What is landlord insurance?
Like any type of insurance, landlord insurance is designed to financially protect landlords from the risks that come with doing their jobs. A few of the most common risks that landlords face include damage to the rental unit they own, damage to their personal belongings, third party claims being brought against them, and lost rental income. Luckily, the right landlord insurance coverage can safeguard landlords against all of these risks and more. Please note that coverage for rental properties is not included in standard home insurance policies in Canada, which means that even if you have a homeowner’s insurance policy, you will need to take out a separate landlord insurance policy for your rental unit. In some cases, landlord insurance can also be added as an endorsement or rider to an existing home insurance plan.
Types of landlord insurance policies
Landlords come in all shapes and sizes, and sometimes, landlords of certain types of buildings have different insurance needs. While standard landlord or rental property insurance is the most common type in Canada, there are others that may be worth considering depending on your circumstances. A list of other types of landlord insurance policies that may be available to you is below:
- Standard landlord rental property insurance: the most popular type of landlord insurance, which can be purchased by anyone looking to protect a property they are renting out.
- Apartment building landlord insurance: for landlords of apartment buildings that have at least seven residential apartment units for rent.
- Condo landlord insurance: for landlords of condo units that they are renting to a tenant.
- Commercial building landlord insurance: this type of landlord insurance is intended for landlords of commercial buildings and properties who lease their building or property out for commercial use.
- Short-term rental landlord insurance: Also known as Airbnb insurance, this type of insurance is for landlords of short-term rental properties, whether it be an entirely separate property or a portion of their home.
- Unoccupied landlord insurance: this is for the landlord of a rental property that is currently unoccupied.
- Student rental landlord insurance: this type of landlord insurance is specific to landlords of rental properties that are exclusively rented out by students.
Landlord insurance coverage
Now that you know about the different types of landlord insurance out there, let’s dive into what landlord insurance covers. Coverage will look a little bit different between policies, as it is up to the policyholder to decide what types of coverage to include with their plans. That said, a few of the most common types of landlord insurance coverage are listed below. Note: you will likely notice several similarities between standard home insurance coverage and landlord insurance coverage:
Dwelling coverage is a key component of any landlord insurance policy, just as it is a key component of any homeowner’s insurance policy. In landlord insurance, dwelling coverage protects the landlord in the event that damage is caused to the physical structure of the building. The damage must have been caused by a peril specifically named in your policy in order to qualify for coverage. Your policy will either feature a set number of perils, which will be clearly outlined, or if you opt for all perils coverage, you will be protected against every peril your insurance company offers coverage against. Some of the most common perils covered by dwelling insurance include fire, vandalism, theft, and falling objects.
Contents coverage for landlord belongings
The second type of coverage that your landlord insurance policy is likely to feature is contents coverage. In the case of landlord insurance, contents coverage is specifically designed to cover damage to belongings owned by the landlord in the rented space. For example, some landlords lease out furnished units, so in this case, contents coverage would pay to repair or replace any of the furniture in the unit if it were damaged by an insured peril. As with dwelling coverage, damage to the landlord’s belongings will only be covered by the contents coverage portion of your policy if it was caused by a peril listed in your policy. Perils for contents coverage may also include theft, fire, vandalism, falling objects, and more. It is worth noting that contents coverage in landlord insurance policies does not cover any of the tenant’s personal belongings. The tenant will need to purchase a separate tenant insurance police to protect their own personal items. When adding contents coverage to any policy, whether it be a landlord insurance policy or a renters insurance policy, make sure to calculate the actual cash value of your belongings so that you can choose a coverage limit that accurately reflects it.
Liability coverage is designed to cover third party claims that allege property damage or bodily injury. For instance, if one of your tenants slips and falls on an icy walkway that leads to the front door of the apartment building, they could sue you. Thankfully, your landlord insurance policy would help cover various fees relating to the incident, ranging from legal fees and settlement fees to medical expenses not covered by health insurance.
Loss of rental income coverage
Loss of rental income coverage is one last type of coverage that is commonly featured in landlord insurance policies. This type of coverage is unique to rental property insurance as it specifically covers landlords if a tenant is forced to temporarily relocate due to damage caused by an insured loss, such as a fire or falling objects. Under this portion of your policy, your insurance company can reimburse you for the rental income lost during this period up until when the property is repaired.
Extra landlord insurance coverage
Basic landlord insurance coverage, outlined above, may be enough for some policyholders. Meanwhile, others may want extra protection. Luckily, insurance companies across Canada offer all types of additional coverage that can be added onto landlord insurance policies as riders or endorsements. Keep reading to discover some of the most popular landlord insurance coverage add-ons:
A popular add-on for landlord insurance policies is flood insurance, which offers coverage against water damage due to a burst pipe.
