Consider the following scenario:
You're making the family dinner, entertaining the baby and running a bath. But oh no, while watching the baby you forgot-for just a couple of minutes-about the bath you were running which is now running over you! Your bathtub is overflowing and the bathroom of your apartment is now ankle deep in water. It's an incredibly big mess to clean up. As you survey your new body of water, you get a knock at the door. It's your neighbour who is furious as she informs you that water from your overflow has been gushing into their apartment below causing damage to their stereo system and laptop. Just when you thought things couldn't get any more stressful you realize that on top of cleaning up the mess, you now owe thousands of dollars to the neighbour, or do you? You're just a tenant, not a home owner so you are not liable, right? Wrong! In this situation, tenants are just as liable as a condo owner would be. If you are a tenant, don't let this be your story. The scary financial burden in this story could have been avoided with the protection property insurance affords, even when you are 'just a tenant'!If you had coverage in this situation, you would have been protected from having to pay for the damages (minus the deductible you would have to pay) caused by your flood, including your neighbour's damages. Not only that, but if your neighbor slipped, fell and hurt themselves because of the water coming from your new pond, than insurance offers liability protection in case you are sued for their injuries.
Basically, with tenant insurance, there are two components - Contents coverage and Basic Liability coverage.
Contents coverage
Contents coverage insures your belongings inside your home for the most common types of losses. You can get All-Risk or Named-Perils coverage. The difference is that "All-Risk" covers your belongings against damage caused by many events--unless specifically excluded by the policy. Named-Perils on the other hand, only covers more common events (say like theft) that are specifically listed on the policy. Whichever type of coverage you have, consider insuring your contents for the replacement value rather than the value of your things after depreciation has been factored in. The benefit? Well remember that TV you purchased 5 years ago for $500, which is now valued at a fifth of the original price? With actual cash value coverage you would only get a fraction of its value to put towards your next new TV instead of the full replacement cost of getting a similar TV today.
Basic Liability coverage
Basic Liability coverage protects you from having to pay damages if you or your guests have been found responsible for unintentionally injuring a person or damaging their property. Without this coverage, if you are sued you would have to pay out of your own pocket.
Know what you're getting. Ask lots of questions
The following are questions to ask your broker or insurance company when getting property insurance as a tenant:
- Who specifically is covered with my property insurance policy?
- What is covered under my policy?
- What is NOT covered in my policy?
- Will I have replacement cost coverage or do they factor in depreciation of my items?
- What are the limitations on valuables, like artwork, fur, high value bikes, silverware, jewelry, and electronics?
- What optional coverages should I consider?
- What is my deductible? How much money can I save on my premium by choosing a higher deductible?
- Are there any discounts that may be available to me that could save me money-like if I insure my auto, or install safety features?
- Does the company offer 24-hour claims service?
