Caroline Arbour | Journalist
Home insurance isn't mandatory if you rent. In Quebec, nearly a third of renters don't have tenant insurance. So why should you bother? Why add this premium to an already long list of expenses?
Tenant insurance covers your personal belongings like furniture, electronics and musical instruments, and also protects you financially. Accidents can quickly happen, and if you don't have insurance, it can have disastrous financial consequences.
Because, even when we rent and don't own many high-value items, we all share a certain civic responsibility to one another that makes us liable for any involuntary damages we cause another person.
Here are 6 key concepts to consider when shopping around for tenant insurance.
A premium is the amount you pay the insurer, as a tenant, to keep your policy in force. It's calculated annually and is based on many factors, such as:
- The value of the personal property being insured
- Your claims experience (in both number and type)
- The neighbourhood
- The kind of building in which the rental unit is located
- The deductible
- and so on
2. Civil liability
Civil liability coverage protects you from being held responsible for damages you involuntary cause another person.
This coverage, which is included in any home or tenant insurance policy, follows you wherever you go--at home, at school or while travelling.
If, for example, you were found to be responsible for a fire, the insurer would compensate the building owner and the other tenants whose property was damaged (up to the maximum amount of insurance stipulated in the policy). Without this coverage, you would be personally responsible for paying for the resulting repairs.
The deductible is the amount you would have to pay in the event of a claim. It's the portion that isn't covered by your policy. The deductible is determined by the insurer and the insured, and it can be anywhere from $300 to $1,000. The higher the deductible, the lower the premium, so make sure you can afford it.
Compensation is the amount the insurer pays you for covered losses to property insured under your policy. The compensation cannot exceed the maximum amount of insurance for each type of coverage.
This amount may be calculated, under certain conditions, based on the property's replacement or repair cost or its value at the time of the claim (replacement cost less depreciation).
There are 2 main types of tenant insurance.
This coverage protects the insured from accidental risks, subject to certain limitations and exclusions set out in the policy.
Some losses are never eligible for compensation, such as damages caused by the gradual deterioration of personal property. Coverage for some items is limited in the event of loss or theft. That's the case with bikes, jewellery, CDs, DVDs, furs and collectibles.
Some insurance companies, like Desjardins, have opted to immediately offer their insureds all-risk coverage.
Named peril coverage
This coverage protects property from certain risks explicitly detailed in the policy.
Endorsements are documents containing amendments to the basic policy.
Endorsements offer additional coverages that you can add to your insurance policy for some risks that aren't normally covered (i.e., sewer backups and water leakage).
Endorsements can also cover specific items (e.g., high-value jewellery, stamp collections).
There's no shortage of home insurance products on the market. Take your time to learn about them and determine your needs before you decide on one.
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You can also get more information by going to the Insurance Bureau of Canada website