Does Renters Insurance Cover Tenant Damage? A Guide for Landlords
What is Renters Insurance?
Coverage 101: Renters insurance
Before we dive into tenant damage specifically, we are going to outline some of the coverages that may be included in renters insurance policies.
- Personal property damage: If any of your personal belongings, such as furniture or electronics, are damaged due to a covered peril, your renters insurance may cover the cost of the damage up to your policy limit. Insured perils vary but may include fire, wind, theft, vandalism, and other types of weather-related incidents.
- Legal liability: Legal liability coverage protects tenants against instances of third party claims of bodily injury or property damage. If a third party is injured on the premises or their personal property is damaged while visiting your property, and you are at fault, your tenant insurance policy may cover liability costs. Costs may cover legal expenses, such as settlement and defence fees.
- Medical payments: If your renters insurance policy includes coverage for medical payments, your insurance company may cover any medical costs not covered by health insurance in the event that a third party is injured while on your property.
- Additional living expense: If your rented property becomes uninhabitable due to an insured peril, requiring you to relocate temporarily, renters insurance can cover any expenses above and beyond your normal living expenses. Additional living expenses coverage is also known as loss of use coverage.
Does renters insurance cover tenant damage?
Yes, renters insurance can cover tenant damage. However, only under certain circumstances. First, renters insurance only covers damage to the renter’s personal belongings, as well as damage they cause to another’s property (this could be a building or personal belongings). For the damage to be covered, it has to have been caused by an insured peril. It is up to each policyholder to decide which insured perils to include in their policies. Perils may include fire, wind, theft, etc.
Please note that since renters do not own the property they live in, this type of insurance does not cover typically cover intentional damage to the property or unit, but some landlord policies which ALIGNED Insurance offers can include small sublimits for intentional damage by tenants. That said, it can cover damage that is accidentally caused to a property, it’s contents, furniture, appliances etc.
Not covered by renters insurance
As mentioned damage to the physical property in which a renter resides only covers insured perils as defined in the a tenant’s insurance policy. Further, intentional damage of any kind is not covered by tenant insurance, as is damage caused by a peril that is not included in your policy. For example, if your belongings were damaged due to an earthquake but your policy only included coverage against fire and theft, your insurer would not reimburse you for the cost of replacing or repairing the damaged items. Lastly, regular wear and tear is also not covered by renters insurance. To learn more about what is and is not covered by tenant insurance, contact ALIGNED. One of our insurance experts will be happy to discuss common inclusions and exclusions in tenant insurance policies.
How renters insurance rates are calculated
The cost of renters insurance depends on several factors. Insurance companies consider all kinds of details when calculating premiums. For this reason, the cost of renters insurance varies widely, even among renters in the same city. To learn more about how renters insurance rates are calculated or to receive an accurate and competitive quote, contact ALIGNED. In the meantime, check out this list of factors influencing renters insurance rates.
- Type of property: The type of property you rent is often used to determine renters insurance rates. For example, the cost of tenant insurance for a renter in a high-rise building is often less than it is for a renter in a low-rise building.
- Location of property: The location of the property is another factor that is likely to affect the cost. For example, the crime rate of a certain area may be used to assess risk and influence your rate.
- Policy deductible: An insurance deductible is the amount of money that a policyholder pays to the insurance provider when they make a claim. The size of your deductible has a direct impact on how much your tenant insurance policy costs. The smaller your deductible, the more expensive your policy is likely to be. Conversely, the larger your deductible (and the more financial responsibility you agree to take on), the less your policy is likely to cost. Contact the experts at ALIGNED to learn more about how insurance deductibles work and to discuss the possibility of raising or lowering your renters insurance deductible.
- Coverage level: The amount of coverage you choose has a significant impact on the overall cost of your renters insurance policy. If you purchase a policy with comprehensive coverage (e.g. several add-ons and high policy limits), your plan is likely to cost more. Alternatively, if you purchase a more basic renters insurance policy with standard coverage, your policy may be cheaper.
- Fire hydrant proximity: If the property you rent is located within 150 metres of a fire hydrant, your renters insurance policy may cost less than someone’s whose property is in an area where fire hydrants are located much farther away (e.g. a more rural area).
- Eligible discounts: Insurance companies may offer discounts on renters insurance to renters that meet certain criteria (e.g. those with responsible rental records). Be sure to ask your insurance broker if you qualify for any discounts, as this could save you money on renters insurance.
- Insurance history: Finally, when purchasing renters insurance, an insurance company will consider your personal insurance history. A lack of insurance history, many claims, or previous policy cancellations can raise your risk level, leading to a higher renters insurance rate.
Can landlords require renters insurance?
Yes, landlords can and should require tenant insurance. Though not provincially or federally mandated, landlords have the right to require that all tenants purchase tenant insurance. That said, even if not required by your landlord, purchasing tenant insurance can be extremely beneficial as it not only ensures tenants are protecting themselves, but also creates a buffer or indirect protection for landlords as some tenants might not have the financial means to deal with the expenses associated with a claim.
Should tenants buy renters insurance if it’s not required?
Unless you could afford a lawsuit or to replace all of your belongings in the event of a major accident, you should likely purchase renters insurance – even if it’s not required. Tenant insurance can be relatively inexpensive and yet can provide peace of mind knowing owing to the financial protection it offers. Without it, you might be forced to pay legal fees and to repair or replace your belongings entirely out of pocket.
ALIGN yourself with comprehensive renters insurance
Still have questions about renters insurance and tenant damage? Contact ALIGNED today. We are business and real estate insurance experts. We can answer any questions you may have about renters insurance, as well as walk you through your coverage options and provide you as a landlord with a quote. If you decide to work with us, a dedicated broker will obtain quotes from top insurance companies and compare them on your behalf, all to find you greater coverage at an affordable rate. Ultimately, ALIGNED makes shopping for insurance entirely hassle-free. Get started today by giving us a call or click here to get a quote now.
