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Rent is one of the most significant expenses you’ll have to cover if you’re not a homeowner. And while you aren’t legally required to obtain tenant insurance, a landlord can insist on it before renting to you.
Also known as renters insurance, tenant insurance protects your personal belongings and provides you with personal liability coverage.
Renters insurance is always a wise investment but if you’re thinking of renting or already do rent a condo, it’s even more important. Why? Many people assume that if their condominium building and their landlord have insurance, so do they. But it’s a much more nuanced situation than that.
Doesn’t my condo building’s insurance cover me?
The short answer is no. Your condo building has its own commercial insurance policy, which will only provide protection to the exterior of your unit, such as the roof or the windows. The same goes for common areas, such as elevators, lobbies, and gyms. Those are covered under the condo corporation’s insurance. When it comes to the interior of your unit, however, things get a little more complicated. The owner of your unit should have an insurance policy that responds to interior damage. But when it comes to your contents and any upgrades/renovations that you paid for and completed yourself, you’re on the hook.
That’s why a tenant insurance policy is so crucial. It looks after your financial wellbeing, not the condo corporation’s. And it also provides you with third-party liability coverage, which covers you in the event that someone injures themselves while inside your unit.
The good news is: tenant insurance is easy to get. You can secure a tenant insurance policy for your condo from the same insurance companies that offer homeowners insurance, or from companies that focus on shorter-term insurance products.
How does tenant insurance work when renting a condo?
Tenant insurance plans vary depending on the insurance provider, but they usually provide two types of coverage: liability and contents.
Most people are shocked by how much it would cost to replace everything all at once. That’s why you should insure for an amount representing the replacement cost of all your possessions. When making a claim, your insurance provider may require receipts or photos as proof, so it’s essential to keep track of your home inventory.
Individual tenant insurance will provide coverage for the following:
- Upgrades/improvements to your condo unit that you do or pay for yourself
- Personal contents, such as furniture and clothing
- Third-party liability
- Your locker
Tenant insurance also provides coverage for any additional living expenses you might incur should you need to relocate if your unit becomes inhabitable due to damage and needs to undergo repairs for an extended period of time. In some cases, it may also cover other incurred costs, such as restaurant meals and moving costs. Be certain you understand how long an insurance company would cover your living expenses in such a situation.
Liability and condo insurance
The other big benefit of having tenant insurance while renting a condo is that you have liability protection in the event that there’s damage sustained to the condo building that’s found to have originated in your unit.
Let’s say your condo building makes a water damage claim on its commercial policy, but the damage is found to have originated in your unit. The condo corporation could assess that loss against the policy of the person who owns your condo unit. If you’re found to be liable for the damage, however, the condo corporation and the unit owner’s insurance companies could decide to recover the damages from you, in which case your personal liability policy would respond. This is why it’s important to have a tenant insurance policy that can defend you against this type of subrogation.
How much does tenant insurance cost?
The cost of tenant insurance will vary depending on the value of your possessions and where you live.
The best thing you can do to save money on tenant insurance is to shop around. Don’t just settle for the first quote you’re offered. Use the internet to your advantage and compare tenant insurance quotes from a number of different providers to ensure you’re getting the best rate for your unique needs.
Before you purchase a policy, make sure you understand its coverage limits. Here are some questions you to ask your broker or agent:
- What does my tenant insurance policy cover?
- What are some items I have that might require an endorsement/rider for additional coverage?
- How much third-party liability coverage do I have? How much do I need?
Tenant insurance doesn’t have to be complicated. Just remember: when renting a condo, you might assume you’re covered, but getting your own individual insurance policy will provide you with the protection you actually need.