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How do high interest rates impact Canadian renters?
Since early 2022, the Bank of Canada has raised rates ten times. This rapid run-up in its benchmark interest rate has st...
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Insurance is often looked at as the cost of owning something valuable. Homes, cars or other expensive items need protection from damage or theft. Replacement values can be high, and insurance provides peace of mind for items that would put a financial burden on someone if they had to pay out of pocket to replace them.
Tenants, while not being owners, are encouraged to consider similar insurance protection for their belongings, even if they are not the primary owners of the dwelling.
Tenant insurance protects you for covered perils and offers personal liability protection in incidents where you cause damage to an adjacent property, or someone is injured on your property and intends to sue.
While tenant insurance in Canada is not mandatory, many, if not most, landlords require it as a condition of a lease agreement. Also, replacement costs can be quite high, and legal bills can reach the tens of thousands of dollars in some cases.
Tenant insurance can also provide protection on any upgrades made by you while living in the home. New cabinets, fixtures and other additions are usually covered by your tenant insurance.
If your dwelling becomes uninhabitable, tenant insurance can help cover the costs of temporary accommodations, while your unit undergoes repairs.
Below is an overview of the protection most tenant insurance policies offer.
They’re very similar to comprehensive home insurance policies:
Contents: Tenant insurance will cover the cost of the tenant’s belongings as well as vehicle contents, including, furniture, clothing, entertainment equipment and other possessions. If the tenant has especially valuable belongings such as fine art or jewelry, they can get additional protection by adding an endorsement or rider to their policy.
Tenant liability insurance: In Ontario, this coverage protects the tenant financially if they cause accidental damage or bodily injury to a third party such as someone visiting the rental unit.
Additional living expenses: This covers living expenses such as the cost of moving or staying at a hotel if the tenant is unable to stay at their rental unit while repairs are underway following an insured loss.
Replacement cost: This covers the cost of replacing an item, following a covered peril. The compensation will reflect the current value of the item (of similar make and model) without factoring in depreciation.
While each insurance provider offers different options, they’re usually the same as those that can be added to a home insurance policy.
Some of the most common endorsements include:
Additional contents: Standard tenant insurance policies don’t cover high-value items like jewelry, fine art, rare books, family heirlooms, etc. Tenants must request special coverage to have these items covered by their policy. Endorsements can be a good way to ensure adequate coverage for meaningful belongings.
Identity theft: This endorsement offers protection if someone begins using the tenant’s identity unlawfully. Costs associated with the theft of personal information can quickly add up – in addition to the cost and hassle of replacing things like a Social Insurance number, Driver's License, credit cards and a passport.
Overland water: For the contents of a rental unit to be protected against damage when water overflows from a nearby water way, overland water must be added to the tenant insurance policy. Most policies come with no protection against flooding. In addition, any home insurance protection the landlord has will not cover the tenant’s belongings if they’re damaged by a flood.
Sewer back-up: Protection of contents against damage to a rental unit when water backs up through a drain or toilet must be added to a tenant insurance policy. Tenant insurance policies don’t come with protection against damage from flooding. Any home insurance policy the landlord has for the property itself does not extend to the tenant’s belongings.
Most insurance providers package tenant insurance plans as either All perils or Named perils.
All perils: Protects the tenant’s belongings against the widest range of hazards. Any coverage exclusions must be explicitly listed in the policy document.
Named perils: Protects the tenant’s belongings from the most common types of hazards, which will also be stated in the policy document.
All perils policies cost more, but they offer a much broader range of coverage and give the tenant the confidence that they’ll be protected if something unexpected happens.
The amount of tenant insurance coverage a tenant purchases should be informed by the total value of the belongings they keep in their rental unit.
Savvy renters will take a room-by-room inventory of their belongings and estimate the cost of replacing each item at least once a year. Doing so makes it easier to ensure that the tenant’s policy is up to date when it comes up for renewal each year.
A tenant will also have to decide between getting an actual cash value plan or a replacement cost plan.
An actual cash value (ACV) plan reimburses the tenant for the value of the items claimed at the time they were damaged. But ACV plans account for depreciation, so the money the tenant gets from a claim might not be enough to replace the items.
