Perception can sometimes cloud reality, and for many renters, the thought process is that because you don’t own a home, you are not likely to get many insurance benefits. Less than half of renters in Canada have renters insurance, possibly in part, due to such thinking. What is renters insurance and why is it so important if not everyone uses?
It offers financial reimbursement for lost property and any legal fees resulting in accidents where you’re liable. This is important because your landlord’s insurance policy will not necessarily cover your belongings in the event of damage, a break-in, or fire. You need to protect yourself.
Renter’s insurance helps you replace your belongings in a cost-effective manner, protecting you from financial pitfalls should something happen in your living space.
Personal property and renter’s insurance
What does renters insurance protect, exactly? As mentioned, if your personal belongings suffer damage due to serious events, your landlord may say, “I’m sorry to hear,” but that’s about the most he or she can offer to you. As a result, you need to make sure all of your personal property is covered so you will be able to replace and restore things without additional hassle.
Do a thorough check of your belongings and tally the costs so you can determine how much it would cost to replace them. Having photo or video records of your belongings as well as keeping receipts or other records are recommended by insurance companies. This helps when trying to figure out what policy makes sense for your situation. Then decide if you want coverage that will protect you from all risks, or just specific ones you may deem more likely (or affordable) to cover.
Extra coverage may be required for jewelry, expensive clothing or other costly items, but it could prove worth the added investment.
How much is renter’s insurance?
Entry-level contents insurance tends to start at around $10,000 in the event of an accident. This is where new grads and young professionals usually start because they don’t have all that many belongings to their name—a TV, some hand-me-down furniture, and one or two sets of formal clothing in most cases.
That $10,000 might not be enough to cover your belongings after a few years in the workplace, though. It’s easy to outpace your coverage at that age because you need to spend money on “adult” things (so we’re told) to fit in with the rest of the working world, including:
- Formal wear
- Work clothes
- A new bed and bed frame
- A television
- Music players
- Couches, chairs, desks, bookshelves, and dressers
- Small appliances (such as microwaves)
In several years you could find yourself with belongings worth two or three times what your policy covers. Remember to review your policy for an insurance update every year to avoid financial exposure like that.
Does each tenant need renter’s insurance?
It depends on the living situation, but it is very likely that each tenant will need his or her own renters insurance policy unless you open a policy together.
For example, common-law or married couples will likely open policies together. Since both of their names appear on a policy, then they’ll both be covered under the policy. But if you move in with a roommate for post-secondary school or your first job, then you probably won’t share a policy together because it makes more sense to keep separate policies.
It comes down to whose names are on the policy. Unless you’ve been in a dedicated relationship of some kind or a long-term co-living situation on good terms, it’s probably best to keep your own policy.
Protecting your personal belongings isn’t the only reason why you need renters insurance. In an event where something that happened in your apartment affects another unit or cause physical harm to a tenant or landlord, you will be held personally responsible for all costs. If you’re not covered, you could be paying astronomical figures to cover someone’s medical bills or property damage.
Having personal liability insurance can protect you from a future lawsuit or third-party liability claims and covers the cost of any damages caused. Make sure to alert your insurance company of any issues right away as failure to report them in a timely fashion could cause your liability claim to be rejected.
Most insurance companies offer anywhere between $500,000 and two million dollars in personal liability coverage plans. That’s serious money. You might think it’s not worth it, but you can never be too sure given that some of the most serious threats to homes happen under the most innocuous of circumstances. It’s an option that should at least be considered.
In addition to these pointers, should your residence be deemed unfit due to a claim, you may be eligible to get financial help to cover living expenses going forward. Plus, you get coverage to pay for expenses such as hotel and food costs if you have to leave your home for an extended period due to an insured peril.
As a renter, you deserve the same insurance benefit a homeowner does. It ensures that you aren’t left paying for things you are not able to afford due to something out of your control.
You’re always welcome to get an aha insurance quote for your home or vehicle online or call us and we’ll be glad to help you experience our vision of insurance.