Renters insurance, sometimes referred to as tenant’s insurance, is a common requirement nowadays. Landlords require that tenants renting a unit in their apartment complex or condo building purchase renters insurance. Sometimes, they even ask for additional interest coverage. But what is additional interest on a renters insurance policy? That is the question we answer today. Keep reading to learn all about renters insurance additional interest, what it is, why you need it, and how to add additional interest to your tenant’s insurance policy.
What is renter’s insurance?
Before we dive into additional interest, we must first define renters insurance. Renters insurance protects tenants from financial losses associated with unexpected events, such as damage to their personal property, theft, or a lawsuit. Renters insurance can be purchased by anyone renting a residence, whether it be an apartment, condo, or house.
Renters insurance is sometimes confused with homeowners’ insurance, but they are two distinct policies. Unlike homeowners’ insurance, renters insurance does not cover the structure or dwelling where they live (rather, damage to the building is the responsibility of the landlord). For this reason, renters insurance is significantly less expensive than homeowners’ insurance.
What does renters insurance cover?
As mentioned, renters insurance is typically less costly than home insurance because it doesn’t include the same coverage types. Namely, renters insurance policies do not cover damage to the building itself, only the renter’s personal belongings and legal liability.
Personal property damage
If your personal property, such as furniture or clothing, is damaged due to an insured peril, your renters insurance will cover the cost of the damage up to your policy limit. Insured perils vary depending on which you choose to include in your policy but may include fire, wind, theft, vandalism, and other types of weather-related incidents.
If a third party (such as a guest) is injured or their property is damaged, and you are at fault, your renters insurance policy will cover liability costs, including legal costs like settlement and defence fees. Standard renters insurance policies include $100,000 in liability coverage.
Additional living expense
If your rental unit becomes uninhabitable due to an insured peril, forcing you to move out, renters insurance will pay for expenses above and beyond your normal living expenses. Additional living expenses coverage is sometimes called loss of use coverage.
If your renters insurance policy includes medical payments, your insurance company will cover any medical costs not covered by health insurance in the event a guest is injured on your property.
What is not covered by my renters insurance policy?
If you cause intentional damage to your unit or are found to be involved in illegal activity, your renters insurance policy will not cover damages. In addition, if damage is caused by a peril not included in your policy, your insurance company won’t help pay the cost of repairs.
Examples of perils commonly excluded from tenant’s insurance policies are pest damage and earthquakes. Regular wear and tear is also not covered by renters insurance.
To find out exactly what your renters insurance includes and excludes, contact an insurance broker from BrokerLink you can walk you through your policy from back to front.
Do I need renters insurance?
Renters insurance is not a legal requirement in Canada, but some landlords may ask for it. Even if renters insurance is optional, it might still be worthwhile to purchase. When buying renters insurance, you should have a good idea of the value of your belongings so it’s best to start by taking an inventory of all items in your possession.
Belongings may include furniture, electronics, appliances, clothing, and other valuables like musical instruments, jewellery, or a bicycle.
In addition to asking about the value of your belongings, insurance companies will consider several other factors when calculating your premium. These factors may include:
- How close your apartment is to fire services.
- The age of your apartment building.
- The square footage of your unit.
- The type of heating used (furnace, heat pump, boiler).
What is an additional interest?
Now that you know what renters insurance and what it covers, let’s move on to additional interest. An additional interest on a renters insurance policy might sound complicated but it’s far from it. In essence, an additional interest is a party that will be notified of any changes to your policy.
The types of changes the additional interest will be notified of include everything from policy cancellations and lapses in coverage to renewals.
You may have heard the terms additional interest and interested party used interchangeably. They refer to the same person. Whether you add an additional interest or interested party to your policy, this party will be notified of any changes in status of your policy.
That said, neither can make any changes to your policy. Only you, the policyholder, are allowed to make changes, like cancelling or renewing your policy or changing your coverage types or limits. Further, the interested party will not receive any coverage by the policy.
While an interested party can be any third party, in most cases the interested party on a rental agreement will be the landlord. This is because the landlord wants confirmation that you have a valid renters insurance policy for the duration of your tenancy.
