Tenant insurance can go a long way towards helping Canada’s massive renting population in protecting themselves and their personal belongings, but a new study has revealed a huge gap when it comes to renters taking out this type of coverage.
A recent survey conducted by TD Insurance has shown that 41% of the country’s renters do not have tenant insurance – something that vice-president of claims Craig Richardson attributes to a lack of understanding of the real value the coverage brings.
“It’s important for renters to understand they are liable for damages to the rental unit and could potentially face steep expenses for repair costs,” Richardson told Insurance Business. “The main misconception is that renters think their personal belongings are covered under the landlord’s policy, and that is simply not the case.”
Among all respondents, more than half, or 51%, admitted that they would have trouble replacing their belongings without insurance. Only one in five said they could afford to replace most if not all their possessions without the aid of a tenant insurance policy.
“Insuring a home isn’t just for homeowners,” Richardson said. “It’s a savvy way for renters to protect their valued belongings and help cover potentially expensive replacement or repair costs when an accidental or unexpected loss happens.”
According to Richardson, a large part of the coverage gap is because many renters are under the impression that their personal belongings are protected under their landlord’s insurance. In reality, however, this kind of policy covers the structure of the property and the contents the landlord owns within the premises such as furniture and appliances. It is up to the tenant then to take out coverage for their personal possessions.
Basic tenant or renters’ insurance policies typically include three different types of coverage:
Several factors affect the cost of a tenant insurance policy, including the type of property and where it is located, how much the belongings are worth, the renter’s credit score (except in Newfoundland) and claims history, and other risks associated with the rental, for example, whether it is located in a flood-prone area.
Standard premiums range between $15 and $30 per month or $300 and $400 annually, according to several price comparison websites. Many of these websites also provide access to checklists and calculators to help tenants get an accurate estimate of the value of their possessions.
Read more: Tenants still need insurance
In TD Insurance’s survey, 43% of respondents named personal electronics, including mobile phones, laptops, cameras, and television sets, as the most valued possessions they would want to protect, followed by furniture (22%), jewellery (8%), clothing (5%), and recreational equipment (2%).
Although there are no regulatory requirements when it comes to purchasing tenant insurance in Canada, many landlords make it a condition of the rental agreement. About half of the respondents on TD Insurance’s poll said that their landlords are requiring them to take out renters’ insurance – and for good reason.
“Without tenant insurance, renters could be liable for damages to the rental unit and could face steep expenses for repair costs, in addition to the costs of replacing personal belongings,” Richardson said. “Our hope is that Canadian renters take the time to understand the benefits of having a tenant policy. The incremental cost of a premium far outweighs the cost of replacing your possessions in the event of a major loss. It’s a relatively nominal investment to ensure the safety of your finances and personal effects.”