Why Both Tenants & Landlords Need Tenant’s Insurance

Jan 11, 2018
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According to the Insurance Bureau of Canada, only half of all renters have any kind of tenant’s insurance. That’s not great. If you break things down by demographics though, those numbers get even worse. A majority of young renters don’t seem to see the need for any kind of insurance on their belongings or rented space.

This isn’t just bad news for renters, it’s bad news for everyone.

What many people don’t seem to know is that tenant’s insurance isn’t just good for renters, but for landlords as well. A simple, affordable policy can help avoid financial strain, stress, and bitter legal disputes down the road. There are excellent reasons for both renters and landlords alike to make sure a they are covered by a tenant’s insurance policy, so landlords should be doing everything they can to encourage their younger tenants to get one.

Landlord’s Insurance Doesn’t Cover a Tenant’s Belongings
As a tenant, it’s easy to assume that all insurance is the landlord’s responsibility and not something you need to worry about. In reality, this isn’t exactly true. While it is your landlord who is responsible for the building and must insure it, your property – the things you own and love – won’t be covered under their policy.

For example, let’s say there is a break in and your apartment is ransacked. The landlord’s insurance will cover the busted window and popped locks, but you’re on your own when it comes to your TV, phones, jewelry, and furniture that was stolen. The same would be true if there was a fire or any other kind of disaster that ruined your property. The landlord’s insurance will only protect the building and their interests, not yours.

So tenant’s insurance makes sense for the renter, but why should a landlord care?

Tenant’s Insurance Makes the Landlord’s Life Easier too
Just because you have landlord’s insurance doesn’t mean you want to address every single problem on your own policy, that is only going to increase your premiums, and potentially the premiums on any other property that you have covered under the same policy. Tenant’s insurance puts another potential path to resolution on the table when it comes to damages and disputes.

Let’s say one of your tenants does something silly. Through negligence or mistake, they accidentally harm one of their neighbours, either through property damage or personal injury. Normally, this would place you, as the landlord, in the middle of an awkward situation where someone is coming after you for compensation over something one of your renters did. After all, who else are they going to pursue if you’re the only one with insurance? However, if the offending tenant has tenant’s insurance, that protection can be used to settle disputes like this – keeping you clear of the situation and protecting your own premiums from increasing.

Or, what happens when a tenant causes damage to your property? If one of your renters gets distracted while making dinner and causes a small grease fire, guess who usually gets stuck with the bill for repairing the property? True, tenants are responsible for any damages they cause, but this is the kind of situation that often ends up in dispute. If a tenant is unable or unwilling to pay for the damages, they’ll drag their feet, argue that it wasn’t their fault, and do whatever they can to get out of it. Meanwhile, you still need to hire a cleanup to crew get the stench of smoke out of the building and repair the walls.

Of course, if they have tenant’s insurance, the whole situation is much simpler. Their insurance covers the damage and everyone is happy. No arguments, no ugly hearings or tedious mediation, no accusations and recriminations, just a simple solution everyone can be happy with.

Tenant’s Insurance Provides Affordable Peace of Mind
One of the best things about tenant’s insurance is that for everything it does, it is surprisingly affordable. Premiums are relatively low – depending on factors such as the renter’s insurance history, the location and condition of the building. The annual expense generally ranges somewhere between $100-$500, or about $10-$40 per month.

As a tenant, especially a young tenant who sees their current living situation as temporary, it might not seem like insuring your old hand-me-down couch, beat up mattress, and rickety chairs makes much sense. But take a second to really think about what it would cost to replace those things if they were lost in a fire or other disaster. Even if you went to a second-hand store you would pay a few hundred just to replace the bed and couch, let alone your TV, laptop, clothing, and everything else.

From a landlord’s perspective, the benefits outweigh the costs to such an extent that it makes sense to require tenant’s insurance from a prospective renter. In fact, you might even go a step further and agree to knock a certain token amount off the rent if a tenant provides proof of insurance. Really, what is ten or twenty dollars a month compared to the peace of mind of knowing that your property is fully protected?

Tenant’s insurance protects everybody. It reduces risk from both parties, avoids conflict, and encourages the kind of long-term stability and commitment that both landlords and tenants depend on. No matter which side of the equation you’re on, tenant’s insurance is one of the wisest investments you can make for your future security and happiness.

We’re here to chat: Contact a licensed Staebler broker to discuss tenant’s insurance options.



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