It’s worth noting that additional insured is another insurance industry term, and while it sounds a lot like additional interest, they are vastly different. An additional insured can make changes to a policy, whereas an additional interest cannot. This is a key distinction, which makes adding an additional insured to your policy a much more serious decision than adding an additional interest.
Can an additional interest make changes to my renters insurance policy?
No, an additional interest cannot make any chances to your renters insurance policy. They will simply be notified of any changes in status to your policy. You are the only person that has the right to make decisions about your policy, such as changing the coverage, filing claims, or cancelling or renewing the policy.
Why do I need to list an additional interest on my renters insurance policy?
Since the additional interest will be notified of any changes in status to your renters insurance policy, some landlords or insurance certificate monitoring companies require being listed as the additional interest. For example, a landlord might require it so they can make sure their tenant is in compliance with the terms of their lease agreement.
Why does my landlord need additional interest?
Your landlord might request being listed as the additional interest on your renters insurance policy for their own protection. Without being added as an additional interest, a landlord has no way to verify your coverage. You may be required to send the receipt of your policy after you first buy it, but there would be no way for the landlord to know if you cancelled it immediately after.
That said, additional interests have no power to change or alter your policy in any way, and no coverage is extended to them being named an additional interest. They also cannot make claims against your policy. They will only be notified if any changes occur, reassuring them that they know the current status of your policy at all times.
It is becoming increasingly common for landlords to require tenants to purchase renters insurance and request that they be added as additional interests on their policies, as it mitigates the financial liability of both the landlord and the tenant should an accident occur.
If you have to buy renters insurance as a condition of your lease agreement, listing your landlord as an interested party will provide them with proof that you've purchased enough renters insurance coverage to protect both your interest.
At the end of the day, there aren’t any major disadvantages to adding your landlord as an additional interest if it will provide them with peace of mind.
How do you add an additional interest or interested party to my renters insurance policy?
If you’ve decided to add an additional interest to your renters insurance policy, whether mandated by your landlord or not, BrokerLink can help you with the next steps. Adding an interested party to your policy is relatively simple. Before contacting your insurance company, we recommend calling a trusted broker like BrokerLink.
One of our knowledgeable and friendly insurance advisors will be pleased to answer any questions you may have about additional interests, including how they work and whether it’s worthwhile for you to add one to your renters insurance policy (speaking of renters insurance, a BrokerLink agent can also help you find renters insurance that meets your needs and budget.)
Contact your insurance company
Adding an interested party, such as your landlord, to your renters insurance policy is fairly straightforward, though the process may differ slightly between insurance companies. Nowadays, many insurance providers allow policyholders to add an interested party online.
To add an interested party, you will need to provide key information about that person, including their name, home address, and email address. Once they have been added, your landlord will receive a description of your renters insurance policy via email or regular mail.
Please note that adding an additional interest to your renters insurance policy is usually free of charge. At most, your insurance provider may charge a few dollars a month. If it charges more than this, you may wish to consider purchasing renters insurance elsewhere.
As insurance experts, BrokerLink can help you find a renters insurance policy that offers the best coverage at the lowest price.
Contact BrokerLink to learn more about renters insurance additional interest and request a free quote
Still have questions about additional interest and renters insurance? Contact BrokerLink today! We can walk you through the ins and outs of adding an additional interest to your party. We can explain what an interested party is, what their rights are, and how to add one to your renters insurance policy.
BrokerLink’s expert insurance advisors can also help you find a renters insurance policy that meets your needs. As you now know, renters insurance comes with tons of benefits. From protecting you in the event of a third party claim to protecting your personal belongings from damage caused by insured perils like fire or theft, renters insurance can be worthwhile no matter what type of home you’re renting.
To learn more about renters insurance or additional interest, get in touch with BrokerLink. We can be reached by phone, email, or in person at any one of our locations in Canada. No matter how you choose to get in touch, a BrokerLink insurance advisor will be pleased to assist you.
We also invite you to take advantage of our free quotes. Using our online quote tool, you can receive an accurate and competitive renters insurance quote in minutes. It couldn’t be easier!
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