance covers fire and water damage, theft, break-ins, and cost to repair or replace your damaged or stolen belongings – which is extra important for things like your laptop and bike.

Additionally, tenant insurance comes with liability coverage meaning, you’ll be covered in the event that you damage someone else’s property or cause accidental injury. With the hustle and bustle of university and college life, the chances of these events occurring are high and without tenant insurance, you could be looking at some unplanned out-of-pocket expenses.

What should I think about when purchasing tenant insurance?

If you’re interested in purchasing a policy, you’ll need to decide how much coverage you need, and a few other things. Here are some tips to keep in mind when determining your insurance needs:

• Complete a home inventory. Take stock of all your belongings to see how much personal property coverage you’ll require. Use a mobile app to make the process easier. Sortly is one of the most popular downloads on iOS, and Magic Home Inventory for Android will do the trick, too.
• Bundle your coverage. Many insurance providers offer big discounts when you bundle tenant insurance with an auto policy.
• Consider your deductible. This is the amount of a covered loss you’ll be required to pay out of your own pocket. Deductibles are usually $500 or $1,000. A higher deductible will lead to slightly lower rates – but a higher payout if you need to make a claim.

A small investment for peace of mind

Monthly premiums for tenant insurance can be quite affordable. According to Canadian Underwriter magazine, rates can start as low as $15 a month –about the cost of a few coffees per week. When you put it into perspective, that’s a small price to pay to know your belongings, and your future, are well taken care of.