Renter’s Insurance: Pay a Little, Protect a Lot

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Much like the prospects I show apartments to, I once scratched my head at the idea of renter’s insurance. Now, after getting to learn more about it through my job, it doesn’t take me long to convince the prospect that investing in renter’s insurance is well worth their money.

Renter’s insurance, also called resident’s or tenant’s insurance, protects the individual that purchases it. Let’s break this down a little bit. A resident/tenant is a person who rents or leases a place to live from someone else (called a landlord). This place of residence could include an apartment, a condo, a basement suite, a townhouse, or a regular house. The tenant purchases the insurance to protect themselves in several ways.

Let’s go over some scenarios in which you, as a tenant, might need some protection or coverage.

Scenario 1: You forget to lock your apartment door when heading to work. When you get back, your home is in disarray and your signed copies of the 1990s Star Wars DVDs are missing. If you had tenant’s insurance, you would be able to claim the value of the movies. Since you don’t, you’re crying like I was when Padme died.

Scenario 2: After your apartment was broken into, you quickly run downstairs to go report the robbery to your landlord. On your way down the stairs, you trip over some garbage another resident left in the hallway. You break your arms from the fall, and someone calls an ambulance. Renter’s insurance would cover the cost of the ambulance, since it isn’t typically covered by most health plans. If you decided to sue the resident that left their garbage in the hall, insurance would cover your legal fees. Unfortunately, you don’t have renter’s insurance. All you’re left with are two broken arms and an ambulance bill.   

What Does Renter’s Insurance Cover?

Most insurance packages cover contents and personal liability. Got a TV you really love? Renter’s insurance will cover the cost of the TV if it gets stolen. Personal liability coverage ensures that you won’t have to pay for your medical/legal costs if you get injured on the property. Additionally, if someone who is visiting you is hurt on the property, the insurance will cover both medical and legal charges.

Other insured costs include all-risk and additional living cost expenses. Insurance companies identify “perils” or risks that could potentially occur on the rental property. All-risk coverage offers protection over a wide range of perils, including fires or floods. If you need to vacate your suite for a period of time due to a peril (usually for the purpose of the property being repaired), additional living cost coverage will provide you with money to stay in a different place for a while. There are many other types of packages, but the ones listed above are the most popular. Of course, the amount to which you are protected in these categories depends on how much you pay into the insurance.

How Much Does Renter’s Insurance Cost?

The simple answer: not much at all. According to a study done in the States, the average insurance package costs only $15.75 USD a month. In Canada, that price is about the same.  The average rate can cover around a million dollars in personal liability coverage and thousands of dollars for contents.

The Real Cost Of Renters Insurance

The reason why resident’s insurance is so much cheaper than home insurance is because it does not cover the property itself. Most homeowner insurance packages include both the building and belongings, making them more expensive. If you happen to live in your parents’ home, both your content and the space in which you live are probably covered by their insurance. You should ask them just in case, though.

If you don’t live with your parents, you’re responsible for insuring your belongings but not the building (except in some cases if you are a post-secondary student – check your parents’ policy for details). For example, resident insurance doesn’t need to cover the cost of rebuilding the apartment if it burns down due to a fire in another suite. The landlord probably has insurance that covers building property damage. However, their insurance does not cover the cost of residents’ belongings. This isn’t asking for much; you don’t have to insure the cost of the actual building which is typically more expensive

Despite the insurance’s low cost, Forbes predicted that over half of adults aged 23 to 29 that rent their place of residence don’t have tenant’s insurance. According to Forbes’ article, a contributing factor to this ratio is that resident’s insurance isn’t usually a requirement. To get a mortgage for a home, most banks require that the purchasers have homeowner’s insurance. The same is not true for those looking to lease or rent a place.

Some companies have taken note of this startling trend and have implemented mandatory renter’s insurance for tenants throughout North America. In a few cases, they partner with insurance companies to provide even lower insurance rates. Now, there’s really no excuse to forgo renter’s insurance.

Which Insurance Package Do I Need to Get?

Like in the case of all important purchases, it’s good to search around before you decide which insurance is right for you. If you live in an area with a notable crime rate, it may be a good idea to invest in higher contents coverage. If you live in a basement suite, it would be more useful for you to get coverage for perils such as floods as compared to someone living on the top floor of an apartment building. All of these factors should be considered before selecting which package you want.

In Saskatchewan, there are a few big players in the renter’s insurance arena. These include SGI and TD Bank. SGI refers to its insurance as ‘tenant insurance’. They offer highly customizable packages with a wide array of coverage options. Individuals looking to downsize from a home can sometimes transfer their home insurance package to a tenant insurance package. This allows for hassle-free sign-up.

TD on the other hand covers mostly basic renter’s insurance categories, with a few specialized ones. It would be easy to sign-up with TD if you already bank/ are covered with them. There are also smaller companies you can investigate if neither of those options have what you are looking for. With enough digging, you should be able to find something in your price range that has the coverage you need.  

Remember, it’s important to look around, get quotes, speak to professionals, and make informed decisions. These rules apply not just to tenant’s insurance but to all important financial decisions.

 

Nudba Ismaeel is an Edwards School of Business student by day, and novelist/debater/tea fanatic by night. Engage her rapier wit via spoken or written word  at your peril!

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1 Comment

  1. Laura on July 30, 2018 at 4:13 pm

    Great article! I applied the same logic to term life insurance. The cost is fairly low for the amount of risk deferred.



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