Landlord Insurance: How It Saves You Money and Stress

Years ago, a fire caused $512,995.04 worth of damage to a BC-based landlord’s property.

Let’s assume this landlord had landlord insurance; even after their premium and deductible, they’re looking at hundreds of thousands of dollars saved. Without insurance, they’re left 100% responsible for over half a million dollars in damages.

No one wants to imagine that situations like this can happen to them. They’re certainly rare—and not always to such a magnitude—but they do happen—and landlord insurance can save the day when they do. 

Whether you already have paying tenants, are in the process of turning your home into a rental property, or are toying with the idea of maybe becoming a landlord in the future, this landlord insurance guide is for you.

The main things to know:

• Landlord insurance typically covers rental property structure, loss of rental income, landlord-owned items, liability, and legal fees related to eviction proceedings
• Your coverage amount should ideally cover the most expensive setback that could possibly happen to your rental property and tenants
• Home, landlord, tenant, and condo insurance serve different purposes (although you can combine them)
• No Ontario law requires landlords to carry insurance, but it significantly lowers the financial risks of renting and opens up more funding and tenant opportunities
• There are often savings when you bundle home and landlord insurance together
• Some providers offer standalone landlord insurance while others offer additional coverage you tack on to your home insurance
• Home insurance is an easy way to protect your home until it's time to rent it out; the better condition your property is in when you apply for landlord insurance, the better your coverage options will be

How landlord insurance makes your life easier

No law requires landlords in Ontario to carry insurance, so why get it?

Here are just a few reasons why:

1. You’ll save a lot of money when expensive issues arise in your home or property
2. You’ll have the peace of mind of knowing that if something goes wrong, you’re covered
3. It’s required by some lenders or mortgage providers before they’ll give you a loan
4. It’s required as part of some lease agreements with tenants

Now, let’s look at what kind of insurance you need.

Home vs landlord vs tenant vs condo insurance

There’s a lot of confusion over different types of insurance, who they’re for, and what they cover. To clear things up, here’s a simple table comparing home, landlord, tenant, and condo insurance.

In some cases, you may need to combine different types of insurance for full coverage. For example, if you live in your home but also rent out certain parts, you may need both home and landlord insurance. 

It’s also often cheaper to get your home insurance from the same provider as your landlord insurance; many providers offer discounted bundle deals.

What does home insurance cover?

For homeowners living in their homes, home insurance often pays for:

• damage or loss to your home
• damage, theft, or loss of your personal possessions
• personal property stolen from your vehicle
• damage or injury to others who visit your home or property
• accidental damage you cause to somebody else’s property

What does landlord insurance cover?

For landlords, landlord insurance often pays for:

• damage to your rental property structure beyond wear and tear
• loss of rental income if the property becomes uninhabitable due to a covered event
• damage, theft, or loss of landlord's belongings within the rental property
• damage or injury to others who visit your rental property
• living expenses for tenants if the rental property becomes temporarily uninhabitable due to a covered event
• legal fees and eviction costs associated with eviction proceedings

What does condo insurance cover?

For condo owners, condo insurance often pays for: 

• damage to the inside structure of your condo (your condo corporation covers outside and shared areas of your building)
• damage to, or loss of, your belongings
• damage to improvements you, or the previous owners, made to your condo
• damage to other condos or common areas caused by an accident in your condo
• additional living expenses, up to a certain amount. For example, if you're temporarily unable to live in your condo because of a loss covered by your policy

What does tenant/renters insurance cover?

For tenants, tenant insurance (aka renters insurance) often pays for:

• damage to or loss of your possessions if you rent or lease your apartment or home from someone else
• personal property stolen from your vehicle
• accidental damage you cause to any part of the apartment building or home you're renting
• injury to visitors
• additional living expenses, within a certain limit. For example, if you're temporarily unable to live in your apartment because of a loss covered by your policy

Securing the landlord insurance coverage you need

The ideal amount of coverage is the amount you’d need to fix or replace everything if your rental property and tenants disappeared completely.

Insurance providers calculate this figure based on factors like:

1. Rebuilding Cost: The cost to rebuild the property, including construction, materials, and labor. 
2. Landlord-Owned Property: The value of landlord-owned items within the rental property, such as appliances and furniture.
3. Structures and Improvements: The cost of insuring additional structures or improvements made to the property, like detached garages or sheds.
4. Loss of Rental Income: The cost of rental income loss in case your property becomes uninhabitable. 
5. Liability Coverage: The needed liability coverage based on property location, number of tenants, and associated risks.
6. Tenant-Related Risks: The risk of intentional and/or accidental damages caused by tenants.
7. Claims history: Your claims history, if you have previously filed insurance claims.
8. Local Regulations: Local regulations and requirements, as they may impact the necessary insurance coverage, including potential minimum requirements.

These factors combined affect what premiums (monthly fees), deductibles (out-of-pocket money you pay before insurance pays the rest), and coverages (areas of your rental operation) you qualify for. 

As a first step, use online providers, such as Ratehub, to get a free estimate by answering a few questions. 

An easier way to sign tenants at the right price

As a landlord, landlord insurance makes your life easier, plain and simple. It saves you money, stress and often grants you access to more funding and tenant opportunities. 

But let’s back up: For help signing tenants in the first place—quickly and at the price your property deserves—sign up for Rhenti's automated leasing software today.