How much tenant insurance do I need?
9 minute read Published on Aug 11, 2025 by BrokerLink Communications
Navigating the insurance world as first-time renters can be confusing. If you have questions such as : "Do I need tenant insurance?" "How does renters insurance work?" "How much renters insurance do I need?" Or, if you have other inquiries about this type of property insurance, we've answered these questions and more below, so you can feel more confident moving out on your own.
What is renters insurance and what does renters insurance cover?
So, what is tenant insurance, and what does it cover? Tenant and renters insurance is a special type of home insurance that takes into account the unique hazards renters face. While a standard renters insurance policy may vary between insurance companies, you'll typically find the following included:
Liability coverage
Tenant liability insurance protects renters from personal liability claims that may be filed against them. For example, if someone comes over to your rental property and suffers a bodily injury or property damage, they have the legal right to sue you for damages.
This is where tenant liability insurance comes into play. With this portion of your tenant insurance policy, should a liability claim be filed against you, your liability coverage would cover the cost of repairs, replacements, medical bills, legal fees, and other expenses associated with your settlement up to your coverage limits.
Personal belongings insurance
Personal belongings insurance, also known as personal property coverage or contents coverage, is the next portion of a standard renters insurance policy. Essentially, this policy in your renters insurance protects your personal belongings stored in your rental unit if they are damaged or lost as a result of a covered peril listed in your policy documents.
When purchasing tenant insurance, you may have the option of choosing between replacement cost value RCV or actual cash value (ACV) policies. For example, if you choose an ACV renters insurance policy for your personal property, then to calculate the actual cash value of your belongings, your insurance provider considers the depreciation of your personal property, whereas a replacement policy does not.
In other words, you're likely to be compensated more with an RPV insurance policy compared to an ACV plan, which is why they tend to yield more expensive premiums.
Additional living expenses
Additional living expenses coverage is the final portion found in standard insurance policies. Should your rental unit be damaged by an insured peril that renders the property unsafe to live in, your additional living expenses insurance will cover the additional cost of accommodations, meals, and other costs during the time you are unable to live at your home.
Optional tenant insurance policies
Beyond standard renters insurance, there are options to add additional policies to your plan for added peace of mind, including the following:
Sewer backup insurance
Sewer backup coverage protects you from sewage backing up into your house. Sewer backups are generally more likely to occur in houses with older plumbing and basement suites following periods of heavy rainfall when municipal plumbing becomes overwhelmed. Therefore, if you live in an older home or a basement, you may want to consider this optional renters insurance policy.
Identity theft coverage
If your rental unit is broken into and your personal belongings containing your identity are stolen, identity theft renters insurance covers the cost of recovering or replacing the missing identification and information. This includes items like your driver's licence, social security number (SIN), birth certificate, banking information, and other similar documents.
Overland water insurance
Overland water insurance can be added to your standard renters insurance plan to protect you from the financial consequences of water damage to your rental unit. Overland water coverage requires that the damage caused by water to your rental be the result of above-ground floods, such as overflows from neighbouring lakes or rivers, melting ice, or heavy rainfall.
How much tenant insurance do I need?
So, how much coverage do you need as a renter? When it comes to determining your coverage amounts, your insurance company will consider various factors that ultimately form a risk profile for you. These factors include the following:
The value of your personal belongings
The more items you own and the higher the value they are, the more coverage you'll need when purchasing contents insurance. Ultimately, you'll want to ensure your tenant insurance covers the total cost of replacing or repairing your items, so you do not have to pay out of pocket in the event you need to file a claim.
Your income level
When it comes to determining how much tenant liability insurance you need, your insurance provider may also take a look at your income level. Given that a third party could come for your income when filing a liability claim, the more you make, the more liability coverage you may need.
Your risk factors
An insurance provider will also look at the risks associated with your rental unit. Beyond the actual unit, they'll look to see how many people you live with, if you live with any pets, whether you have previous claims filed, and more. Ultimately, a risk profile determines how risky it is for insurers to provide you with insurance coverage.
The greater risk you are, the more renters insurance you may need to purchase, and the more expensive it may be.
Your lease agreement
Finally, your lease agreement may also play a role in how much tenant insurance you need to purchase. For example, your landlord may state within your agreement that you need specific coverage limits for tenant liability insurance, additional living expenses, and personal property coverage in case a covered claim occurs.
What does renters insurance not cover?
While renters insurance covers tenants against numerous risks, there are some exclusions renters should be aware of:
Damage to the physical structure
Should any physical damage occur to your rental property, your tenant insurance will not cover the damage to your unit. Rather, it would be covered under your landlords insurance policy.
Car damage or theft
While the personal belongings stored in your vehicle may be covered under a tenant insurance plan, the theft of your vehicle will not. You will need to have a separate auto insurance policy, specifically comprehensive coverage, to receive compensation from your insurance company.
