Tenant Insurance - Why is it so important?

A big conversation I am having with a lot of people lately is "what is tenant insurance" and "why do I need it?" Well, whether you yourself are a tenant, you are a landlord or you are helping a client who is a tenant, this is important information for you to understand!

As part of a mortgage requirement, homeowners always have to have homeowners insurance on their property. This should be mandated as well for rental properties and tenants, however it is not. Tenant insurance, firstly, does NOT replace homeowner's insurance and should not be considered as a replacement as they cover very different things.

Tenant's insurance in Alberta can be obtained through any insurance company, so if you want to bundle it with your car insurance or other insurance, that is likely the easiest option. However there are insurance companies that can provide insurance for tenants specifically such as Apollo Insurance, Nuera Insurance and Insurely.

Tenant insurance has a 1 million dollar liability minimum in Alberta. This means that if something happens to your property due to the tenants actions, either willful or negligent, their insurance is responsible for a minimum of 1 million dollars in damage.

A specific example (that I've personally encountered) is a tenant living in a condo goes to run a bath and forgets about it and falls asleep on the couch or bed. Now for whatever reason the diverter is blocked or removed and the bathtub overflows and causes a flood, not only in their unit, but down below into multiple other units.

This tenant did have insurance, so they paid their deductible and took responsibility for the damage and repairs to the affected units as they activated their liability coverage.

If the tenant did NOT have tenant insurance, this would have fallen on the homeowner to pay their deductible on their insurance which then would have caused their premium to rise.

Having tenant insurance also covers the tenants personal contents, should something (outside of their control) happen, such as a fire where their belongings are damaged. Tenants can also opt in for relocation coverage if the home they are living in is no longer habitable and they are forced to move out, so their insurance could potentially cover these expenses as well. This is not something all plans have, but it is highly recommended to have in a "just in case" scenario.

Ensuring you yourself, your tenants or clients are educated on why tenant insurance is important is invaluable as it provides peace of mind for all parties should accidents happen. Landlords can enforce that tenants must have insurance and that a copy is provided to them as an extra step to ensuring the tenant is adequately covered as it is inexpensive overall; somewhere between $25-$40/month depending on the policy and it is well worth it.

CIR REALTY Property Management is currently partnered with Apollo Insurance and Insurely to provide both landlord and tenant insurance, so if you'd like more info on those companies, please email kwood@cirrealty.ca