#MakeItMakeSense is a series from The Star that breaks down personal finance issues to help young Canadians gain more confidence and understanding when it comes to financial literacy.
While not all landlords make renters insurance a condition of their rental agreements, having it can help protect Canadian renters and their valuables.
According to a 2021 TD Insurance Survey41% of Canadians do not have tenant insurance.
Among survey respondents, 43% cited “personal electronic devices, including cell phones, cameras, televisions and laptops as the most valuable assets they would want to protect.”
While many people said they avoided buying insurance because it was too expensive, a money expert Jessica Moorhouse points out that there are affordable options you can research.
“(For example) $15 is like a Netflix subscription…and that doesn’t sound bad compared to the fact that you have to pay out hundreds of thousands of dollars if you get robbed or your place is damaged,” said she declared.
So how do you better understand renters insurance? Moorhouse breaks down the basics and gives us his expert tips for this week’s #MakeItMakeSense.
What does tenant insurance include?
Renters insurance will protect your personal items and valuables. Moorhouse said that can include jewelry, electronics like your phone and laptop, and clothing.
“I think a lot of people don’t realize how much money they’ve spent getting these things until they start adding price tags to it all… If these are damaged would you shell out thousands of dollars or would you rather be covered?” she said.
The insurance also covers liability, meaning it would protect you if you have damaged property or someone is injured on your property, Moorhouse said.
“We’ve always heard reports of something like a malfunctioning slow cooker burning down an entire apartment…Your insurance may help pay for some of that damage,” she said.
Moorhouse added that, typically, basic renters liability insurance provides between $1 million and $2 million in coverage.
Under some renters insurance policies, you may also be eligible for coverage for additional living expenses.
“For example, if you have to leave your home because there needs to be repairs and you can’t live there anymore, your landlord won’t cover that. Maybe if they’re nice they will, but usually they won’t,” she said.
As part of additional living expenses, if you have to pay to stay in a hotel and other expenses like meals, renters insurance can provide this for you.
How much does tenant insurance usually cost?
According to Moorhouse, quotes can range from $15 to $30 per month.
How the price is determined is based on several factors, including where you live and whether the place you are staying is relatively new or older and may have a higher likelihood of sustaining damage.
“It will also depend on the coverage you actually want. Do you want some of those extras? Or do you want the most basic plan. It will have everything to do with how much it will cost you.
What are the two types of tenant insurance?
The first type of coverage is “all risk,” which literally means that under this type of policy it will cover most all of your content, but as a result it can be a bit more expensive, Moorhouse said.
The second type of cover is called “named perils”, which means renters can set their policy to cover specific items they describe.
Named peril policies would be cheaper, but that depends on the level of protection you want, Moorhouse said.
She also recommends taking a look at your policy every year to review it and see if you need more liability or additional coverage on new items.
“Sometimes we’re kind of on autopilot. You should check your policy when you want to renew and ask questions such as ‘Has anything changed?’ she said.
How are claims paid?
There are two different ways people get paid from their policies.
The first is the actual cash value, Moorhouse explained, meaning the item’s value at the time it was damaged or stolen.
The second is replacement cost, she added, which pays for the full cost of replacing items with new ones.
Moorhouse pointed out that while many people think their homeowner’s insurance will protect them, there is a difference.
“Your landlord’s insurance covers something completely different. They don’t care about your valuables or your own liability. Their insurance protects them and their property, not you,” Moorhouse explained.
Additionally, she noted that most banks and insurance companies will offer renters insurance policies, adding that there are several ways to find the best quote for you.
Like other services, insurance brokers can shop for you, or you can find options online and compare plans.
Moorhouse advised checking out some of the insurance company reviews to at least get an idea of the quality of their customer service.
Have a question or scenario you’d like to see covered? Contact Madi via email [email protected] and we’ll #MakeItMakeSense.
Jessica Moorhouse is a Canada® Certified Financial Advisor, host of the More Money podcast, and founder of financial education company MoorMoney Media Inc.
Read more about Star’s #MakeItMakeSense Series.