According to a 2014 poll from the Insurance Information Institute, while 95 per cent of homeowners purchase home insurance, only 37 per cent of renters purchase renter’s insurance. Yet renter’s insurance is very affordable – on average it costs $15 to $20 per day or $200 per year. So why do renters not purchase insurance? Do they even need it?
Renters don’t purchase insurance likely for the following reasons:
- They believe their landlord’s insurance protects them.
- They don’t think their stuff is worth enough to insure.
- They don’t know renter’s insurance is available or what it covers.
- They assume renter’s insurance is expensive.
We recommend renter’s insurance to all tenants as it’s affordable coverage that offers a lot of benefits.
What is renter’s insurance?
Renter’s insurance provides coverage to individuals renting a room, apartment, condo or home. There are three main areas of protection:
- Property Coverage – Helps replace your property if it’s damaged or destroyed by an insured peril such as fire.
- Personal Liability Coverage – Helps cover expenses if someone is hurt or has their property damaged due to your negligent acts. This includes medical payments and legal costs.
- Additional Living Expenses – Helps cover additional costs if you’re forced from your home due to a covered claim or mandatory evacuation order for an insured peril.
Here’s an example:
A 24-year-old assistant marketing manager decided to take a quick shower in her one-bedroom Edmonton apartment. Just before she stepped into the bathroom, she threw a bagel into her toaster. It was only as she stepped out of her bathroom and saw the black smoke that she realized her 10-year-old toaster must have caught fire. That’s when the fire alarm went off. Although she easily got to safety and no one was hurt in the blaze, there was extensive damage to her unit and adjacent apartments.
With renter’s insurance, her property would be covered as legal expenses and potential damages if other residents sued her for causing the fire. Note – this is only up to your policy limit, which is why choosing the right amount of coverage is important.
Like home insurance policies, renter’s insurance has some exclusions. It is designed for unexpected events, not incidents that are preventable by proper maintenance. Some common exclusions include:
- Damage caused by pests like insects and rodents
- Damage caused by wear and tear
- Damage intentionally caused by an insured
- Business property or liability claims (if you run a business from your rental, you’ll need separate insurance)
You should always read your policy documents and speak to your broker to understand what is and isn’t covered.
Going Without Renter’s Insurance
Without renter’s insurance, you can be on the hook for replacing your belongings, covering the costs of lawsuits, and paying the extra costs if you’re forced from your home.
You’re not covered by your landlord’s insurance and you won’t be covered by your roommate’s policy either (unless you’re named on the policy).
Many people don’t think their stuff is worth much but it can really add up. Calculate how much it would cost to replace all of your belongings – it’s probably more than you think!
Renter’s insurance is an affordable way to reduce the financial burden of a disaster. Talk to one of our brokers to learn more or to get a quote today. You can also learn more with our e-book on renter’s insurance.