Landlord insurance for homeowners in Canada who rent out their properties is critical. As a landlord, you are exposed to certain risks and you need coverage for unforeseen events.

An ordinary homeowner’s insurance policy will not cover many eventualities that can arise when you have a tenant in your property.

The cost of owning and managing a rental property can be quite expensive. For this reason, it is critical to have the right landlord insurance in place to protect your investment from damage or loss.


Reasons you need Landlord Insurance for your Rented Triplex

As a landlord, you are exposed to significant risks that can have devastating financial consequences. For instance, if the building is gutted by fire, you will need replacement insurance cover.  While under construction, you will not have rental income but will still need to pay your mortgage. Your landlord insurance can take care of these problems.

Two of the biggest risks that face landlords are malicious damage to property and non-payment of rent.

Regular home insurance policies do not cover the following:

  • ✓ Theft of property by tenant or guest of tenant
  • ✓ Malicious or intentional damage to property by tenant or guest of tenant
  • ✓ Liability for claims made by a tenant against you
  • ✓ Legal expenses arising from suits filed by a tenant
  • ✓ Loss of rental income due to non-payment of rent

Not all landlord insurance policies are the same.  You can obtain landlord insurance with contents insurance if you rent out a furnished property.  You can also take out landlord insurance to cover the building and its fixtures.

Cover for loss of rental income is important especially if you have amortizations to pay for your property.  Your cash flow will be negatively affected by this loss and can result in financial hardship.

A rental property is a huge investment.  It is critical to have adequate landlord insurance cover to protect your asset.  You can ask for a free quote online to get the most affordable and comprehensive policy for your investment.


Which do I need: Landlord or Homeowner’s Insurance

Because of the growing popularity of renting out homes for short periods of time over online platforms, many people are in shaky ground with their insurance coverage.

If you only rent out your home in the summer when you are abroad, do you need landlord or homeowner’s insurance?

In this scenario (short-time rentals or sporadic rentals), it is possible to maintain a homeowner’s insurance but you need to inform your insurance company.


It is possible with many insurers to obtain additional coverage for this type of situation.

If you rent out an investment property which you don’t live in on an on-going basis, you need landlord insurance. It is a separate policy for the home insurance you have for your own home.

Generally, you can’t buy homeowner’s insurance for a property you don’t live in.  You can speak to an insurance broker or agent to understand the type of coverage you need and the risks you need protection from.


Types of Coverage from Landlord Insurance

Landlord insurance is similar to home insurance in the sense that it also offers protection for the building and other structures on your property.

There are, however, major differences between the two.


Coverage for Personal Property

Homeowners insurance typically protects personal belongings inside the home including electronics, furniture, clothing, and valuables.  Landlord insurance does not cover the personal property of your tenants or any personal items you own left behind that is not used for the rental property.

For furnished units for rent, a landlord insurance policy can have expanded coverage for an additional price.


Coverage for Liability

Home insurance typically provides liability coverage for injuries or damage caused to a third party while on your property. It does not, however, cover such damage or injuries on your rented property. If a tenant is injured in the home for rent and claims compensation, your landlord insurance can cover medical expenses and legal fees.

Benefits from these types of coverage are subject to policy limits and deductibles.  The deductible is the amount you are responsible for paying for every incidence of damage or loss.  You can choose a deductible amount you feel comfortable with but insurers would generally have a minimum deductible amount.


Optional Types of Coverage for Landlord Insurance

Landlords would have different needs based on individual risks.  These will usually depend on the location of the property and the condition of the rental property.

Aside from basic coverage from landlord insurance, you can consider getting optional coverage for any or all of the following.


Rental Property Under Construction

If you should renovate your rental property, you can benefit from additional coverage that protects it until it becomes inhabited.


Vandalism or Burglary

Seasonal rental properties are at risk for vandalism or burglary. A traditional landlord insurance won’t cover damages for vandalism unless you purchase this optional coverage.


Personal Umbrella Policy

Your liability coverage has a limit.  If you want additional protection, you can obtain this extra coverage.  Usually, umbrella policies are sold in increments by the million, up to $5 Million.

It is important to obtain comprehensive landlord insurance as broader coverage means fewer problems down the road with your rental property and your tenant.


Landlord Insurance vs. Tenant Insurance

It is important for both the landlord and the tenant to understand the differences between landlord insurance and tenant insurance.

Tenant or renters’ insurance is insurance protection designed for renters, whether it is an apartment, a single-family home, or a condo.  It is much cheaper than landlord or home insurance because it only covers personal property of the tenant and liability.

As a landlord, it pays to ensure your tenants have tenant insurance.


Tenant Insurance Only Covers Personal Property and Liability

Tenants have no stake in the building they occupy and this is already covered by the landlord’s insurance in case of damage. However, tenants stand to lose a huge amount if the apartment is burgled or a fire destroys the contents of the rented dwelling.

Further, a tenant can be held legally liable if damage to other units happen due to a leaking faucet left open or a fire breaks out.  The building’s owner can hold you liable for damages.

It is therefore highly advisable for renters to purchase their renters’ insurance.  Landlords have the option to require tenants to show proof of tenant insurance before approving a lease agreement.


Medical Expenses and Additional Living Expenses Covered

Tenant insurance can also pay for medical expenses for a guest who is injured in the rented unit.

Another important coverage from tenant insurance is for additional living expenses.  If your apartment gets damaged by fire and you are unable to live in it while under repair, your policy can pay for hotel bills and additional food expenses.

These risks can lead to a heavy financial burden if you don’t have tenant insurance.


Things to Consider When Buying Tenant Insurance

Before you obtain tenant insurance, you need to decide on your deductible amount.  It affects the cost of your premium as the lower your deductible, the higher the premium.  You can adjust your deductible and premium to suit your needs.

Ensure that you buy adequate coverage for your personal property. Think about how much it would cost to replace your personal belongings if you lose them due to fire, burglary, or other unforeseen events.

Tenant insurance is very affordable and is recommended even for university students staying in a rented home.

Check out secrets to cheap tenant renters’ insurance in Quebec to help you find the best tenant insurance for your budget.


How Much Insurance Do you need?

The Insurance Bureau of Canada recommends making an inventory of your possessions and keeping proof of ownership such as receipts, photos, or videos.

List down your personal belongings, date of purchase, and the value to have an accurate estimate of their worth.

Depending on this value, you can obtain cash value replacement coverage (cost minus depreciation) or full replacement coverage.

You may think that there is little likelihood of something bad happening. The fact is, we can’t know for sure.  You will be glad to have insurance protection in case something does go wrong. It is peace of mind for a small investment.


Sample Coverage of Landlord Insurance Policy

It might be confusing to compare landlord insurance policies especially if you don’t know what to look for.

Below is a sample of landlord insurance coverage that can be your guide in shopping for the best landlord protection

  • Replacement coverage for dwelling and other structures
  • Covered perils such as fire, smoke damage, lightning, hail, ice storm
  • Water damage from burst pipes
  • Landlord Liability up to $1 Million
  • Medical payments coverage up to $5,000
  • Loss of Rent Income in case of Damage
  • Contents coverage for furnished units
  • Rent default (optional with some policies)

Look at and compare these critical components of landlord insurance when checking out your quote.

Landlord insurance is generally about 20% more expensive than the average homeowners’ insurance because of higher risks.


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