Overland water insurance
Overland water insurance is a type of flood insurance that specifically protects against water damage caused by above-ground water making its way into your rented unit. The forms of above-ground water that are covered include overflow from a nearby lake or river, melting ice, or heavy precipitation.
Sewer backup insurance
Sewer backup insurance is another type of flood insurance, but this kind specifically protects against water damage caused by sewage or wastewater that backs up into your home. Sewer backup insurance is especially important for landlords of basement units, as basements are the areas most likely to fall victim to sewer backups.
Earthquake insurance is not typically found in landlord insurance policies, even as an insured peril under the dwelling or contents coverage portions of your policy. However, if you live in a part of Canada prone to earthquakes, you might be able to add earthquake insurance coverage as an endorsement to your landlord insurance policy.
Extended contents insurance
Extended contents insurance, also known as personal valuables insurance, is an extension of regular contents insurance. It might be necessary if your rental property features a variety of high-value items that you own, whether that be expensive jewellery, original artwork, musical instruments, vintage wine, bikes, and more.
Airbnb insurance is another landlord insurance add-on that can protect those who operate short-term rentals. Keep in mind that Airbnb and other short-term rental companies like VRBO may offer their own insurance. However, it’s rarely enough. Thus, you will likely need to purchase additional coverage in the form of a short-term rental or Airbnb insurance add-on to adequately protect yourself.
Non-payment of rent insurance
One final type of coverage that can be extremely beneficial to landlords is non-payment of rent insurance. With this type of coverage, your insurance company can compensate you if one of your tenants refuses to pay their rent. More specifically, if a tenant does not pay you rent and you want to evict them, the process may involve a lawyer. Thankfully, non-payment of rent insurance can cover both the missing rent and any legal fees incurred to evict the tenant.
What landlord insurance does not cover
Landlord insurance does not cover everything. The following is a list of what most landlord insurance policies will not cover. However, to find out exactly what you are and are not covered for, contact an insurance broker at BrokerLink who can help you review the terms and conditions of your policy:
- General wear and tear
- Damage caused by pests or vermin
- Losses or damage of tenant’s belongings (this will only be covered if your tenant has their own tenant insurance policy)
To learn more about renters insurance, including an answer to the question, “Do I need renters insurance,” contact BrokerLink today.
Factors that influence the cost of landlord insurance
The cost of landlord insurance varies, even among landlords in the same province or city of Canada. This is because insurance companies consider a whole range of factors when calculating rates. Some of these factors include:
- The type of property you rent
- The age of the property
- The location of the property
- Your chosen deductible amounts
- Your insurance claims history
- If your property is equipped with any additional security features, e.g. a monitored alarm system
How to get cheap landlord insurance
Looking to find cheap landlord insurance? Make your policy more affordable by following the tips below:
Properly maintain your rental property
Maintaining your rental property year-round is crucial if you want to keep your insurance rates low. Make sure to hire a professional to inspect your roof, plumbing, electrical, and HVAC systems annually. The better condition your property is in, the less risky it will be, which is likely to translate to a lower premium.
Avoid filing minor insurance claims
As mentioned above, an insurance company will look at your claims history when calculating your landlord insurance rate. The more claims you’ve filed, the higher your rates are likely to be. Thus, experts recommend that policyholders avoid filing insurance claims for minor incidents. If you can easily afford to pay the expense out-of-pocket, this might be more beneficial to you in the long run.
Bundle insurance policies
Bundling insurance policy is an effective way of saving money on all kinds of insurance policies, and that includes landlord insurance. Reach out to a BrokerLink insurance advisor to find out which insurance companies near you offer bundles.
Raise your deductible
If you can afford to pay more money out-of-pocket in the event of a claim, consider raising the deductible amounts on your landlord insurance policy. Premiums and deductible impact one another, so by raising your deductible, you can instantly lower your premium.
Only buy the coverage you need
A general rule of thumb in the insurance industry is to only buy the coverage you need. While it can be tempting to purchase every type of landlord insurance add-on out there, chances are, not all of them will benefit you. For example, if you live in an area that is not prone to natural disasters, adding earthquake coverage probably isn’t going to be worthwhile. If you need help discerning which risks face and need protection against, contact a BrokerLink insurance advisor.
