Rented Dwellings: What Are Your Insurance Obligations

Today, many people prefer to rent than their own homes. But does your decision to rent and not own the property you use for your home absolve you from costs and obligations homeowners must bear and shoulder? Specifically, do you understand what your insurance obligations are where your rented home and its contents are concerned?

There are significant differences between your insurance obligations as the renter of a property and those of the one who is renting out the property to you. Whether you’re the one renting or the one letting the property these differences affect you.

Homeowner’s Insurance

Rental properties are income-generating assets. As the owner of the property, it makes business sense to insure the property against damage. If you leave it uninsured and it gets destroyed in a fire, hurricane, or some other natural disaster, your whole investment is lost.

However, when you insure the rented property the coverage typically does not extend to the contents of the property. Only the actual building or structure and the outbuildings are covered. For the contents of the house or apartment, the tenant must take out their own insurance.

Renter’s Insurance

If you are a tenant, it is advisable to take out your own insurance to cover your belongings as any insurance policy the rental property owner may have taken will only over the home and the outbuildings. 

In the event of a fire or severe weather that destroys the property and its contents, only the physical buildings will be replaced by the homeowner’s insurance policy. Your own furniture, clothes, books and other personal belongings you keep in the house will be lost. Unless you take out a policy that specifically covers your personal belongings.

Does homeowner’s insurance cover damage by renters?

Homeowners have the right to charge the tenant for damage to the property that’s beyond what can be deemed normal wear and tear. The damage may be due to carelessness or malicious intent by the tenant. It also includes damage that is caused by the tenant’s guests.

Where the tenant’s own renter’s insurance does not cover their liability during the course of the property’s lease, they will have to pay out of pocket for any damage to the property that they or their guests cause. This brings us to:

Tenant Insurance

Now, depending on where you’re and the insurer you’re under, there may not be any differences between tenant and renter’s insurance. But, here we refer to tenant insurance as that which covers your personal belongings and your liability on the physical building and installations thereon.

It is not uncommon these days to find rental property owners insisting that people wishing to rent their properties take out personal liability insurance as part of their tenant insurance.

Where the tenant’s insurance policy covers both your belongings and your liability over the rented property different coverage amounts will normally be specified. As the replacement cost of the property is likely to be higher than that of the covered belongings, your liability coverage is typically higher.

Types of tenant insurance

There are two types of tenant insurance you should be aware of, namely covered perils and all risks policies. For named perils, coverage is limited to losses caused by specific risks. All risks policies, on the other hand, cover your belongings against all risks, unless specific risks are expressly excluded.

For renters and tenant insurance, as the renter you are advised to keep a list of all the items you own and keep in the house. Add all new purchases to the insurance policy as you acquire them to ensure all your belongings are covered.

Able Elite is a top insurance brokerage serving the insurance needs of individuals and businesses in Ontario, working with the leading insurers in Canada. Contact us for a free quote.

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