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What Is Tenant Insurance And Why Do You Need It?

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Why do tenants need tenant’s insurance? Does it protect tenants from damages, destructions, fire, earthquake, or other natural calamities? Are there any exclusions in the tenant/renter’s insurance? Find out more in this blog.

Tenant's Insurance in Canada

Source: Freepik

When Steve planned to move into a new city, his friend advised him to buy tenant insurance. Thankfully, he paid heed to his friend’s advice and bought the insurance. A week later, after he moved into his new house, Steve’s neighbor accidentally broke the railing while visiting him. Luckily, the insurance covered the cost of repairing.

Many of us might consider tenant insurance to be irrelevant. But knowing what the tenant insurance can cover gives us peace of mind as a tenant.

The tenant insurance is not a guarantee to cover all the property damages, but it protects you from the expenses if some damage happens to your apartment or building you are staying in as a tenant. It helps you cover some costs of the damages caused to the unit you rented.

In this blog, you will know about tenant insurance, what it covers, and what it does not.

What is tenant insurance?

If someone visits your house and causes damage to your building, usually you cover the cost of the damage by paying out-of-pocket. Here, tenant insurance can come in handy. Tenant insurance, also known as renter’s insurance, covers the cost of repairing any damage to your home. It covers the loss caused by the theft or human-caused destruction.

Why do you need tenant insurance?

Securing items of your home

Tenant insurance helps protect your home items, such as a television, furniture, or any other home belongings. You do not need to pay for the damage of these items out-of-pocket if you have tenant insurance.

Cover accidental damage

Renter’s insurance covers the cost of the accidental damage to your rental apartment or other building. For example, if a fire breaks out in your apartment causing damage to other buildings, the insurance company will cover the cost of the damages to those buildings as well.

Pay for additional living expenses

If something has caused damage to your rented house and you want to rebuild or repair it, the insurance will help you cover the additional expenses for the repair. It could include paying the bills for your hotel stay, food expenses at a restaurant during the repairing period, or moving costs.

Buying tenant's insurance
Source: Freepik

What are the different tenant insurance coverages?

Tenant’s insurance offers two types of coverages, the actual cash value, and replacement cost.

  • Actual cash value: Actual cash value = replacement value – decrease in the item’s cost.

The actual cash value covered by the insurance is the difference between the cost to replace the damaged item and the price reduction because of the depreciation in the piece.

  • Replacement cost: The insurer will pay you to replace the damaged item with a similar one in present value.

What is the Cost of Tenant Insurance?

The cost of the tenant insurance depends on several factors:

  • The extent of the insurance coverage you are looking for
  • Additional items you want to include in the coverage
  • The area where you have rented the property
  • The insurance company’s fee structure
  • History of your insurance claims

Safeguard yourself from unplanned expenses by purchasing renter’s insurance, as Steve did. You do not know what expenses might come your way because of the damages that occur on the rented property. Renter’s insurance is the perfect way to protect you from the unexpected harm and damages your rented property may have to go through.

If you are unsure which renter’s insurance to buy, the easiest way is to consult your insurance agent or check online. Check with as many tenant insurance providers as possible before making your decision. Compare the costs and services offered by the insurance company before zeroing in on the insurance.

You may ask a few questions to your insurance agent to get things cleared before putting down your money.

Do you want to know what these questions are? We have listed them all in our article titled “What questions should I ask my insurance agent?”.

References:
http://www.ibc.ca/nb/home/rental-properties/tenant-insurance
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