Renters insurance Ontario

If you're a renter in Ontario, you may be wondering whether renters insurance is worth the investment and whether you should get insurance early in anticipation of moving out of your parents home for the first time.

To learn more about renters insurance in Ontario, stick around as we outline everything you need to know down below.

What is tenant insurance coverage?

Tenant insurance coverage is a special type of home insurance designed to protect renters from a variety of common risks. A standard tenant insurance plan typically encompasses the following policies:

Personal belongings coverage

Think about all of the personal belongings you own. Now imagine something happens in your rental unit that either leads to damage or lost items. Whether it be vandalism, theft, or a fire, without tenant insurance in place, you'd be responsible for paying out of pocket for this personal property damage, which can lead to thousands of dollars out of your own.

Now, reimagine a scenario where your personal belongings are lost or damaged, but you've already purchased a tenant insurance policy. Instead of having to pay out of your own bank account to repair or replace your personal belongings, your renter's insurance will cover the cost for you up to your policy coverage limits for any covered claim listed in your policy.

Liability coverage

Generally speaking, when you think of liability protection, it's likely that your mind wanders to auto insurance. Similar to having liability coverage when you're operating a motor vehicle, tenant insurance works in the same fashion. For example, let's say you have friends over in your basement unit for a fun night when all of a sudden, one of your guests slips and falls on your rug, causing them bodily injury.

Legally, your guest can file a liability claim in court for medical costs and other expenses related to their injury--again causing you to rack up legal fees, medical expenses, and other costs. With the tenant liability insurance portion of your overall tenant insurance plan, you'll have coverage for any costs that may arise as a result of a third-party claim filed against you.

Additional coverage for living expenses

The final portion of standard tenant insurance policies is additional living expenses coverage. If the physical dwelling where you live is damaged by an insured risk to the extent that it's no longer safe to live there. As your home is uninhabitable, you'll need to find other accommodations until a restoration company has completed the repairs, which can take anywhere from a couple of weeks to months, depending on the extent of property damage.

With additional living expenses coverage, your accommodations, food costs, and other expenses will be covered up to a certain amount stated in your policy, ensuring you aren't stuck with financial hardship during an already stressful time.

Optional types of renters insurance coverage

For an added cost, you can supplement your basic renters insurance with additional coverage options that can further protect you against risks that are not mentioned in your existing policy:

Sewer backups

Sewer backup renters insurance provides renters with protection in the event their unit is flooded with sewage due to heavy rainfall, clogs, or other plumbing problems that can lead to raw sewage exposure in your living space. If you live in a basement suite, the added risk of sewage backup is common, which is why you may want to consider this specific tenant insurance policy on top of your standard renters insurance.

Overland water damage

Living in an area with nearby natural waterways is something many Canadians wish for. But, before you get too excited about your neighbouring lake, it's important to recognize the insurance risk this body of water adds to your living scenario.

With overland tenant insurance, you can protect yourself from the cost of water damage that occurs as a result of above-ground flooding caused by melting snow, high river levels, and heavy rainfall that causes nearby waterways to flood into your property.

Identity theft coverage

If your rental space is broken into and your personal identification information such as your drivers licence, banking information, credit cards, social security number, birth certificate, or passport are stolen from your property by a third party, identity theft coverage will reimburse you for the cost of recovering or replacing your items.

Factors that determine your tenant insurance premium

When crafting your first budget in preparation to move out on your own, you may be wondering, "how is homeowner's insurance calculated?" As you meet with an insurance agent for the first time, they consider a variety of factors when calculating your tenant insurance premium, including the following:

Property type

The type of property you're renting is the first-factor insurance companies want to know when calculating the cost of your tenant insurance. From condos and apartment buildings to basement suites, single-family homes, and other dwellings, each comes with a set of risks companies need to consider in the event you need to file a covered claim.

The location of your rental property

Where your rental property is located is also an essential consideration as some areas lead to more risks than others. For example, if you live in a bustling city with a higher crime rate, you'll like to purchase coverage that's more expensive than a renter living in a rural area where there's a lower crime rate.

At the same time, living near large bodies of water or an area where severe storms can also impact how much it will cost for you to buy a tenant insurance policy.

The value of your personal belongings

Owning high-ticket jewellery, electronic devices, artwork, and other items that cost a significant amount of money to repair or replace requires higher coverage limits. Like all the types of insurance out there, should you opt for more protection from your tenant insurance policy, you'll need to pay more in the end.

Your credit score

While not all insurance companies look at credit scores as a determining factor in renters insurance premiums, the reality is, some do. Ultimately, the higher your credit score, the more likely you'll pay less for your tenant insurance policy compared to renters who have a poor credit history.

Before purchasing your own renters insurance, build your credit with KOHO and get a free credit score check online. With a virtual credit card, you can begin charging purchases and paying your bills on time each month, which can help you establish a responsible credit history that insurance companies and landlords are sure to appreciate.

And, while we're on the topic of insurance, you may want to consider credit card protection insurance for the months where you may not be able to cover your minimum payment, so you can continue to grow your score without any penalties.

