What Is Renters Insurance?

Oct 29, 2019

Renters Insurance, also called Tenant Insurance, is an often overlooked type of insurance policy.  Who needs to buy Renters Insurance?  What is covered by Renters insurance?  What are the differences between Renters insurance on a house vs. apartment?  We have these answers for you and more.

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Is Tenant Insurance Mandatory?

No, Renters Insurance is not mandatory.  By “not mandatory,” we mean that legally it is not required in the way that auto insurance is.  But just because it’s not legally mandatory, you shouldn’t overlook this type of insurance. This can be a mistake.

If you are renting an apartment or house and you have belongings, you really need Renters Insurance.  In addition to covering your belongings, most landlords also require you to have tenant insurance as a condition of your lease.  So while not legally mandatory, it may be contractually mandatory to even obtain an apartment.

What Is Covered Under Renters Insurance?

Contents Coverage

Well, Renters Insurance policies are all very similar. There is coverage for your contents such as furniture, clothing, your personal belongings.  You can choose a limit or amount to insure for.  Generally, you would start at $30K and go from there.  The biggest objection we hear from clients is “I don’t own very much; do I need Renters Insurance?”  Often people are surprised to realize how much they actually own. Think of how much it would cost to replace all your clothes, all your furniture, etc.  The numbers add up quickly!

It is also important to know that “contents” coverage does not necessarily cover everything.  There are some special limitations of coverage for valuable items such as jewelry, sporting equipment, musical instruments and collectibles such as coins or art.  You may want to add a “floater” to your policy which specifically insures these items for an extra price.  Ask your broker if you need extra insurance on jewelry such as wedding rings; this is the most common request.

Third Party Liability

Renters Insurance also covers you for Third Party Liability for bodily injury or property damage.  That’s a mouthful!  In plain English: it means anything that you do, unintentionally, to cause injury to someone or something.  Do you have friends or family over?  Of course you do!  If someone slips on your floor, has a few too many drinks, you give them too many cannabis cookie - Think of anything that could go wrong.  You can get sued for injury and lose everything you own or ever will own.  Tenants Insurance covers you for that liability.  It’s not just about your belongings.  This is why Renters Insurance is a must-have.

Other Coverages

  • There are some other coverages which can be very important such as Additional Living Expense if you need to live in another apartment while yours is being repaired.
  • There is Tenants Legal Liability in case damage is caused to your unit and your Landlord sues you.
  • There may also be coverage for Flood, Identity Theft, E-bikes or other items which may be important to you. 

The rule of thumb is: If something is important to you, ask your broker about it.  It can usually be covered.

Tenant Insurance on House vs. Apartment

What is the difference between insurance on a house vs. apartment?  In general, these two insurance policies can be very similar except for a few items.  Home Insurance will also cover the building whereas Tenant Insurance only covers your belongings since you do not own the building; you are only renting it.

If you are renting a house or a portion of it such as the basement or one of the floors, you need Renters Insurance not Home Insurance.  It’s simple: If you own a house, you need Home Insurance.  If you rent a house or apartment, you need Renters Insurance.  If you own a condo you need Condo Insurance.  If you rent a condo, you need….Renters Insurance, you got it!

Where this can get complicated is if you own a house, condo or apartment building and you are renting it out to others.  That’s a whole other ball of wax.  You’ll need Rented Dwelling Insurance for that or even a Commercial Insurance policy depending on how many properties you own.  Some people buy an investment property such as a condo and purchase Tenant Insurance.  This is a big mistake since you’re actually not covered for anything by doing this.  A good broker can find the appropriate coverage for you if you own rental properties.

Bonus Tip 

Renters Insurance can be made easy and prices can start at just a few hundred dollars per year to cover all of your belongings and give you peace of mind.  In addition to this, you will be building up claims-free rating, which is similar to a credit score. This will help your prices go down once you eventually buy a home or condo!

Get a free quote or buy directly online now here. Or feel free to give us a call. We’ll gladly help you find what you need.

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