Is Landlord Insurance the Same as Homeowners Insurance in Ontario?

This is a fairly common misconception, and it's understandable because there are many similarities between landlord and homeowners insurance. They both provide insurance coverage for a residential property, including property and liability coverage, and the policyholder is the property owner. But there are some differences as well. Rental properties come with increased risk exposures because you, the property owner, are not living there. Therefore you can only know what's going on there daily. Instead, you must primarily rely on your tenants to report issues that could (or already have) result in a financial loss and prompt you to file an insurance claim. There's also an increased risk exposure because, no matter how carefully you vet your tenants, there's no guarantee that they'll treat your property with the same care and attention they would give to a property they own. That can include willful damage and neglect, but more often than not, it's accidental carelessness. Regardless, it can result in severe problems with a property that lead to significant financial loss, and the best way to mitigate that loss is by transferring the risk via a comprehensive landlord insurance policy. You can also do a lot to prevent problems by keeping up with a robust rental property maintenance schedule and following some other important tips to ensure you know about potential problems early on. You can stop them in their tracks before they become major issues that disrupt your and your tenants' lives.

Should Tenants in Ontario Be Required to Hold Tenant Insurance?

As a landlord, you should always include the requirement for your tenant to hold tenant insurance in the rental contract or lease agreement and ask to see proof of their insurance coverage in the form of a certificate of insurance (COI). If your tenant's belongings are stolen or destroyed by something like a natural disaster or a fire, your landlord's insurance will not cover the repair or replacement of their belongings. But tenant insurance doesn't just provide them with the compensation necessary for their belongings: it also offers liability coverage so that they can pay litigation and settlement costs should they be sued. No one wants to imagine that it could come to that, but if you do have reason to bring legal action against your tenant, their tenant insurance coverage will help ensure you get the compensation you are entitled to by the court.

What Landlords Should Know About Rental Property Maintenance in Ontario

Essential Insights on Rental Property Maintenance for Landlords in Ontario

It's not uncommon for people to assume that being a landlord is as easy as can be, but anyone who has ever tried it knows it can be a challenge. There's a lot to stay on top of, and rental property maintenance can be a struggle when you're not the one living at the property. At the same time, neglecting rental property maintenance is not an option, as it could lead to unhappy tenants, safety and health violations, and increased landlord insurance premiums. As much of a hassle, as Ontario rental property maintenance can sometimes be, it's preferable to the consequences of not getting it done.

You already have a pretty good idea of what it takes to maintain a residential property, from exterior upkeep and repairs to plumbing maintenance, electrical repairs and many more tasks. But what impact does rental property maintenance have on your landlord insurance coverage? What are the best practices for keeping up with everything that needs to be done at your rental property? What insurance coverage, if any, does your tenant need? The experienced brokers at Morison Insurance have the answers to those questions and more below. Give us a call to find out more!

Can Rental Property Maintenance Affect Insurance Premiums in Ontario?

In an indirect way, yes. If rental property maintenance is not done, or not done adequately, minor issues and seemingly insignificant problems will gradually worsen as time goes on until there's a breakdown, collapse, or some other type of catastrophe that could lead to you having to file an insurance claim for repair or replacement costs. It could also lead to a tenant or third party bringing legal action against you, requiring you to file a liability claim to recoup the cost of your legal defence, court fees, and legal settlements should you be found liable.

As with any insurance, your claims history impacts your insurance premiums. The more claims you need to file, the more the premiums will increase. In worst-case scenarios, you may not even be able to get landlord insurance coverage at all. It's far more cost-effective and less stressful to take rental property maintenance seriously and prevent those issues from occurring before it gets to the point where an insurance claim is necessary.

What Are the Best Practices for Staying On Top of Rental Property Maintenance?

Keeping up with maintenance at home can be quite a chore, and it's even more of a challenge when trying to maintain a property that someone else is paying you rent to live in. Your rental property may be located across town or in another city than your home, making it more challenging to ensure that you do everything necessary for upkeep. Here are some tips for staying on top of rental property maintenance in Ontario that can make the entire process easier and more efficient.

Schedule Routine Maintenance Tasks

Some maintenance issues and repairs can't be predicted—they must be dealt with as they occur. But plenty of preventative maintenance tasks can and should be handled regularly to avoid future problems. That includes seasonal maintenance like cleaning out rain gutters, changing HVAC air filters, cleaning off the outdoor AC compressor unit, testing smoke alarms and carbon monoxide detectors, flushing out the water heater, cleaning the drain, trimming trees and bushes, and much more. Many of those tasks require you to enter the house, and of course, you need to notify your tenants before you plan to enter. That's why scheduling these regular rental property maintenance tasks well ahead of time is the best course of action, whether you plan to handle them yourself or hire a professional property manager or property management company. That way, both you and your tenant will be on the same page, and they can be prepared for your visit. This will also reassure the tenant that the property is well-cared for and properly maintained. Annual maintenance costs will still be less costly than serious repairs.