Pest infestations
Pest infestations are also not covered under renters insurance, or your landlords insurance for that matter. All pest infestations are the responsibility of your landlord to handle and pay for, given that it is deemed a maintenance issue and preventable.
Your roommate's items
Finally, if you live with roommates, you may want to purchase separate tenant insurance or list them on the policy, as the coverage may not extend to other parties.
Is renters insurance mandatory in Canada?
So, is tenant insurance mandatory? The short answer is no. However, while this type of insurance protection is not legally mandated, it may be required as a condition in your rental lease agreement with your landlord. And, while you may not need renters insurance, there are numerous benefits to having your own renters insurance policy:
Peace of mind
Accidents and unexpected damages can happen at any time. With a customized tenant insurance policy in place, you can have peace of mind knowing you're protected should something occur.
Financial protection
When comparing the cost of a monthly tenant insurance premium to the potential cost of having to replace your personal belongings or legal costs, what you pay out of pocket without coverage in place will be substantially more and could be detrimental to your overall finances.
Protects your interests
Lastly, when it comes to personal liability, having liability protection in place only serves to protect your interests if someone decides to sue you for damages and injuries. Without adequate coverage, you would need to cover expenses related to your lawsuit on your own, which again, could put you in significant debt for the rest of your life.
Does my landlord's insurance coverage protect me as a renter?
The difference between landlord and renters insurance often gets confused, especially for those new to renting. The main difference between these two insurance policies is who they protect. One myth that we need to dispel right away is that a landlord's coverage protects renters, which is false.
While tenant insurance focuses solely on the interests and finances of renters, landlord coverage protects their property and their interests. So, what about landlord and tenant responsibilities? Who is responsible for what? Here's a closer look:
Landlord responsibilities
- A landlord must maintain common areas, like driveways and other walkways on the rental property.
- All emergency repairs required in the unit must also be maintained by the landlord, such as leaks, pest control, or electrical problems.
- Ultimately, the landlord must ensure that the rental space is habitable and safe to live in.
Tenant responsibilities
Tenants are mainly responsible for ensuring the rental unit is not damaged intentionally. If damages do occur during the time you were a tenant or if changes were made to the space without your landlord's knowledge and approval, your landlord can withhold your damage deposit from you to pay for any repairs.
What should I know as a first-time renter?
If you're a first-time renter, there are a couple of things you'll need to do and know before moving into your rental unit. To ensure your experience is as smooth as possible, take a look at some of our tips for first-time renters below:
- Set a monthly budget for yourself before moving into a place. This will help you determine what you can afford to pay in rent.
- With affordable rent in mind, begin searching in neighbourhoods you like and consider what non-negotiables you may have in terms of the place you would like to live in.
- If costs are high, consider getting a roommate.
- Before moving in, make sure you purchase renters insurance to protect your finances and interests.
- Before signing your lease, ensure that you fully understand the terms and conditions listed by your landlord.
Can I save money on my tenant insurance costs?
Tenant insurance in Canada can range between $15 and $50 a month. While pretty affordable for most, there are still ways you can save on your costs:
Shop around and compare quotes
Because renters insurance isn't mandatory, tenants have some purchasing power when it comes to choosing a policy. Before signing a contract, make sure to shop around and compare tenant insurance quotes from different insurance providers, so you can find the best deals available.
Work with an insurance broker
Insurance brokers work independently from insurance companies. This means they can help you shop around, compare quotes, customize your coverage to fit your needs, and give you unbiased advice when it comes to insurance. An additional benefit to working with insurance brokers is that their services are free of cost.
Bundle your tenant and car insurance policies
If you have car insurance, you may be able to bundle your renters insurance and auto policy with the same company. Doing so can provide you a bit of a discount when it comes to your renters insurance costs.
Increase your deductible
A deductible is an amount of money you need to pay to your insurer when filing a claim under your renters insurance before your policy covers the remaining costs. The higher your deductible is, the more of a financial burden you assume. As a result, your insurer may lower your renters insurance rates.
Pay your premium upfront
If you're able to afford to do so, consider paying your renters insurance premium upfront. Insurance companies tend to add administrative fees to those who pay monthly, as it costs money to process your payment. By paying in one go, you can avoid these fees and save some money.
Ask about discounts
Finally, consider asking your insurer or insurance broker whether you qualify for other discounts. There are numerous savings available that renters can qualify for!
How BrokerLink can help
At BrokerLink, we help homeowners, renters, and landlords find affordable insurance coverage. With access to policies from some of Canada's top insurance companies, our brokers can help you compare coverage options and quotes, unlock discounts, and customize your tenant insurance policy based on your budget. Beyond tenant insurance coverage, BrokerLink can also help with: