As a broker, I often hear from clients that they do not need tenant’s insurance. Usually, they say they don’t own enough stuff to ensure or it’s a waste of money. This gives me an opportunity to do what I love. Educate on why people need insurance and how mitigating loss to an insurance company is a very smart financial move.
Tenants insurance is more than just your contents. Let’s take a look at 3 parts of the tenant's insurance policy that I find the most beneficial.
One misconception people have is that their Landlords have property insurance for the building itself, but this doesn’t extend to the contents of your place. Nor does the landlord’s coverage cover your personal liability if, for example, a visitor is injured at your place or you damage someone else’s property in the building.
The minimal on most tenant’s insurance is usually $30,000. For a single person, this may be enough. For a family, this will not cover very much.
Let’s look at the average contents of a single person in an 800 square foot apartment and how much it cost to replace the contents looking at the low end of contents.
- Furniture- $5,000
- Computers and technology $5000
- Clothes and jewellery $5000
- Appliances $2500
- Kitchenware $1000
- Bedding and bath $1000
One of the biggest advantageous of tenant insurance is the liability coverage that it gives the client. Knowing that the owner’s liability does not cover the liability of the tenant. An example for liability portion of insurance which I have seen a few claims from is when a client left an iron on during the day and it caused a fire. Your insurance would cover you for any third party damage. Which would be for example, smoke damage to your neighbours apartment. Another common liability claim we see is when someone comes to your home and trips and falls on the stairs and they sue you for their injuries. This would cover you as well.
Additional Living Expenses
The best examples of additional living expenses would be the Fort McMurray fires. There were a few people left with nothing after the fire because they did not have any insurance. On a personal note one of my friends from high school was in Fort McMurray during the fires. He wanted to save money and did not get tenants insurance. During the fire his apartment was affected by the fires, he lost all of his belongings and was all out of pocket expenses during the time of evacuation until he found a new place to live. This is one simple way to explain why additional living expenses and tenant’s insurance is so important. With additional living experience, when you are displaced by an insurable claim, the insurance company will get you a hotel to ensure you have a place to stay plus some additional costs above your normal expenses.