If your tenant’s TV is stolen, the depreciated value of the TV will be covered, which is probably less than what the tenant paid for it and less than it'll cost to replace.
Replacement cost plans pay the tenant the full replacement value of the lost or damaged belongings. If someone steals an old TV from the insured unit, the insurance provider will pay to replace it with a new one of similar make and quality.
That's what's great about a replacement cost plan: The tenant will be able to replace all their belongings if they’re stolen or damaged.
See how our customers save big on tenant insurance.
Type of home | Location | Previous claims | Lowest rate | Average rate | Saved |
---|---|---|---|---|---|
Quote from July 23, 2024 Type of home High Rise | Location Mississauga, ON | Previous claims None | Lowest Rate $18/mth $210/yr | Average rate $33/mth $395/yr | Saved $15/mth $180/yr (47.00%) |
Quote from July 23, 2024 Type of home Detached | Location Golden, BC | Previous claims None | Lowest Rate $31/mth $376/yr | Average rate $42/mth $508/yr | Saved $11/mth $132/yr (26.00%) |
Quote from July 23, 2024 Type of home Townhouse | Location Rocky Mountain House, AB | Previous claims None | Lowest Rate $21/mth $257/yr | Average rate $36/mth $435/yr | Saved $15/mth $180/yr (41.00%) |
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Tenants should expect to pay at least $20/month.
Tenant insurance is a customized product, making it a challenge to suggest a more specific average cost.
Premiums vary depending on several factors, including the value of the tenant’s belongings, where the rental unit is located and how much coverage is included in the policy. The policyholder’s claims history is also an important factor.
When more coverage is added to the policy, it will be more expensive. If the tenant’s goal is to find a cheap tenant insurance policy in Canada, we encourage them to focus instead on finding the right tenant insurance policy.
The cost of adequate protection is likely to be less than the cost of paying out of pocket in the event of a claim. If an accident happens and the tenant is without protection, there’s no financial recourse.
In fact, the tenant could be on the hook for legal and medical costs if someone is injured within the rental unit and they successfully bring a lawsuit against the tenant.
By entering a few details about your tenant, you can compare the quotes from the best tenant insurance providers in your area. That’s all it takes to save hundreds of dollars per year on your tenant insurance policy – just like that.
Spending extra money on tenant insurance doesn’t make sense. Find the cheapest tenant insurance rates from a wide range of insurance companies.
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There are perks to shopping for tenant insurance with us. On top of getting the best rates, the process is quick – it only takes 3 minutes – and it's free.
Many factors go into determining the cost of a tenant insurance policy in Canada. Some of the most significant ones include:
Claims history: Insurance providers are always trying to gauge how likely a policyholder is to make a claim. In instances when a claim seems likely, the policyholder will pay more. This means that if you have a history of making insurance claims, expect to pay more.
Credit score: In Ontario, a tenant can consent to a credit check in order to get savings on their tenant insurance policy. While some are wary about taking this step, a good credit score can help the tenant secure savings. A bad credit score will not result in a more expensive policy. In other words, a tenant can’t be penalized for a bad credit score.
Home inventory: The volume and value of a tenant’s belongings impacts the cost of the policy. For more coverage, they’ll pay more. If a tenant has added coverage for protection of especially valuable items such as jewelry or fine art, their coverage will be more expensive.
Location: For tenants insuring a rental unit in an area that’s prone to damage from flooding or has a high crime rate, they should expect to pay more.
How to get the cheapest tenant insurance
Bundling: When a tenant agrees to have more than one insurance policy held by the same provider, they can reduce overall coverage costs. When an insurance provider holds more of a policyholder’s business, they’re more likely to offer a discount.
Compare: Shopping around every year when a policy is up for renewal is a good way to ensure getting the best coverage at the lowest rate. Switch providers before the end of a policy term, can result in a penalty. At LowestRates.ca, we offer free quotes for coverage from dozens of the best providers in the country. It takes less than three minutes and is free.
