When your rental suffers a fire or major water damage, your tenants can’t live in their home until it’s repaired leaving you without any rent coming in for possibly months. But you still need to pay your rental’s mortgage, taxes and utility bills. Avoid all this financial stress with Rental value protection.
When your tenants are forced to live elsewhere momentarily
Natural catastrophes such as wildfires in Fort McMurray or in B.C. had forced hundreds of tenants to evacuate their homes.
And we all read stories in our local news of domestic fires in rented buildings, leaving tenants displaced like 15 tenants in Sudbury in November or in Drummondville.
But major water damage – whether from high winds ripping off your roof or faulty plumbing – can also make your rental inhabitable.
Avoid financial stress with the Rental Value protection
Now you may be facing weeks or even months of repairs to get your rental back to its original condition.
Your tenants are not paying you rent as they had to relocate during the renovations. However, your mortgage is still due. Some banks will allow you to skip one to four payments per year but it has some consequences. So you really need to think this through.
Add to that your rental’s utility bills. And if you’re late, you can have fees of 19.56% per year in Ontario or 14.4% in Quebec, or even service interruption.
On top of that, you still need to pay your rented property’s taxes.
To avoid financial struggles, APRIL automatically includes the Rental Value protection in its Landlord insurance package. It will compensate you for the rent you can’t collect while your rental is uninhabitable because of insured damage.
Why you should ask your tenants to have their own insurance
While a major loss to your rented property is stressful for you, the landlord; this is also nerve-racking for your tenants:
- They must find another place to live for a while. Renter insurance would cover their living expenses (such as renting an AirBnB or booking a hotel room) when a loss happens to their home.
- Their personal belongings have been damaged too. Renter insurance would compensate them so they can replace their clothes, furniture or other personal items; as your landlord insurance would only protect your appliances and furniture.
- But more importantly, they might be responsible for the damage (e.g. they caused a kitchen fire). Renter insurance would pay, on their behalf, any compensatory damage to you or any other third party impacted by the property damage they caused.
Write a clause in the lease making it mandatory for your tenants to have their own insurance. Every year, you should ask for a copy of their renewal to make sure they maintain their coverage. This kind of requirement is easier to implement once you’ve established a good relationship with your tenants. Read here our 10 tips.
Facing the other consequence of a major loss
Traditional insurance companies might not renew your landlord policy if:
- Your rental has been significantly damaged
- You claim multiple losses over the past few years
- Your rented property has been unoccupied by tenants for several months due to the renovations