The need for insurance when renting

Should you get insurance when you move into a property?

When renters move into their first property, there are many things that go through their mind. Meeting their roommates, finding their way around a new part of town, or newfound independence. The thing that is usually forgotten is insurance for the unit. It is usually not a priority when moving into a new place and many renters feel insurance is something they can do without. According to the Insurance Bureau of Canada, about half of all renters do not have insurance. This is even more prevalent amongst young people. However, insurance can save you a lot of headache and heartbreaks when moving into a new property. The need for insurance when renting is greater than you might think.

Tenant insurance can be broken down into two main areas:

1. Contents insurance
2. Liability insurance

Contents insurance protects your personal belongings, such as your clothing, furniture or digital devices. This type of insurance usually costs a few hundred dollars and covers your belongings in cases of theft, fires, flooding, freezing or windstorms. It may even bail you out of a simple mistake.

Many renters don't know that insurance is necessary to save headache and heartbreaks when moving into a new property.

For example, you could go on a trip and decide to turn off the heat for a few days. However, while you are away, the temperature drops and the pipes freeze, causing flood damage to all your clothing, furniture and electronic or digital devices. Contents insurance could really ease the cost of replacing your valuables. Be careful, however, as you need to understand the exclusions and limitations in any policy you obtain.

Liability insurance can be even more important than contents insurance. For example, the flood could leak through the floor and damage the unit and its contents beside or under yours. Even if the landlord has insurance, the insurance company, tenant below, or landlord could go after you for the cost of the damages.

Here is another possible scenario: standing on your balcony overlooking the park, sipping a glass of wine, your phone rings; startled you reach for it, dropping the glass, it bounces on the balcony railing and sails into the night. Below a father of eight is walking his dog when the glass smashes him in the head, killing him instantly. The dog runs onto the street and is hit by a car. You face potential litigation of impossible magnitude. Liability insurance will protect you to the extent of the insurance, should these issues occur.

Do not believe that the landlord’s insurance will cover your damages. First, the landlord’s insurance only protects the landlord’s own property and personal liability. Your possessions will never be covered by the landlord’s insurance unless the damage was caused by the landlord. Second, if your neighbour’s property is damaged due to a fire or flood originating from your unit, the landlord could sue you for the damages caused to the neighbouring property. This is evidenced in the case Taylor v Allard[1], where the tenant was 50 per cent liable for the damages caused to the neighbouring property. Third, landlords are not responsible for providing alternative accommodation should your unit be involved in some accident. Therefore, having a Tenants Insurance policy that will ease the financial burden of moving and staying in a new place while repairs are being made on the rental property (provided you bought that coverage).

Lastly, there is case law which shows a landlord can demand that their tenant has insurance. In the 2005 case of Stanbar Properties Limited v. Brooke, the Ontario Superior Court of Justice upheld that tenant insurance coverage, if required in the lease, is enforceable and can be grounds for eviction. Make sure to read the lease to see if the requirement for having tenant insurance is written in the contract.

Insurance may or may not be required when signing a lease, however, it is always a good thing to have.

Perhaps the most difficult part of writing these articles relates not the actual writing, but thinking of a topic to address. So help us!!! Mail, deliver or fax letters to the magazine or to us, use the web site (www.schwarzlaw.ca), email (info@schwarzlaw.ca) and give us your questions, concerns, critiques and quandaries. We will try to deal with them in print or electronic form.

Disclaimer: The articles provided herein are for general information purposes only and not intended as or to be relied upon for legal advice. Consult with a lawyer for your unique situation.

Cases:

1. Taylor v Allard, [2009] 10986 (ON SC)
2. Stanbar Properties Limited v. Brooke (2005) Doc. Hamilton 04-212DV (Ont. Div. Ct.)

Websites:

1. http://ontariolandlordandtenantlaw.blogspot.ca/2013/08/renters-insurance-ontario-students-take.html
2. http://renx.ca/tenant-insurance-from-a-landlords-perspective-are-you-covered/
3. https://www.insurancehotline.com/5-reasons-why-you-need-tenants-insurance/
4. http://www.weirfoulds.com/files/9351_Lawyer%20News_George%20Rust-D'Eye_20111223.pdf