Zoocasa
Sold Prices
Mortgage Calculator
Map
Market Insights
  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
Zoocasa
Home Guest Posts

Thinking About an Income Property? Why Your Tenants Need Insurance

Ratehub.ca by Ratehub.ca
May 11, 2020
in Guest Posts, Home Insurance
4 min read
Share45
Tweet
Share
45 Shares

Whether you’re buying a stand-alone income property or you want a home with a basement apartment, there are a few things you need to know to reduce your risks. Of course, researching rental prices in the area and understanding what goes into a lease agreement are essential, but don’t forget home insurance.

How Home Insurance Protects You

A comprehensive home insurance policy includes coverage for the primary dwelling, a detached private structure (like a shed or pool house), personal property (your belongings like your TV, couch, and jewellery), and additional living expenses pay for the cost to live elsewhere, while your home is being repaired from an insured loss.

There’s also liability coverage for any lawsuit filed against you by someone who injured themselves on your property.

NOTE: Personal property, or contents insurance, has limits and caps on certain items like jewellery, bicycles, and laptops. You can increase the amount for which any particular item is insured by calling your provider and paying for a relative premium increase. Keep a detailed and up-to-date list of your contents available at all times – an online version is best (it won’t get destroyed).

Optional Add-Ons to a Home Insurance Policy

One pitfall of a standard policy is the lack of flood insurance. While your home is protected from a burst pipe, it’s not protected from a sewer backing up into your home from heavy rains, rising rivers and lakes, or snowmelt. Earthquake insurance, as another example, should be high on your BC home insurance if you’re investing in Vancouver or Kelowna, but not needed for a property in Saskatchewan.

Why You Need Landlord Insurance

Landlord insurance costs about 20% more than your comprehensive home insurance policy, according to the Insurance Bureau of Canada, but it’s essential if you’re set to become a landlord.

Let’s say your rental property is damaged by an insured risk or peril, you’ll be happy to know you have rental income protection. This protection covers your lost income while your tenant(s) are relocated during the renovation. If you charge $1,000 in rent, and the repairs take 2 months, your insurance provider will not only pay for the repairs, but will also cover the lost rental income.

Landlord insurance doesn’t cover earthquakes and general wear and tear, so be sure to understand your risks and buy extra coverage where appropriate.

Why Your Tenants Need Insurance

Tenant insurance essentially covers 3 things: contents, living expenses, and liability.

Liability is coverage for someone who injures themselves in the renters’ property. It looks the same as the homeowner’s insurance liability portion, but there are differences. For example, your tenant mops their floor, their guest slips and injures themselves – that falls to the renter’s liability insurance. On the other hand, your landlord insurance kicks in for shared spaces such as icy front steps. If the tenant or their guest injures themselves there, it’s the landlord insurance which will compensate the injured.

Living expenses pay for your tenant to live elsewhere while the unit is being repaired. Your landlord insurance is covering your lost rental revenue, but it doesn’t cover your tenant to live elsewhere. Without it, tension could arise between you and your tenant, especially if you want to keep them as a renter. Renter’s insurance covers those additional living expenses for them.

Contents insurance is another often confusing area of insurance. Let’s say a pipe bursts in the basement, destroying your renters’ bed, nightstand, and couch. Your landlord’s insurance will pay for the repair to the unit, but their stuff, unless they have their own insurance, isn’t covered. All their belongings are lost. Trying to help them out and claiming their contents on your policy is insurance fraud and against the law.

For all those reasons, your tenants should have their own insurance policy.

The Bottom Line

Home insurance is not a maintenance plan, so be sure to take care of your property and repair damage as soon as you can. Take the time to read through your home insurance policy to understand how and when you’re covered. Finally, while it’s not legally mandated, tenant insurance should be something you stipulate in your contacts.

Matt Hands is the Business Director of Insurance at Ratehub.ca, a website that compares insurance rates in Canada, as well as mortgage rates, high-interest savings accounts, chequing accounts, and credit cards with the goal to empower Canadians to search smarter and save money.

Previous Post

Toronto Region Homes Sales in Steep Double-Digit Decline Due to COVID-19: TRREB

Next Post

How Much Toronto Condo Apartment Prices Dropped Since COVID-19 Measures: 35 Neighbourhoods in Review

Ratehub.ca

Ratehub.ca

At Ratehub.ca we make it easier for Canadians to choose better personal finance. With the best tools, rates and knowledge to help you take control of your money. Whether it’s a mortgage rate or insurance rate, a credit card, chequing account or high-interest savings account, we are your champions of choice.

Related Posts

A cottage on the lake
Home Insurance

Best Cottage Areas in Ontario

May 30, 2023
A document that says home insurance policy
Canada

How Much Does Home Insurance Go Up After a Claim in Canada?

April 28, 2023
Pet sitter cuddling with three dogs on a grey couch.
Ask the Pros

Should I Tell My Insurance Provider About My Dog?

February 10, 2023

Blog Search

No Result
View All Result

Newsletter Sign-up

Join a community of 130,000+ subscribers. Don't miss important real estate news, market data, and buying and selling tips.

Recent Articles

A view of the Toronto skyline.

Detached Home Prices Soar in the Greater Toronto Area (GTA) During Q1

May 31, 2023
a trowel and a fork in the ground.

Canadian Gardening Tips for a Successful Spring and Summer

May 30, 2023
A cottage on the lake

Best Cottage Areas in Ontario

May 30, 2023
Skyline of Toronto

Exploring the GTA Cities with the Highest Property Taxes: An In-Depth Analysis

May 29, 2023

Featured Listings (Updated Weekly)

A small lighthouse in Nova Scotia

Luxury Real Estate in Halifax, NS: 7 Listings You Can’t Miss

May 12, 2023

Updated: 7 Houses Currently For Sale in Toronto Under $699,900

May 2, 2023
A detached house on a sunny day.

Updated: 7 Houses Under $900,000 For Sale in Mississauga

April 27, 2023
The outside of a detached home.

Updated: Cheapest Toronto Homes Currently Listed for Sale Under $1,000,000

April 26, 2023
first-time home buyer programs and rebates

Social Media

250 The Esplanade Suite 408 Toronto, ON M5A 4J5

Terms of Use | Privacy Policy | Careers | Sitemap | About Us

 

Zoocasa © 2007–2022. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.

Stay Connected

1-844-683-4663 | [email protected] 

  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
  • Real Estate News
No Result
View All Result

Zoocasa © 2007–2022. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.