Accidents might happen on the landlord’s property during your stay as a tenant. You might end up owing thousands of dollars in legal fees and damages. However, having tenant liability insurance coverage can save you from going bankrupt.
What is tenant liability insurance?
It is insurance taken by the tenants to cover damage or loss of property owned by the landlord. The insurance legally covers the damages caused during their stay.
However, this insurance must not be confused with the tenant’s content insurance — the latter exclusively covers the contents inside the property. To learn more about affordable tenant insurance, visit Surex.
What Does Tenant Liability Cover?
Here are the scenarios your insurance would cover:
- Injuries caused at the property: There might be a case when a third party visiting your rented home has an accident and gets injured while on the property. Without tenant insurance, this would make you liable for paying for their treatment. However, tenant insurance coverage protects you in this case.
- Items misplaced or damaged at home: You might misplace or damage the landlord’s items when on the property. The insurance would cover these costs.
- Accidents like fire and water damage: There is nothing much you can do in the event of a fire or water damage. As long as they are not caused by you, the tenant’s insurance coverage would cover the expenses.
- Damages caused due to social events: If you host regular social gatherings at your place, the chances of property damage increase. Thus, make sure you have appropriate insurance in place.
- Theft: Theft is yet another uncontrollable situation. An appropriate policy would cover events of theft and compensate you an amount equal to the replacement value of the lost items.
What Doesn’t Tenant Insurance Cover?
Here are the scenarios your insurance wouldn’t cover for:
- Natural damage due to wear and tear
- Theft caused due to the tenant’s own fault
- Damages while the property is unoccupied for more than 30 days
- Problems arising from a home-based business
- Acts that are not a result of accidents
Is tenant’s insurance mandatory?
No Canadian law does not require tenants to purchase a tenant’s insurance coverage. However, vigilant landlords may require their tenants to purchase the policy.
Thus, if it is a part of your rental agreement, you would have to purchase a tenant’s insurance.
How much tenant liability insurance do you need?
The majority of the tenant liability insurance coverage ranges from $100,000 to $500,000. But if you aren’t sure how much insurance you would need, adding up your net worth might help. The net worth approach helps you understand what you own and plan your coverage accordingly.
How to Purchase Tenant Liability Insurance?
Here’s how you can purchase tenant liability insurance:
Decide your coverage types
There are various types of tenant liability insurance. While some cover personal possessions, others cover living expenses. If you obtain coverage for personal possessions, you’ll get coverage for furniture, appliances, and more.
There is specialized coverage also, which provides you complete protection against floods or earthquakes. However, if your area does not have a history of these natural disasters, you can skip this add-on.
Determine the coverage amount
Everybody doesn’t require the same coverage from their insurance. It entirely depends on the amount of your rent and the location you’re in, along with your lifestyle.
Choose an insurance company
Many companies still don’t offer tenant’s insurance which means you’ll have to do thorough research. Once you come across an insurance company that does, you need to shop around and explore the terms, features, and offers to make a sound decision.
Mistakes to Avoid When Buying Tenant Liability Insurance
While purchasing insurance, we all make some common mistakes that can cost us our hard-earned money. Here are some mistakes that you must avoid when buying tenant liability insurance.
Not knowing what the policy doesn’t cover
You probably check what you get while purchasing a policy, but it is important to check what the policy doesn’t cover. Knowing that can guide you in purchasing any additional coverage if required.
Not considering extra coverages
While purchasing a policy, you may forget to check for extra coverage you can get. These add-ons do not cost much when purchased along with the main policy.
Not comparing prices
It’s always recommended to shop around and compare prices before settling for one.
How to reduce the cost of tenants’ insurance?
Here are some ways you can reduce the tenant’s insurance cost:
Go for annual payments
Paying annually instead of monthly will help you reduce the insurance cost to a great extent. If that seems hard, you can always go for a 0% purchase credit card and spread the interest-free payments over twelve months.
Consider the extras carefully
The insurance company will offer you extra coverage every so often. But you will need to choose which option will help you get significant benefits without increasing the tenant’s insurance cost.
Improve security
You certainly do not need insurance for everything. For example, you can talk to your landlord and convince them to install better locks on doors and windows. It will ensure better security and might save you the insurance cost.
Conclusion
Hopefully, this article has answered your question: What is tenant liability insurance?
Indeed, purchasing a policy requires ample research and knowledge. Although it is not mandatory coverage, a tenant’s liability insurance protects you in unforeseen circumstances. If you are unsure about the extent of coverage needed, talk to an insurance expert today. They will help you figure out the best coverage according to your needs.