Weigh your options
Shop around with help from a BrokerLink insurance broker to ensure you find the best possible policy for your needs. The worst mistake you can make as a landlord is to buy the first policy that comes up on Google. Instead, you should work with a broker to obtain and compare quotes from different insurance companies. This way, you can rest easy knowing you have the most competitive policy out there.
Install a burglar alarm system on your rental property
Installing a monitored alarm system is one last way to save money on landlord insurance in Canada. Many insurance companies offer discounts to landlords who make their premises safer by installing some type of burglar alarm or home security system.
Landlord insurance vs. tenant insurance
At this point, you may be wondering, “What is the difference between landlord insurance and renters insurance?” This is a question that many landlords and renters ask themselves. As they share some similarities, it can be difficult to understand how each works, but it’s important as they offer different forms of protection. First, as the names suggest, landlord insurance is designed to cover landlords while tenant insurance is designed to cover tenants. As such, landlord insurance protects rental property owners from risks like physical damage to the dwelling they own or lost rental income caused by damage to their rented unit. Landlord insurance may also cover damage to any of the landlord's belongings in the rented unit, as well as third party claims brought against the landlord by tenants. In contrast, tenant insurance is specifically designed to protect the tenant’s personal belongings from damage. Any belongings owned by the landlord in the rented unit will not be covered by tenant insurance. Tenant insurance also includes a form of liability insurance. However, this type of liability insurance is intended to protect the tenant should a guest injure themselves or damage their personal property while visiting the tenant’s space. Further, tenant insurance can cover the cost of alternate accommodation and more if a renter is forced to temporarily relocate due to damage to their unit. As you can see, although landlord and tenant insurance might seem similar on the surface, they are very different in reality. Each respective party will need to take out their own insurance policy if they want sufficient protection. You can learn more about tenant and landlord responsibilities by reaching out to BrokerLink today.
Contact BrokerLink for more information on landlord insurance
Ready to learn even more about landlord insurance or purchase a policy of your very own? Contact Brokerlink today. We can shop around to help you find the right coverage for your rental property. We can also help with tasks like renewing landlord insurance or explain complicated industry jargon, like additional interest home insurance.
Contact us today to get started. We can be reached by phone, email, or in person at any of our 200+ locations across Canada. No matter how you choose to get in touch, a BrokerLink insurance advisor will be happy to assist you. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive landlord insurance quote in a matter of minutes.
Landlord insurance FAQs
Does landlord insurance cover me when my unit is empty?
Basic landlord insurance does not cover vacancies in your unit. If you want to be covered when your unit is empty, you will likely need to purchase additional coverage, such as unoccupied rental unit coverage.
Is landlord insurance required in Canada?
Landlord insurance is not a legal requirement in Canada. However, if you bought your rental property with a mortgage and that mortgage has yet to be paid off, then you may be obligated to purchase landlord insurance in accordance with the terms of your mortgage loan agreement. It is worth noting that even if you are mortgage-free, purchasing landlord insurance offers a means of protection you won’t find elsewhere. Without it, if damage occurred, you would be on the hook for covering the cost of the damages out-of-pocket.
As a landlord, should I require that my tenant purchases renters insurance?
While this decision is up to you, it can be a smart choice to stipulate that all tenants occupying your property purchase renters insurance. Renters insurance provides peace of mind to both tenants and landlords, as this type of policy can help cover claims relating to losses or damage of a tenant’s belongings, as well as third party liability claims. In Canada, it is common practice in many cities for landlords to require tenant insurance of their renters. In fact, many rental agreements even specify that tenants must purchase policies that contain a minimum amount of liability coverage, such as $1,000,000 or $2,000,000.
Does landlord insurance cover tenant damage to the rented unit?
In most cases, yes. Landlord insurance policies typically feature dwelling coverage, which covers property damage to the unit. However, the property damage must have been unintentional and caused by an insured peril listed in your policy. For instance, if your tenant accidentally starts a fire, damaging the kitchen in your rented unit, the dwelling coverage portion of your landlord insurance policy should pay to repair the damages. However, if your tenant intentionally damaged the unit, such as by committing an act of vandalism, your insurance company would not pay to repair the damage.
What’s the difference between landlord insurance and homeowners’ insurance?
Landlord insurance is a type of home insurance. However, it is different from standard homeowner’s insurance. Landlord insurance, also known as rental property insurance, is designed to protect property owners against the unique risks that come with leasing out a property that one owns. Thus, the key difference between landlord insurance and standard home insurance is that landlord insurance is for when you rent out a property you own and home insurance is for when you own a property that you do not rent out to other people.
If you have any questions, contact one of our local branches.
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