Rented Dwelling Insurance Ontario

Dwelling Insurance for Your Rental Property in Ontario

If you’ve invested in a residential property, you’re not planning to live in yourself, and it makes perfect sense to offer it up on the rental market and turn it into a profitable venture. Whether you’re interested in bringing in a little extra income, it’s critically important to have protection against financial loss afforded by the right rented dwelling insurance policy. Ontario property owners are sometimes reluctant to consider renting out a dwelling because they know it could leave them vulnerable to financial hardship caused by damaged or destroyed property, a sudden loss of rental income or even liability issues that could force them to defend themselves in court. All those worries can be alleviated by a thorough rented dwelling insurance policy that addresses your specific needs and unique risk exposures that gives you the financial protection you need.

What is Rented Dwelling Insurance?

Also referred to as rental property insurance or landlord insurance, rented dwelling insurance is a type of insurance designed to protect a residential property owner from financial losses related to physical damage or destruction of their property and belongings, along with covering other expenses such as legal costs in the event of a liability situation. Rented dwelling coverage can also provide coverages such as rental income protection so you can receive compensation for lost income if a fire or other insured peril renders your property unfit for occupancy and your tenants have to move out.

Who Needs to Have Rented Dwelling Coverage?

Anyone who owns a residential property (or multiple income properties) that they plan on renting out to a tenant should have rented dwelling insurance. Ontario property owners are vulnerable to certain claim risks. They could lose a lot of money if they aren’t backed by an insurance company that will provide them with recovery funds in the event of damage, liability or sudden loss of income. Speak to an expert broker at Morison Insurance to learn more or to begin a rented dwelling insurance quote.

Is Rented Dwelling Insurance Mandatory?

Like most types of property insurance or business insurance, rented dwelling insurance is not legally mandatory in Ontario or the rest of Canada. Rented dwelling coverage is likely a mandatory requirement if you have a mortgage on your investment property. But even if you aren’t required to have it, you can’t afford to go without it. When you rent out your property, you will naturally screen prospective tenants and try to find someone responsible, honest and tidy—but you’re still handing over the keys to your personal property to a virtual stranger. You don’t know if they will treat your rental house with the same diligent care they would give to their own property.

What would happen if you were forced to evict your tenants and found that they had caused severe vandalism damage in retaliation when you went to reclaim possession of the property? Without rented dwelling insurance, you would have to cover the cost of restoring the building to livable condition and go without rental income until the repairs were complete. You would also have to pay legal fees if you chose to pursue charges against your former tenants. Suppose you have rented dwelling coverage in place. In that case, your insurance carrier will provide funds to cover those costs up to the coverage limits on your policy, so you can get it taken care of quickly and get your rental property generating income again.

Accidents can happen even if you find a perfect tenant who is honest, prompt, and takes excellent care of the property. We all know that no matter how careful a person is, there’s still the potential for something to go wrong—and, of course, damage can occur that isn’t anyone’s fault. You can’t control many factors at your rental property, and investing in rented dwelling insurance gives you the peace of mind that comes with knowing that you will be adequately covered when something does happen.

What Types of Coverage Are Included With Rented Dwelling Insurance?

When you need rented dwelling insurance, Ontario brokers at Morison Insurance will first consult with you to find out as much as possible about your property, how you intend to manage it, and other information that will tell them which risks you are most likely to encounter. The necessary reason is that there’s no such thing as a one-size-fits-all approach to insurance coverage. Your experienced Morison Insurance broker will find the perfect combination of coverages to address your unique insurance needs, so you can rest assured that you have the coverage you require. Here are some of the standard types of coverage, along with some options that are well worth considering.

Property Insurance

This is a fundamental building block of any rented dwelling insurance that protects the policyholder from paying out of pocket to cover repair, replacement and restoration expenses if the physical structure is damaged or destroyed by an insured peril such as fire, hail storms or natural disasters. It is possible to add additional coverages to your property insurance or increase coverage limits if necessary to guarantee you will receive the full replacement value if the house is destroyed for an insured reason.

