I know a small landlord who had a tenant without insurance. The tenant caused a fire – you know the rest. Although the landlord was covered with his own insurance, the payment of the claim would have meant in an increase in his premiums (possibly on all all the properties insured under that policy. For your protection as a landlord it is essential that you require all your tenants to provide proof in insurance before they take possession of your property.
When you describe this requirement to a prospective tenant it is essential that you describe it as being for their benefit. See the following article from the Toronto Star:
Do renters need insurance?
August 16, 2011
Special to the Star
Contents insurance is something most renters don’t put too high on their list of priorities.
In the grand scheme of expenses, many feel it’s a cost they can do without, believing the likelihood something bad will happen is slim.
According to the Insurance Bureau of Canada, about half of all renters don’t have insurance, especially young people. They also fail to appreciate the full value of their clothing and personal belongings.
But there are other factors to consider, such as a tenant’s legal liability.
For example, you could be liable if your toaster oven causes a fire and it affects other units, or if you accidentally leave a tap on in the bathroom and the water causes damage.
The building owner could charge you for the cost of the damages, but they would be covered under your contents insurance policy. Without insurance, it would come out of your pocket.
But can a landlord make renting a unit conditional on having contents insurance?
Francis is a Toronto tenant who was looking to sublet her apartment. Her landlord met with the people interested in subletting and insisted they would be required to have contents insurance.
Francis and her roommate were never asked about contents insurance and she has never owned any in the 10 years she’s been renting. Although she understands she won’t be covered in the event of a fire or theft, she doesn’t think her furniture and possessions are worth the expense of insuring — especially since the odds of anything happening seem quite low.
Barrie-based paralegal April Stewart says contents insurance isn’t required under Ontario’s Residential Tenancies Act. However, landlords do have the right to insist on seeing proof of insurance prior to accepting a tenant or a sublet.
“Landlords who wait until after giving possession can try to evict based on no insurance, however there are inconsistent decisions on the matter,” says Stewart.
In the 2005 case of Stanbar v. Joseph Rooke, the Ontario Superior Court of Justice upheld that tenant insurance coverage, if required in the lease, is enforceable and can be grounds for eviction.
The decision states, “The Act is silent about whether or not a landlord has the right to demand that tenants maintain insurance, or that they provide proof of coverage to their landlords. However, if the parties agree to it, it, too, becomes a contractual issue….”
Based on her own experiences, Stewart says tenants can be evicted, depending on who the adjudicator is, as there is little consistency in decisions.
Stuart Henderson of the Ontario Landlord Association says landlords try to educate tenants about the benefits of contents insurance.
He insists it’s a good investment at a low cost. Premiums are typically based on the value of the contents, and can range from $100 to $500 per year. Luxury items like jewellery can cost more to insure.
Stewart knows the value of having contents insurance. She recently experienced a break-in at her own rented Barrie home and lost $10,000 worth of possessions.
“They didn’t damage anything and, in that regard, we were relieved. My daughter lost all of her jewellery though — not overly expensive, but sentimental value, which upset her a lot.”
The single mom adds her daughters still feel quite vulnerable. “I’m not comfortable leaving them home alone now, even though they are old enough. Clearly, someone snoops around and I don’t want anything else to happen.”
“Tenants may wish to look at it another way: insurance is a small investment that provides real protection. I can attest to that. I’m a tenant, I have insurance, and was very happy about that several weeks ago when I came home to find my home burglarized,” says Stewart.
Contents insurance also provides for additional living expenses – up to 20 per cent of their contents amount if there was a fire and they had to leave the building.
Renters should also consider estimating replacement value of goods, especially furniture and electronics, not what they think is the value of their aging recliner and sofa.
To determine the value of contents, the Insurance Bureau of Canada suggests making a list which can include writing everything down, but faster ways include using a camera or video recorder, or using a digital or tape recorder. It’s also a good idea to keep receipts, warranties and instruction manuals for things like televisions and computers in case you need to make a claim down the road — they serve as proof of ownership and value. Store these items in a safe deposit at a bank, at another location or in fireproof box.
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