As a renter, there’s no shortage of advice on what you need. Buy tenant insurance. Make sure you change the locks. Don’t forget about emergency savings. But amidst all the advice, the topic of tenant liability insurance can tend to fade into the background. Yet, it’s the very thing that could prevent a minor mishap or accident from spiralling into a financial nightmare. 

Whether you’re new to the concept or have overlooked it in the past, this blog will shed light on the vital role of tenant liability insurance and equip you with the knowledge you need to protect yourself and your assets as a renter.

Key takeaways

Included in most standard tenant insurance policies, liability insurance protects you if you unintentionally cause injury to someone or damage their property while living in a rental unit. Tenant liability insurance typically covers:

• Medical expenses if someone is injured in your rental unit 
• Repair or replacement costs if you accidentally damage someone else’s home or belongings 
• Legal fees if you’re sued for injuries or property damage you caused 

What is liability insurance for renters?

Liability insurance for renters is a type of coverage designed to cover the damages you may unintentionally cause to someone and/or to their belongings while living in a rental unit. When this happens, the affected party could file a lawsuit against you to recover their losses.

If they do, liability insurance would act as a protective buffer, offering you some peace of mind knowing you won’t have to shoulder the burden of associated legal and medical expenses on your own.   

Should renters get liability insurance?

Yes, it is highly recommended that renters get liability insurance. Mainly, this is because of how expensive legal and medical costs can be if someone gets injured in your rental unit or if you inadvertently damage someone else’s property. Without liability insurance, you could potentially face significant financial strain or even bankruptcy in such situations.

Fortunately, when you buy tenant insurance in Canada, liability insurance is included, as it’s one of three standard components, along with contents insurance and additional living expenses.

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What does tenant liability insurance cover?

Accidents are a part of life. You forget to turn off the bathroom sink when you go to work one day, and it causes water damage to your downstairs neighbour’s unit. Your friend trips over your carpet in the living room, breaking their ankle. These things can happen to even the most careful renters.

While there are things you can (and should!) do as a responsible renter, if it’s an accident and it happens beyond your control, liability coverage will allow you to breathe just a little bit easier.  In fact, here’s what tenant liability insurance typically covers: 

• Medical costs when someone is injured in your rental unit (ex. ambulance services, rehabilitative therapy, emergency dental procedures)
• Repair costs when you accidentally damage someone else’s home (ex. damage to the structure of the home, fixtures in the home, contents of the home) 
• Legal fees when someone sues you for the damage you caused them or their property (ex. attorney fees, court costs, settlements)

This list is meant to give you a general sense of what tenant liability insurance may cover, however, it can vary from insurer to insurer. Be sure to thoroughly review your insurance documents or consult with your insurance company or broker for clarification on the specifics of your policy’s coverage.  

Can a landlord require liability insurance?

It’s standard practice for landlords and property management companies across Canada to require tenant insurance with liability coverage in their lease agreements. Therefore, by signing such an agreement, you agree to follow its terms, which may include obtaining an adequate insurance policy. Failure to do so could result in serious consequences.

For instance, in Ontario, Settlement.org cautions that your landlord reserves the right in this situation to “give you a notice to terminate the tenancy and then file an application with the Landlord and Tenant Board (LTB) to evict you.” 

This is why it is so important to carefully read the terms and conditions of any lease agreement prior to signing it. Once your signature is given, you are legally bound to abide by that which is outlined in the agreement.   

How much liability coverage do tenants need?

While one million dollars in liability coverage is often recommended, determining how much liability coverage you actually need requires you to assess your unique situation. To do this, consider your personal circumstances, preferences, the size of your building, and the requirements of your landlord or property management company.

• Personal circumstances: Your assets, income, and potential risks influence the level of liability coverage needed to protect against financial loss.
• Preferences: Your comfort level with risk and desire for peace of mind determine whether you prefer higher or lower coverage limits.
• Size of your building: Larger buildings with more units typically involve higher risks, necessitating greater liability coverage.
• Requirements of your landlord/property management company: Landlords or property managers may mandate specific coverage limits to ensure adequate protection for their property and other tenants.

By considering these factors, you can make an informed decision about the amount of liability coverage you need to feel secure. Plus, you might be happy to discover that at YouSet, where one million dollars in liability coverage is standard, tenant insurance starts as low as $12 a month, making it easy and affordable to get the protection you need.