Many landlords require tenants to carry a policy known as renter’s insurance. But what does this policy cover?
The property owner’s insurance typically covers the building, not the tenant’s personal belongings. Here are some benefits of having this coverage:
Unlike the landlord’s insurance, which covers the building, tenant insurance will cover your possessions in case they are stolen or damaged. If your bike is stolen or your computer gets burnt by the fire, you will be compensated (up to your policy’s limit).
So, what does tenant insurance cover? Most tenant insurance policies include two types of property damage coverage: replacement cost and actual cash value. Replacement cost coverage will reimburse you the price of a new item if it is destroyed in an insured event. At the same time, existing cash value policies will only pay out for the depreciated value of your items.
Many tenant insurance policies also include personal liability coverage, which protects you against damages you may be held responsible for. For instance, if your dog bites someone or you accidentally damage another tenant’s property, your insurance may pay their medical bills and legal fees up to your policy’s limit.
Many tenant insurance policies will also include additional living expenses coverage, which will reimburse you the money you spend on accommodation if your home is uninhabitable due to a named peril in your policy (subject to limits). For example, if your apartment or house suffers smoke damage and needs to be cleaned, or if a natural disaster causes flooding, your insurer will cover the costs of finding somewhere else to stay for a set amount of time.
Additional Living Expenses
Tenants often get a replacement cost policy, which covers the price of replacing personal belongings with brand-new items when they’re stolen or destroyed. This differs from a cash value policy, which only reimburses you for the item’s current condition (like a couch burned in a fire).
Another benefit tenants need to remember is additional living expenses. If the loss or damage from a covered peril makes their home uninhabitable, this part of their tenant insurance policy will pay to cover the costs of staying somewhere else, like a hotel. This also includes food and other necessities needed to maintain their usual standard of living.
For example, if they were forced to relocate because of a fire and their temporary apartment doesn’t have a kitchen, this portion of the policy can cover costs like meals at restaurants. However, it’s important to note that this type of coverage is meant only to cover the added costs. It can’t cover groceries since those are considered a regular living expense.
While landlords typically don’t have to provide their tenants with tenant insurance, it can still be a good idea for them. Not only does it help to protect the tenants’ stuff from theft and destruction, but it can also save the landlord from having to cover damages that could have been prevented with a few extra dollars on the tenants’ end.
Tenant insurance isn’t just about protecting your belongings against damage and theft. It also saves you from liability if an accident in your home causes injuries to others. For example, you accidentally leave the bath water running, and it floods into the unit below yours. In this case, you could owe your landlord a ton of damages. That’s why tenant insurance offers you liability protection to cover any expenses resulting from an incident in your home, like medical bills or cleaning fees.
Another important aspect of tenant insurance is additional living expenses coverage. If you have to vacate your apartment due to a covered peril, this part of the policy will reimburse you for the costs of staying elsewhere (subject to limits). This is especially helpful when it comes to unforeseen circumstances.
Of course, there are some things that tenant insurance does not cover, including damages to furniture and electronics that you have purchased separately from your landlord’s property, small business equipment, and a few other risks. But overall, the cost of a tenant policy is minimal and can provide you with a lot of peace of mind. They make it easy for tenants to get insured in seconds and instantly change and update their policies through an app.
Credit Card Theft
Most tenants don’t realize how expensive it would be to replace their possessions if stolen or destroyed. Requiring tenant insurance can help protect them in the event of any damage or theft.
Tenant insurance is also helpful if something happens to the landlord’s property, such as a fire or flood, that renders the dwelling uninhabitable. In this scenario, the tenants can claim money towards a hotel stay or home share if they need accommodations while the repairs are made.
Another perk of having tenant insurance is that it often covers credit card theft. This protection can be a lifesaver if a credit card is stolen from a home or apartment and used to make fraudulent purchases.
Depending on the policy, it may also cover the cost of any food that spoils in a freezer or power cut. Some policies also cover cash stolen from a residence.
Although not mandatory in most provinces, tenant insurance is a valuable investment for those renting their homes or apartments. It offers financial protection from the costs associated with insured losses to personal belongings and extra living expenses, as well as liability coverage in case someone is injured on the rental property. It can be less costly than many think and provides peace of mind to tenants and landlords alike.