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Misconceptions about tenant insurance

Car owners know they need car insurance, and you’d be hard-pressed to find a homeowner who doesn’t carry homeowners’ insurance. But a lot of renters don’t bother protecting themselves with tenant insurance. In fact, the Insurance Bureau of Canada reports that about half of all tenants don’t have insurance to cover contents and liability.

For whatever reason, tenant insurance generally isn’t high on most renter’s list of priorities – especially since you’re not legally required to have it. But their decision to go without is often based on misconceptions, from underestimating how much it costs to replace your belongings to not understanding your legal liability as a tenant.

Here are some of the most common misconceptions about tenant insurance and how knowing the truth could save you thousands of dollars.

Myth 1: I’m covered by my landlord’s policy.

Reality: This is quite likely the most commonly held misconception about tenant insurance. Most people renting a space – whether an apartment, condo or house – have the false belief that the owner of the property is going to take care of them if something should happen to the building they occupy.

But your landlord’s policy covers damage to the building – not tenants’ personal possessions. If you’re properly insured, you’re covered. However, if you’re uninsured, the cost to replace your possessions will have to come out of your own pocket.

Myth 2: I don’t need tenant insurance because I don’t have much stuff.

Reality: Most people don’t really appreciate the value of the things they own. Clothing, electronics, furniture, dishes, sheets, towels, bikes, sporting equipment… if you had to go out today and replace every single item you own, the cost will be far greater than you think. Once you start tallying the costs to buy it new, the numbers add up quickly.

Few people think about what it looks like to lose everything – from your jeans and kids’ toys to towels and linens. Few people guess accurately on what it would cost to replace all those items. Tenant policies are less than a few hundred dollars per year. When you compare that to the tens of thousands it would take to replace all your contents, it really does provide great value.

Myth 3: I already have basic coverage. I don’t need to pay a premium.

Reality: Some tenants do have insurance – the cheapest coverage they can find online. But even if you have coverage, do you have enough?

You probably don’t have an itemized list of everything you own – few people do. But one of the brokers or CSRs at DPM Insurance Group can provide resources to help you calculate the value of your possessions and figure out how much money you would need to replace or repair everything.

Sure, $10,000 sounds like a lot of money, but consider how much you pay for a pair of jeans and how many pairs of jeans you currently own. Factor in nothing else but the rest of your clothing and $10,000 won’t last long if you lost everything in a fire.

Myth 4: I’m just a renter. Damage to the unit isn’t my responsibility.

Reality: Another common misconception is that, as a renter, you’re not responsible for any damage to the unit or unintentional harm to someone who visits your home. After all, you’re not the owner, right?

But if you were to accidentally cause major damage to your unit, you have a responsibility to the landlord, and damage deposits are not designed for that kind of damage.

Consider this scenario: If you left the water running in your unit, which caused flooding in your unit and the ones below, you could be held responsible for covering the damages – not the building owner. And the building owner and other tenants may be within their right to pursue legal action.

Myth 5: If I’m forced to move out temporarily, my landlord will reimburse me.

Reality: Contents insurance will cover the cost of replacing or repairing possessions lost or destroyed by a fire, smoke, flood, windstorm, water damage, vandalism or theft. But if you have to move out temporarily while your unit is being repaired – say, due to a water leak or fire – your landlord isn’t responsible for covering the additional cost that comes with spending potentially months in a hotel or furnished apartment. Instead, you might have to rely on family, friends, or charitable donations.

Your tenant insurance should provide enough to cover additional living expenses, including the cost of a temporary location, because it won’t take long living under your sister’s roof to remember why you didn’t get along as teenagers.

Myth 6: It’s not going to happen to me.

Reality: No one thinks it’s going to happen to them – until it does. But if you lost everything in a fire, you’d be temporarily homeless.

Where would you go? Could you afford to live in a hotel or a temporary furnished rental suite for several months? How would that affect your ability to work? Your kids? Your dog?

Thinking about it from a personal perspective can make you realize how vitally important it is that your insurance provides additional living expense (ALE) coverage if you’re displaced. That coverage needs to be enough to cover a long-term stay outside of your home, and there are other factors that can go into determining the right amount. Ensure you talk with one of DPM Insurance Group’s brokers or CSRs about how much you will need to live somewhere else.

After dispelling all these common myths, it’s fair to say that every renter should have tenant insurance, but not all tenant insurance is created equal. That’s why taking the time to meet with a broker or CSR to customize the right policy for your needs is time well spent – so if the worst-case scenario does happen, they’ve got your back.

If you’d like to discuss tenant’s insurance, or want to review your existing policy, the brokers and CSRs at DPM insurance Group are always prepared to help. Click here to find the location nearest you: https://dpmins.com/locations/

 

Source: Wawanesa

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