You have found a place to rent. Fantastic! You have arranged for movers (whether professional or friends to help). Great! You have even downloaded an app to help you decide how to arrange your furniture. Fun! But what about renter’s insurance?
Renter’s insurance, sometimes called tenant insurance, can sound scary, complicated, and worse still expensive. But it does not need to be all that difficult. And often people find it to be less expensive than they first thought.
At Campbell & Haliburton Insurance, myCH we can help unravel the mystery of renter’s insurance. Most renter’s insurance policies will protect you in two important ways – both your contents and your liability.
Caveat: There are a number of insurance companies that sell renter’s insurance here in Canada. There are similarities between them but also differences. This is not designed to be the definitive word on what each individual policy covers. Rather it is designed to provide a “broad brush” overview of what renter’s insurance does. For specifics on what your policy does, and does not provide, please speak with your broker or agent.
The first thing that renter’s insurance does is protect your belongings. There are two major questions that you need to answer when arranging contents insurance.
1. How Much Insurance Do I Need?
This can be a difficult question to answer. After all, most people do not purchase all their belongings at once. We acquire them over time, some new, some second hand. It can seem like an impossible task to come up with how much you have spent for your “stuff”.
When figuring out the amount of insurance that you need – ask yourself the question, “If I needed to buy everything brand new, what would it cost?” Most renter’s insurance policies are based on “replacement cost.” Replacement cost means the amount that it would take to purchase what you had with brand new items.
Many people fall into the trap of thinking, “But my things are old; they are not worth that much.” That may be true, but when it comes to insurance ask the question: “What would it cost if you needed to go on a shopping spree and buy everything brand new?” When thinking of this remember that most policies will allow you to purchase the same kind and quality as what you had. So, if that old couch is very well made you would be able to purchase the same quality of couch in the event of a claim.
Many insurance companies have a minimum amount of contents insurance that they will provide, for example, $30,000 is quite common. Would that amount be enough? It is a good starting point, but everyone has a unique set of belongings and everyone has a different set of needs.
One tool that is available is a record of your belongings. While it is not strictly necessary to complete a record like this, it is a valuable tool in determining how much insurance you need.
2. What Kind of Insurance Do I Need?
Once you have determined how much insurance you require the next question to ask is what kind of insurance best meets your needs. There are essentially two different types of contents insurance. There is a more basic form of insurance and a more comprehensive insurance.
Named Perils Insurance
The first form of insurance is named perils. It has different names depending on the insurance company. It may be called Pak I or Broad Form. Each company has a different name. So please do not rely on the name, make sure that you understand what it actually provides.
As the name implies “Named Perils” provides insurance for a specific number of perils. A peril is an event that is unexpected and accidental.
Common named perils would include:
- Falling Object
- Impact of Aircraft, Spacecraft of Land Vehicle
- Water Escape
For a named perils policy to respond, one of the specifically listed named perils would have needed to occur. If something other than one of the specially listed things happened there would be no insurance. Named Perils policies often specifically define some of the terms and restrict what is, and is not, covered by them.
Comprehensive Perils Insurance
The second form of contents insurance is comprehensive insurance. As the name implies this is a much broader form of insurance than is named perils.
Named Perils Insurance specifically tells you what is covered, Comprehensive Insurance tells you what is not covered. It is often called all-risk insurance as it covers all risks except those specifically excluded.
Typical exclusions would include:
- Exclusions when the property is vacant
- Pet Damage
- Normal Wear and Tear
There are some day-to-day advantages of comprehensive insurance cover named perils.
- The first is a philosophical difference. With named perils insurance the onus is on the insured (person who purchased the insurance) to show where something is covered. With comprehensive insurance that responsibility is shifted to the insurance company. Unless they can point to a specific exclusion, the insurance company must pay the loss.
- Accidental Damage – Comprehensive Insurance typically provides insurance for accidental damage whereas named perils do not. For example, if a person dropped a big-screen television or spilled a glass of red wine on the couch most comprehensive insurance policies would provide coverage whereas named perils would often not.
- Mysterious Disappearance – Named Perils policies typically cover if things are stolen, but not if they are lost. Comprehensive insurance often covers loss as well. If your diamond ring goes missing or the gem falls out of it comprehensive insurance would usually respond and pay the claim where named perils would likely not.
- Smoke – Some named perils policies provide very restrictive coverage for smoke damage. Comprehensive Insurance provides much better coverage for things like candle smoke.
So which policy is better for you? Comprehensive insurance is a significantly better policy than a Named Perils policy is. Typically, the price difference, on a renter’s policy, is not that much between the two. If your budget allows for it, we recommend Comprehensive Insurance.
With renter’s insurance, as with most kinds of insurance, there are a few things to be aware of:
- Insurance policies carry with them a deductible. A deductible is a portion that you must pay in the event of a loss. For example, if you have a $500 deductible you would be responsible for any amounts up to the first $500 of any claim.
- Whenever you file a claim you can expect to see your premium increase.
- Most policies have specific items that they put limits of insurance on. For example, there are maximums that will be paid out for things such as jewelry, stamp or coin collections, or bicycles to name a few. We recommend that you review these with your broker or contact one of our helpful insurance brokers at Campbell & Haliburton.
Liability Insurance protects you if others are harmed due to your negligence. Liability insurance has two “triggers” that they use.
- Bodily Injury – Someone gets injured because of what you did or did not do. Suppose you are renting a house and are responsible for keeping the sidewalk shoveled and safe. But if someone slips on the ice and is injured you might be found by the courts to be liable. Your renter’s insurance provides liability insurance to protect you in this situation.
- Property Damage – Provides coverage when there is damage to someone else’s property due to your actions. For example, if you are cooking and cause a fire the landlord might want you (or your insurance company) to pay for damages to their house.
Liability Insurance is generally included in a renter’s insurance policy.
A few things to think of:
- Cost – In Canada, liability insurance on a renter’s policy is relatively inexpensive. Many policies provide you with $1,000,000 of liability insurance. However, the cost to increase this is generally very low. Since liability insurance is designed to protect you from potentially catastrophic events, we recommend increasing the amount of liability insurance.
- The Fine Print – Some liability insurance policies provide restrictions on when it will payout. We strongly recommend that you speak with your insurance broker to ensure that you are aware of any limitations.
Renters insurance is a relatively cost-effective way to not only protect yourself in the event the unthinkable happens.
Are you ready for a personalized insurance quote? Our easy user-friendly website makes this both easy and convenient. Do you need more information? Please contact Campbell & Haliburton, one of our expert insurance brokers.
If you don’t have an insurance broker and want to talk to someone who is truly passionate about your insurance, contact us at Campbell & Haliburton Insurance. We would love to talk to you.
Office Manager & Licensed Insurance Broker
Our Trusted Regina Insurance Agents at Campbell & Haliburton have your best interests and safety in mind and our commitment to customer service is one of the pillars of our business. We also know insurance inside and out, so please contact us for all of your insurance needs and we will be more than happy to help ensure what you value most is protected.