What is tenant insurance?

What is tenant insurance? 

Tenant insurance is a form of home insurance that protects renters and their personal belongings from theft, fire loss and other common risks. If something happens to the possessions on your property, tenant insurance covers the cost of replacing or repairing them.

It also protects renters against liability. According to the Insurance Bureau of Canada (IBC), tenants are legally responsible for property damages—accidental or otherwise—and for any injuries their visitors may suffer. If you’re not properly insured and you cause a grease fire that results in smoke damage to your apartment, you could owe for more damages. Say, your neighbour’s apartment and communal areas outside of your rented space, you’ll have to cough up all the related expenses. Similarly, if someone slips and falls in your rental, financial responsibility falls squarely on you, not the property owner. Tenant insurance is there to protect you in instances like these.

Watch: What is Tenant Insurance?

What’s covered by tenant insurance? 

Basic tenant or renter’s insurance policies typically include three different types of coverage: 

Contents insurance: This covers the cost of replacing or repairing the items in your rental, if they are damaged or stolen. Policies typically include contents coverage up to a specified dollar amount. In some cases, it may not cover all your valuable possessions (like fine jewellery and collectibles, which are subject to coverage limits), so be sure to discuss what items are covered before purchasing a policy. If you need, you can purchase additional contents coverage.

Liability coverage: This covers the cost of lawsuits brought against you, if someone is injured in your home or if you cause an accident that damages someone else’s property. Most basic insurance policies offer $1 million to $2 million dollars in liability coverage. Always confirm the amount of liability coverage included in your policy, because you can raise or lower the amount of coverage based on your needs.

Additional living expenses: If you have to leave your rental space while it’s being repaired, this coverage will pay for additional expenses, like hotel bills, meals and moving costs (also subject to limits). The key word here is “additional.” This means it will cover anything above and beyond your regular expenses. So, for example, if your rent is $1,500 a month and you now have to pay $2,000 a month to stay in a hotel, your insurance will cover the additional $500 a month.  

What’s not covered by tenant insurance?

Certain perils are excluded from tenant insurance, unless otherwise stated in the policy. These include:

• Your building: Damage to major components of your building, such as the structure, pipes and roof, is generally the responsibility of your landlord and should be covered under their landlord insurance policy.
• Car damage and theft: The contents insurance portion of your policy follows you wherever you go. It offers coverage for belongings left in your vehicle, such as your laptop or wallet—say, if they are stolen from the back seat. There’s one exception: the car itself. For your vehicle to be covered from damage or theft, you’ll need auto insurance. This applies even if your car is parked within your apartment building at the time of the accident. Coverage will depend on the type of auto insurance policy you have; to understand the differences between policies, read our auto insurance guide.
• Business equipment: If you operate a business—no matter how small—from your home office, you should consider small business insurance. Items related to running your business, such as a cell phone or laptop, are not covered by tenant insurance. Risks associated with your line of work, such as professional liability, are also excluded from tenant’s insurance, but can be included in a small business policy.
• Roommates’ belongings: Are you sharing your rental with someone or even a few people? For their belongings to be insured, they will have to get their own insurance policy.
• Damage from pests and rodents: Damage caused by as rats, squirrels, and bed bugs is typically excluded. This includes the costs associated with eliminating an infestation.

How much is tenant insurance?

Tenant insurance rates vary across Canada, but standard rates fall at around $15 to $30 per month. Having a lot of insurable items and opting for additional coverages tend to increase the cost.

What you pay for insurance will be based on several factors, including the age of the building you’re moving into, the size of your rental, and the total value of the belongings you want insured. For instance, a two- or three-bedroom apartment is likely to cost more to insure than a one-bedroom, due to the number of belongings requiring coverage.

Before purchasing a policy, the best thing to do is shop around or talk to an insurance broker who can compare prices and find the coverage that suits your needs. (Read more about the cost of insurance for renters here.)

How much tenant insurance coverage do I need?

The amount of coverage you will need depends on the value of your belongings and the kinds of accidents you wish to protect yourself from. It’s recommended you purchase enough renter’s insurance to be able to cover the cost of replacing all your possessions if they are stolen, lost or damaged. 

You will also need to decide if your policy’s standard coverages meet your needs or if you want to purchase additional coverage. Common coverage add-ons, known as endorsements, include: 

• Overland water protection: Provides coverage from water damage originating from a fresh water source that is above ground, such as a river flood or heavy rainfall. You may need this type of coverage if you live near a large body of water or in a flood-prone area. 
• Sewer backup protection: Provides coverage against damage caused by water flowing back into your home from the city’s sewer lines. If you live in a basement apartment or your building is below sea level, you may want to consider this type of coverage. 
• Additional contents insurance: Standard policies contain limits on contents coverage. You may wish to purchase additional coverage if you have valuables, such as valuable family heirlooms or an art collection, that exceed those limits. 

