According to Statistic Canada, half of the tenants in Canada do not have  insurance. The reason? The belief that the landlord insurance will cover them in case of damages, even though they are responsible for it. As a landlord, you wonder if you have to request your tenants to carry insurance in order to protect your rental? Here is why it is important to confirm that they have their own insurance. 

Your insurance policy do not protect your tenants

The landlord insurance policy that is underwritten is protecting you and your building. In case of damages caused by your tenant, by accident or on purpose, he is held responsible. This means that your tenant will be required to pay for the damages. In case he is not insured, he will have to pay with his personal resources. In case of damages that makes the rental property unlivable for a certain amount of time, your tenant will have to support the relocation costs as well as the rents of the ongoing rental agreement. Although you checked his information prior to signing the agreement (read our article about the information you can ask your future tenant), will he be able to support all those expenses?

The liability is important

The liability is part of the tenant insurance. It is important to raise awareness among your tenants to get such a protection. In the event of fire, your tenants could be sued by other tenants, by yourself or by other insurance companies in order to pay for the damages they caused. 

With your tenant liability, it is also you, as landlord, who is protected. If a damage occurs in your rental, the tenant liability will cover the repairs. The amount for liability offered in insurance policies are of minimum 1 million dollars. 

Ask for an extract of their insurance policy

Make sure that your tenants are covered for major risks. Endorsements to insurance policies can be underwritten and be necessary in order to protect your rental. Check that the insurance policy has the elements of a basic coverage: 

  • Fire
  • Theft 
  • Liability

Check a second time that the needed endorsements were added to the policy according to the risks that your rental is exposed to, especially when it comes to water damages that your tenant has caused. Check finally that your own insurance as a landlord protects your rental from all the risks it is exposed to. 

Do not forget that there are no legal requirements for tenants to get their own rental insurance, but it is possible for you to ask for one when signing the lease agreement. In case of a major damage, you will also avoid the issue of relocating your tenant, as his or her own insurance policy will take care of that. 

To make sure that your insurance policy covers water damage, read our article 10 types of water damage: covered or not?