Owner’s Contents Coverage

Most belongings on your rental property will likely belong to your tenants, and your rented dwelling insurance does not cover their belongings—they need their own tenant insurance. But there probably is some stuff on the property that belongs to you, from major appliances such as laundry machines to provided furnishings. Since those items are in the house but not a part of it, they aren’t directly covered by your basic property insurance. The contents coverage portion of your rented dwelling insurance will prompt your insurance carrier to compensate you for damaged items in the rented property but not a part of the building.

Rental Income Insurance 

If your rental property suffers severe damage—from a house fire, for example—and is no longer habitable, your tenants will naturally have to move out. That means you not only have to deal with the time, hassle and expense involved in getting the building restored and fit for occupancy again, but you also have to manage without the rental income you’ve been receiving until the building is back in safe, livable condition and you can get another tenant in there. Rental income insurance is essential because it gives you some financial relief. Your insurance carrier will compensate you with “fair rental value” for the period it would reasonably take to get the repair or restoration work done. It’s important to note that it will not necessarily be the amount you were charging for rent. For example, if you were charging $1,800 per month, but the typical rate for comparable rental properties in your area is $1,200; you will receive $1,200 per month from your insurance provider. 

Legal Expense Insurance 

As a rental property owner, many potential factors could cause you to need legal help, from drafting a few documents to a full-blown legal defence, should you be sued and have to defend yourself in court. With this type of coverage on your rented dwelling insurance, you can get legal assistance for various purposes related to legal costs. One massive benefit of legal expense insurance is that you have access to a legal hotline or may qualify to receive legal aid for matters such as document drafting without the need to trigger an insurance claim. This way, you can get the legal help and advice you need without making a mark on your claims history.

Vandalism and Theft Coverage

While vandalism and theft are generally covered by standard property insurance, you may need more than the standard coverage on your rented dwelling insurance policy. Your property is more at risk of vandalism and theft because you don’t live there and aren’t present to monitor it most of the time. Speak to your insurance broker to ensure adequate vandalism and theft coverage, so you don’t have to worry about recouping costs after a disappointing event.

Additional Types of Insurance Coverage

Many additional types of coverage can be added to your rental property insurance policy to provide further coverage. Some popular coverages include:

• Commercial General Liability (CGL),
• Water Damage Coverage,
• Sewer Backup Extension,
• Solar Panel Extension,
• Lock and Key Coverage.

What is the Difference Between Rented Dwelling Insurance and Renters Insurance?

This is a fairly common question, and it’s easy to see how these two types of insurance can be confused based on their names. The critical difference between them is that rented dwelling insurance policies are held by property owners and offer the owner financial protection against loss. In contrast, renters insurance policies—also called tenant insurance—are held by the renters or tenants and protect them against financial loss should their personal belongings be stolen or damaged. It also gives them liability insurance should they be found liable for causing property damage or bodily injury for an insured reason. Rented dwelling insurance and tenant insurance don’t apply to the same items because the former covers the property and items belonging to the landlord. In contrast, the latter covers the belongings of the tenant.

Should Tenants Be Required to Have Tenant Insurance?

It’s a good idea to include a requirement on your rental agreement that your tenant obtain renters insurance. It’s beneficial to the tenant because it gives them the coverage they need to replace any personal belongings that are stolen or damaged and gives them liability coverage so they can access financial support up to the limits on their current policy to pay for legal fees and settlement costs should they have legal action brought against them.

Tenant insurance doesn’t just benefit the tenant, though—it’s also better for the property owner if their renter has the right insurance coverage because it reduces the risk of a personal or legal conflict if the tenant causes accidental damage to the physical property and helps to ensure that the property owner will be able to receive full insurance compensation for the building damage. It’s also important to note that some insurance carriers may not be willing to provide you with rented dwelling insurance unless the occupants of the building are backed by tenant insurance. 

Where Can I Get Dwelling Insurance for a Rental Property?

Call 1-800-463-8074 to speak with a reliable Morison Insurance broker about a rented dwelling insurance quote. Ontario property owners can rely on our team for outstanding customer service and extensive experience with property insurance. At Morison Insurance, we don’t work for the insurance companies; we work for you. That means we have your best interests at heart and will work tirelessly to find the correct insurance coverage from the right insurance provider for you so you have financial protection against all the perils you are most likely to encounter. Give us a call today to speak directly with an experienced broker or start a rented dwelling insurance online quote, and we’ll contact you to find out more about your insurance needs.