Whether you have pets

Having pets can also affect your tenant insurance policy, especially if you own a pet that has certain liability risks. To ensure that you're protected in the event a claim is filed against you for property damage or injuries, you'll likely need to increase your liability insurance minimum, which, of course, is going to cost you more than a standard policy will.

Whether you live with roommates

If you choose to live with other people, your tenant insurance cost may increase. The way insurance companies see it, the more people you live with, the more of a risk it is, which will lead to a more expensive insurance premium.

Your personal insurance claims history

Lastly, an insurance agent is also going to take a look at your overall insurance history. If you're someone who files a claim often, there's a chance you'll pay more for your renters insurance premium compared to someone who has no property insurance claims on their record.

This is because the more claims you file, the more it costs for your insurance company to insure you in the end.

Does my landlord's insurance coverage protect me?

A common misconception when it comes to landlord's insurance is that the coverage extends to their renters, when in fact, this is far from being the case. Essentially, landlord insurance is a type of home insurance coverage that takes into consideration the unique risk homeowners face when they rent their property to a third-party.

This type of property insurance provides coverage to the physical structure of the home as well as any detached structures on the rental property. It also includes contents coverage for any appliances, furniture, and other items within the rental space that belong to the landlord.

This type of home insurance policy will also provide financial protection to the landlord in the event a tenant liability claim is filed against them. Common tenant insurance claims can include injuries renters may suffer on the property or property damage.

As such, to protect your interests as a renter, you'll need your own tenant insurance policy in place.

How to save on tenant insurance policies

We get it. Life as a young adult in Canada is expensive. Now that you'll be responsible for your own monthly rent payments, utilities, groceries, and more, adding an insurance policy to the mix can be overwhelming. When you're looking at your plans for spending and savings, tenant insurance is likely at the end of priorities.

Luckily, saving on personalized renters insurance is possible when you know what to do. Here's how you can find tenant insurance for an affordable price:

Bundle your insurance policy

If you already have a car insurance policy and other forms of coverage in place, you may want to consider bundling your coverage with the same insurance provider. Insurance companies often reward loyal customers who have more than one policy with them and as a thanks, may give an insurance discount when purchasing your tenant insurance.

Consider your deductible options

Similar to having a deductible for car insurance, certain policies within your renters coverage will require deductibles to be paid before your insurance kicks in. If you choose higher deductible options, you can potentially lower your monthly premium.

Just keep in mind that the higher your deductible is, the more out of pocket money you'll need to pay if you do file a claim in the future.

Get a personalized renters insurance quote from multiple providers

Before settling with any insurance company, we recommend shopping around and obtaining an online quote from different vendors. This will give you the opportunity to look at what each company is offering and at what price, which can help you get a good deal on your coverage.

Remember, the most affordable option isn't always the best option. The key is to find a balance between affordability that doesn't compromise your level of protection.

Ask about insurance discounts

Most importantly, don't forget to ask about available discounts you may qualify for! We briefly mentioned the discount offered by insurance providers for bundling multiple policies. However, there are often other savings available that could help you save even more money on your monthly premium.

So, make sure you're vocal with your agent, as there could be savings waiting for you!

Is tenant insurance mandatory in Ontario?

If you're a homeowner or new renter, there's a chance you're wondering, "Is home insurance a legal requirement in Canada?" The truth is, no. Home insurance policies and tenant insurance are not legally required in Ontario or the rest of Canada for that matter.

That being said, many landlords will require renters interested in their property to buy tenant insurance as part of the lease agreement. So, while there's no law that says tenant insurance is a requirement, not being willing to purchase this type of insurance policy could be the reason you miss out on a property compared to someone who is willing to get insurance.

Is it a good idea to get tenant insurance?

Still wondering, “Do I need renters insurance in Canada?” Needless to say, getting tenant insurance is a good idea when you find the right coverage for your unique circumstances. Policies like content coverage and liability protection can give renters peace of mind, knowing they have financial protection in place should anything go wrong in their rental space.

For example, the cost of repairing and replacing your personal belongings can cost thousands of dollars compared to a small monthly premium that ensures you won't need to pay out of your own bank account if damage to your items occurs.

Similarly, because accidents can happen at any time, having this type of home insurance in place ensures you're not stuck paying expensive legal costs and medical bills if a third-party is injured on your rental property. Remember, your landlord's coverage does not extend to you as a renter, it only protects their interests at the end of the day.

Do my roommates and I need our own renters insurance policy?

Unless you and your roommates are common law or married, having separate tenant insurance is recommended. Each of you will have your own items, and if damage occurs to those items, only those with coverage will be reimbursed for repairs or replacements.

Similarly, if a liability claim is filed against you or those you're living with, you'll want to make sure that each of you individually has liability coverage in place to protect your interests and finances should the matter go to court.

Purchase tenant insurance with KOHO

Ensure you're ready for the unexpected by establishing a high-interest savings account and planning your financial future with KOHO. This account allows you to earn interest at low interest rates to finance your recurring expenses like insurance and rent.

You can also enhance your credit score and add overdraft protection coverage as an extra layer of security.