Schedule Larger Upkeep Projects

The regular maintenance tasks mentioned above must be handled in regular intervals, on a monthly or quarterly basis or at least annually. But more significant upkeep projects may only need to be done every three to five years, including a fresh coat of interior and exterior paint, siding repair or replacement, carpet replacement, etc. These types of regular repairs can and should also be scheduled for similar reasons. Some of these projects will require some work on behalf of your tenant—for example, if the carpet needs to be replaced, their furniture and belongings will need to be moved for a period of time. They should have ample time to plan for that eventuality, and it doesn't hurt to remind them about a month before the scheduled day arrives.

Conduct Rental Property Inspections

You can't rely solely on your tenants to alert you when there's a problem—they may not notice, care or may see but not realize it's something they should be telling you about. That's why inspections are a big part of preventative rental property maintenance. There are actually four types of regular inspections that all landlords should know about and perform:

Move-In Inspection: When a tenant first moves in, you should inspect the property together and make notes on the current condition of the property at the time when you're handing the keys over. This also allows the tenant to voice any concerns about the property's condition and make sure the tenants happy with the property.
Move-Out Inspection: When a tenant moves out, you should again conduct an inspection and refer to your notes from the initial inspection, so you can note any changes that have occurred during the tenancy.
Routine Inspection: Routine inspections should be done regularly, like quarterly or annually. They can typically be handled while you're there to take care of rental property maintenance tasks, so you're not constantly disrupting the tenant for various reasons. It would help to give your tenant advance notice because you must enter the property to complete a thorough inspection.
Drive-By Inspection: This is pretty much what it sounds like—you drive past the property occasionally and look at whatever you can see from the road. Of course, you can't tell much from driving by, but it hints at whether tasks like lawn cutting and snow removal are handled promptly. Other visual signs, such as structural integrity and property damage, can be seen by simply driving by.

Be Responsive to Tenant Concerns

We mentioned above that you can only sometimes rely on tenants to tell you when something that needs your attention is incorrect. That being said, when they mention something they're concerned about, the ball is in your court, and the best practice for rental property management is to react promptly to ensure the issue is resolved. That may involve handling a repair yourself or hiring a professional such as a handyman, plumber or electrician. Either way, let the tenant know what you plan to do to fix the situation and when it will be taken care of.

Reserve Funds for Major Repairs

Rental property maintenance and routine tasks can go a long way toward preventing the need for big repair projects and the expenses that come along with them. But part of owning any property is accepting the fact that there will occasionally be a need for extensive repairs that you may or may not have seen coming. Having some savings tucked away makes sense, so you can deal with this eventuality without suffering financial strain. Some experts suggest that 50% of the rental property income you receive should be saved to deal with rental property maintenance costs and operating costs, which could include more significant ticket items like a roof replacement.

Follow Up With Tenant After Repairs

After a repair visit to your rental property, it's a good idea to follow up with the tenant and ensure they are satisfied with the results and that the initial problem has been completely solved. Sometimes you may think you've got an issue like water leaks or a pest infestation taken care of, only to find it reoccurs shortly after. If that's happening, it pays to know about it as soon as possible, which may indicate that more extensive costly repair measures are necessary.

Stay Up-to-Date On Laws and Regulations

Local laws and regulations about a landlord's responsibilities to their tenant are largely centered around the requirement to provide a habitable living space in exchange for rent payments. Since those laws and regulations can sometimes change or be updated, an essential part of keeping up with rental property maintenance is investing some time and effort into not only understanding the current law as it stands but also making sure to stay up-to-date on any changes that come into effect, so you don't find yourself in violation of regulations that you weren't even aware of.

Keep Detailed Maintenance Records

Finally, keeping detailed records of the rental property maintenance you perform (or have professionally done) on your property is really important. There are many situations in which it's handy to have that information readily available, including settling disputes with tenants or neighbours. It's also good practice so you can easily see what has been done and what still needs to be taken care of. If you hire a new property manager, they will keep well-organized, thorough rental property maintenance records, including repairs. If you decide to put the property up for sale, it will be easier to communicate all the necessary information as you can simply look it up in the books.

This content is written by our Morison Insurance team. All information posted is merely for educational and informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information in this article, you do so at your own risk. While the information on this website has been verified to the best of our abilities, we cannot guarantee that there are no mistakes or errors.