It is very common to see on the news that a fire, flood or other natural disaster has rendered a building uninhabitable. The next line is often that the tenants or owners did not have have insurance, leaving them without a home or possessions. This sounds extreme, but it could happen to you or someone you know – Statistics Canada says that less than 50% of renters purchase tenants/renters insurance. But, you say smugly, you own your home, so you are not affected by this. However, if you have a tenant, and they do not have renters insurance, you may also be at risk.
Are you aware of all the risks?
For tenants, there are various risks – some more obvious and than others – to forgoing tenants insurance. The obvious can be summed up by the unfortunate tenants in our news story example. They do not have a place to live and they have lost all of their possessions. However, it could be worse. Maybe one of them accidentally caused the building fire by forgetting to turn off their stove. Now in addition to being homeless, they are also financially responsible for the others in the apartment building who lost their homes and possessions, or worse, were injured in the fire. This may sound unlikely, but even small accidents can have significant financial ramifications. The pizza delivery man who slips on unshoveled snow on your property can sue you in court, as you are legally liable for any accidental injuries sustained on your rented property. Tenant insurance means that your insurer will deal with the court case, and pay your legal bills and any court settlements. Limits ranging from $1-2M are commonly available with most insurance companies.
Tenant insurance protects landlords too
Most homeowners have insurance – over 97%, in fact. But what if you have a tenant? Your home insurance covers the dwelling, but not the contents, or liability if someone on the property is injured. The assumption is that your tenant has the proper insurance to address these exposures, but we’ve already established that this is probably not the case. This means that you could be named in the lawsuit for any liabilities that happen on the property such as a guest of your tenant slipping on an icy path. You also need to get written confirmation from your insurer that they are aware that your property is being rented, or has a secondary suite. Failure to do so could result in your home insurance being void – a nightmare that could leave you at best out of pocket, or at worst, financially ruined. Communication in writing is key – both with your tenant, and your insurer.
Tenant insurance also covers the cost to remove, clean and store the tenant’s belongings while the house (insured by the landlord) is being repaired or rebuilt. If the tenant doesn’t have insurance, then the tenants are faced with assuming these out of pocket expenses – usually payable within days of the loss. This can obviously create a problem between the landlord and the tenant.
It is everyone’s best interest to make sure the tenant has insurance so the two parties don’t end up in a conflict over delayed repairs or who pays for contents removal and storage.
Tenant insurance myths
Why don’t more renters get insurance? They often believe that insurance is too costly or not applicable since they don’t own many valuables. But tenants insurance rates are usually substantially less than homeowners insurance and many insurers offer flexible monthly payment options. Renters also often incorrectly assume that their landlord’s home insurance will cover their losses. In truth, the contents of the home as well as any accidental injuries that occur on the premises are the tenants responsibility. Your landlord’s insurance also does not cover Additional Living Expenses such as the cost of a hotel or temporary living accommodations if your rental unit becomes unlivable due to an incident like a flood or fire.
Long term advantages to purchasing tenant insurance
Tenant insurance can set you up to save money down the road when a person up-grades to homeowners insurance. Having continuous insurance coverage will help a renter earn discounts ultimately will lead to cost savings. With claims-free and loyalty-based discounts applied, the insured is looking at a 15-25% reduction in premium. This can save you hundreds of dollars on homeowner insurance costs. So protect yourself now and gain a long term benefit.
Getting tenant insurance is easy with Reliance
Life is a series of unexpected adventures. Don’t let an unforeseen event in your home ruin you financially, especially when protection is so easy and inexpensive to come by. Call our tenant insurance specialists at: 604.255.4616
Getting proper insurance for tenants has never been easier. Our experienced and friendly insurance experts are just a phone call away to answer any questions you may have.