What does Renters Insurance Cover?
Much like home insurance, renters insurance includes coverage for:
If ever a guest hurts themselves in your unit, or an incident like a fire or a leak damages someone else’s unit, you’re covered and that person will be covered for medical expenses and loss of income without you having to pay for it out of pocket.
The Contents of Your Unit
This includes your furniture, your clothing, your appliances, sporting equipment and anything that can be found within the confines of your apartment. The only exceptions are high-value items such as jewellery and fine art, which require a separate, specific policy.
Coverage for Additional Living Expenses
If ever something happens where you couldn’t stay in your apartment, such as smoke damage or mould cleanup, a tenant’s insurance policy would reimburse the expenses incurred from staying in a hotel while your apartment was inaccessible due to a covered incident.
Living expenses also include storage costs for your furniture and possessions, moving and displacement costs, furniture rental costs and any increased transportation costs or extra mileage.
What does tenant insurance NOT cover?
Renter’s insurance does not cover high value items such as jewellery or fine art because of the value limits imposed on these types of items. For these, you need to consider a separate policy to make sure these items are covered if ever something occurs.
Another thing a standard tenant’s insurance policy doesn’t cover is flood damage. This shouldn’t be confused with water damage, which is when the water source that caused the damage originated from inside the apartment, such as a faulty pipe. Flood damage needs to be added as an extra coverage. This might be a good idea if have a unit at the ground or basement level of a building.
The same thing goes for earthquake insurance. You’ll need to add it to your policy as an extra coverage. If you live in an area prone to earthquakes such as the Ottawa region, you may want to consider adding it.
An important thing to note is that tenant’s insurance only protects your stuff. That means your roommate is not protected under your policy and will have to apply for their own policy. Should there ever be a burglary in your apartment and both you and the person you live with have personal items stolen, only the things that belonged to you will be covered by your policy and vice versa.
Actual Cash Value versus Replacement Cost: What’s the difference?
When you insure your belongings, you can choose to either insure them for their replacement cost or for their actual cash value. Replacement cost refers to what you paid for an item. If your sofa that you bought for $2000 is stolen, you will be compensated $2000 by your insurance company.
Under actual cash value, the insurance company considers depreciation when paying out for damages. If that same sofa was 10 years old and had a few rips in it, the insurance company will only pay you what the sofa is worth today.
You have to consider the value of what your insuring and the cost it would require to replace it if it were lost before deciding which option is best for you. Although replacement cost premiums may be a more expensive, they could be worth the price if you have several expensive items.
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