Customize coverage: In general, it costs more to have more coverage. Tenants who don’t need a lot of coverage will have minimal costs.
Improve safety: Tenants who take steps to improve the overall safety of their unit such as installing a security alarm may be eligible for savings.
Increase deductible: Tenants who can afford to pay a larger deductible in the event of a claim, may be eligible for savings. However, we encourage them to closely consider if they’ll have cash on hand to pay a larger deductible if they need to.
Most companies that offer home insurance in Canada will likely offer tenant insurance. Finding these companies and getting the best quotes from them starts with comparison shopping on sites like LowestRates.ca. With a few pieces of information about your location and needs, you’ll get instant quotes from the top providers in your area. Choosing the rate that works for you is simple and we’ll put you in touch with a licensed broker, who can help you secure your rate. The best part? It’s all free to use!
Start by filling out the form at the top of this page. Applicants will be asked to provide a few details about themselves and the rental unit they’re insuring. In less than three minutes, we'll find the cheapest renters insurance rates available.
After selecting a quote, an insurance broker will call the tenant to lock in the best rate and help set up the new policy. That's it.
Renters insurance also provides coverage for any upgrades you paid for in your rental unit. For example, if you built extra shelving into your closets or added high-end light fixtures, those items would be protected by your renters insurance policy.
Shopping for renters insurance has never been faster or easier.
A credit check is optional but will help a tenant get the lowest rate on renters insurance.
Insurance providers use credit checks to help determine how much to charge. A good credit score can lower the price of coverage.
One great advantage of our service is that we only do one credit check per application, so your credit score won't be impacted. Some Canadians who shop around on their own, going from provider to provider, often must submit to multiple credit checks which can temporarily lower a credit score.
The cost of insurance can be expensive, but — trust us — tenant insurance is worth it. Without renters insurance, the contents of a unit are the tenant’s responsibility to repair or replace.
In addition, if any damage is sustained to the unit and the tenant is found to be at fault, they may be held personally liable.
Tenant insurance covers liability for damage sustained to property anywhere in North America. So, if a fallen candle happens to set a tenant’s hotel room aflame in the middle of a romantic evening while they’re on vacation with their partner, their tenant insurance policy very well may cover all or part of this damage. That makes rental home insurance coverage more than worth it in our books.
As soon as a tenant needs to make a claim, we recommend they immediately contact their insurance provider. They’ll guide you through the claims process. Depending on the tenant insurance coverage, it’s likely that the tenant will need to outline the damage as well as what needs to be replaced or repaired.
We encourage tenants to take photos of their belongings so that they have a record of everything in their rental. This will help account for belongings if they're damaged or stolen and the tenant needs to file a claim. Bonus: visual evidence helps expedite the claims process.
We also recommend that tenants keep receipts for higher value items, like televisions and furniture. Credit card statements will also work. It’s a good idea to make sure a tenant can access their credit card history online and that they remember to store any paper receipts in a secure place.
A standard tenant insurance policy generally does not cover rodent or insect infestations, including bed bugs. That's because tenant insurance is designed to cover unexpected losses that might occur from fire or theft. Bed bug and other pest extermination is usually considered routine maintenance.
Tenants who move into a dwelling that already have appliances should expect their operation to be handled by the landlord. Appliances that break down or need replacing will be done at the expense of the owner.
However, some tenants either bring with them or buy new appliances for their rented homes. In those cases, appliances would be covered under the tenant insurance policy as part of the overall belongings that are insured.
LowestRates.ca Staff
About the Author
The LowestRates.ca writing team focuses on telling original stories and bringing you the latest news in the world of personal finance.
Since early 2022, the Bank of Canada has raised rates ten times. This rapid run-up in its benchmark interest rate has st...
In the world of insurance, while home insurance is high on the list of priorities for homeowners, tenant insurance is of...
*Shoppers in Canada who obtained a tenant insurance quote on LowestRates.ca from January to December 2023 saved an average of 31% The average savings percentage represents the difference between the shoppers’ average lowest quoted premium and the average of the second and third lowest quoted premiums generated by LowestRates.ca. Excludes home and condo insurance.