How should I calculate the value of my belongings?

It’s easy to underestimate the value of all your belongings. You may not think you don’t have many big-ticket items and that your other possessions aren’t valuable enough to insure. But what would happen if you had to replace everything—from your entire bedroom closet to the serving plates in your cupboard—all at once? That’s what tenant insurance is for. 

To make sure you get adequate coverage, start by cataloging everything you own, including photos and receipts if you have them. You’ll then want to document what each item is worth so that you can estimate the total value of all your belongings. (Read about tips on how to ensure your estimate is accurate and that you have the records needed to back up any future claims.)

Actual cash value and replacement value

When taking an inventory of the items you’d like insured, you’ll be asked whether you would like an actual cash value (ACV) or a replacement value policy. Replacement value policies cost more but allow you to re-purchase the damaged item at its current market value. An ACV policy, on the other hand, takes depreciation of an item at current market value into account; so, while you’ll get some cash back, it’s very unlikely you’ll get back the full amount you paid for an item. 

How to get tenant insurance

Purchasing renters insurance is pretty simple to do. First, you can compare tenant insurance quotes by phone, in person or online between different insurance providers or with your broker. If you already have insurance for auto, you can usually bundle your coverage and get a discount too. Once you’ve found a great policy and signed up, your provider will usually give you a proof of insurance document to provide your landlord.

Tenant insurance FAQs

Is tenant insurance mandatory?

Tenant insurance isn’t mandatory in Canada, but it’s a very smart thing to have. In fact, many landlords require proof of insurance before they lease, in the same way not smoking or no pets can be a condition of rental. That means if you don’t comply, you can be evicted.

Your landlord will likely ask to see a copy of your policy for its policy number and to review the insurance company. Rental property insurance policies are annual, requiring a review every 12 months. Your landlord may ask for a copy on renewal as well. (Read more about why your landlord may require tenant insurance here.)

Is tenant insurance the same as contents insurance?

Essentially, yes. Tenant insurance, renters insurance, apartment insurance and content insurance are often used interchangeably. 

Doesn’t my landlord’s home insurance protect me? 

The landlord’s insurance protects the building structure, which includes all structural items that came with your rental unit—from walls and pipes to stoves and bathtubs. But it will not cover your personal belongings, like musical instruments or electronics. It won’t cover damage caused by you or your friends either, and it won’t cover injuries that happen to you or your guests inside your rental (personal liabilities). Nor will the landlord pay for you to live elsewhere if repairs are needed.

Can roommates share tenant insurance? 

Are you living with a few friends while going to school, or do you prefer the social life that comes with having roommates? Many insurance companies allow you to share a tenant insurance policy with other occupants, including those who aren’t related to you. Roommate coverage isn’t automatic, so you will have to contact your provider about adding names to your policy. And there may be limits on the number of individuals you can add. 

Splitting the cost of tenant insurance with roommates may be tempting. But it’s important to be aware of the risks. A claim filed by your roommate will be reflected in your file and could lead to an increase in premiums—whether you want to be associated with the claim or not. 

Does tenant insurance cover water damage?

Not all tenant insurance plans are the same, and some do not cover water damage caused by floods or sewage backup. However, if there is a leak in the unit above that destroys your new leather armchair, your own tenant insurance (not your neighbour’s) usually has you covered. Be sure to ask about water damage when securing a plan.

I need to make an insurance claim—now what?

Many renters will purchase tenant insurance and never have to make a claim. In those cases, policyholders can rest easy knowing their stuff would be covered if something ever did happen. For those who aren’t so unfortunate, there are steps that can help make the claims process as smooth as possible. 

You’ll need a copy of your insurance policy and any other detailed records itemizing your insured belongings. From there, document the damage, take pictures to show what items were damaged and the source of the damage (if you’re able), and never throw anything out before calling your insurance company.

Bottom line: Should you get tenant insurance? 

Although tenant’s insurance isn’t mandatory in Canada, there are many reasons to consider paying for coverage. It may just prevent you from needing to shell out the money required to replace all your belongings—all in one shot. It’s the kind of thing that seems incredibly unlikely, until it happens. At the very least, with the proper coverage, you can relax knowing that you and your belongings are protected from even the worst kind of once-in-a-lifetime event.

Read more on home insurance:

• Is my house covered if I’m not living there? Vacant home insurance, explained
• “I discovered water damage in my home. Will insurance cover me?”
• How to get lower home insurance
• Video: Do you really need condo insurance?