Considering tenant insurance? Here’s what you need to know first.

Original article by:

Leah Golob

THE CANADIAN PRESS

June 21, 2022

📰 Read the FULL ARTICLE here.

I spoke with The Canadian Press about what renters should weigh before deciding whether to buy tenant insurance. Here are the highlights and my contributions.

Key Takeaways

• Tenant insurance, also called renter's insurance, typically costs $20 to $50 a month and helps cover costs from events like water damage, a kitchen fire or a visitor's slip and fall.

• It isn't legally required in Canada, though some landlords ask for it before handing over the keys, so it's up to renters to weigh the pros and cons.

• Policies generally cover personal liability, personal belongings such as electronics and furniture, and extra expenses like a hotel stay if your home becomes unlivable after an insured loss.

• Some insurers also cover identity theft or lock replacement, while exclusions vary by policy and can include rust, rot, mould or damage from vermin.

• The experts interviewed agreed that being caught without coverage isn't a risk most renters should take.

My Perspective

When deciding whether to get tenant insurance, ask yourself what it would look like financially if you had to replace expensive items like a smartwatch or computer out of pocket after a theft or damage. Also consider whether you could afford legal costs if someone got hurt in your home or you damaged another unit, or the cost of relocating if your home became temporarily unlivable.

Some people plan to rely on an emergency fund instead, but I advise against it. An emergency fund is better used for income protection against illness, injury, job loss, a low- or no-income month as a business owner, or unexpected events like the pandemic. The last thing you want is to cover the cost of theft or damage while you're also dealing with lost income.

I don't see any downside to tenant insurance. The only people who might not need it are those with enough savings to absorb the loss.

"If you're quite well off and have ample savings and investments, then maybe you don't need the insurance because you can afford to replace everything without experiencing any financial distress."

For everyone else, a small monthly premium is far easier to manage than a bill for thousands of dollars.

"If the cost of funding a $30 a month policy feels too expensive to you, then that's exactly why you need it."

Originally published in The Canadian Press by Leah Golob on June 21, 2022. Use the link at the top of this post to read the full article.