Tenant insurance is often treated as an afterthought but the ramifications of forgoing coverage can be financially ruinous.

“First and foremost, it’s for [the tenant’s] liability,” Cheryl MacDowell, Principal Broker and Owner of MacDowell Insurance Brokers Ltd., told STOREYS. “If I’m an Uber Eats driver delivering a pizza but the doorway is obstructed and I trip and break my neck, the tenant is the one responsible to keep the location clear of any item that might cause injury. Salting the steps and clearing the snow is the tenant’s responsibility. If they don’t, they can be brought into any type of negligence lawsuit that would make them liable for third-party bodily damage.”

MacDowell says that uninsured tenants are a big problem in the insurance industry, and despite the requisition for landlords to be insured, their premiums are nevertheless rising because of how many lawsuits they’re roped into. The issue isn’t as prevalent in high-rises because most property management companies require tenants to show proof of insurance before handing over the keys; the problem typically rears its ugly head in single-unit low-rise rentals.

Tenant insurance varies in price. It is contingent on someone’s age, credit and insurance history, where they live - - it is a detached abode or a high-rise; is it downtown or uptown? - - and what their specific needs are, not to mention the rate variance between individual companies.

Moreover, should serious injury occur on the premises, it could prove financially precarious for the tenant and even derail their future, says MacDowell.

“Among the best dollars you will spend is having the right insurance in place because it will get you out of a liability lawsuit instead of paying a lawyer and their retainer fee to defend you when an insurance company should be doing it,” she said. “People can afford a $30,000 hit to replace their contents but a million-dollar liability is not so easy to recover from. Landlord premiums have gone up exponentially because a lot of them don’t make their tenants get insurance.”

However, Geordie Dent, Executive Director of the Federation of Metro Tenants’ Associations (FMTA), an advocacy group, disputes the notion that a tenant is responsible for property maintenance and that they would be liable should a third-party incur injury on the property.

“I’m not sure how they would come to that conclusion because the legal responsibility for maintenance, in terms of a slip and fall on ice, would be with the landlord,” he said. “The tenant in that scenario could sue the landlord, again, assuming the landlord hadn’t done their duties according to the law. Some of the issues that come up could be a scenario where the landlord tells the tenant -- and we see it all the time -- ‘You have to go through your insurance,’ even if the landlord doesn’t do their duty under the law, but that’s what landlord insurance covers.”

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Dent added that property standards bylaws, which differ by municipality, determine the types of maintenance landlords and tenants are responsible for but, in Toronto, it’s incumbent upon the landlord to oversee such things.

“The tenant cannot be responsible for doing maintenance; it’s illegal for them to do so,” Dent said. “Pest control, for example, would be a landlord’s responsibility because the tenant could do it wrong and make the situation worse. It’s always incumbent upon the landlord to do maintenance but maybe if the pizza delivery guy is called and maintenance isn’t done because you haven’t told the landlord, you may have liability. But if you tell the landlord and they don’t do maintenance, it could be on them.”

Dent also maintains that not all tenant insurance is good because, as can often be the case, the type of insurance coverage purchased doesn’t address the issue at hand. Moreover, a lot of tenants live on the margins and an extra $20 or $40 a month could push them perilously close to the precipice. That’s one reason FMTA is opposed to making tenant insurance mandatory by law.

“We don’t typically give any advice on the issue because we’re not lawyers but there a couple of things: we explain what the law says and that, currently, tenant insurance is not mandatory,” Dent said. “Generally, what we say is tenant insurance is helpful if you can get it, if you can afford it, and if coverage is reasonable, but it’s not always the case. We argue against making it mandatory because not everybody can afford it. Some people don’t understand how close to the line some people are and not everybody gets the tangible benefits.”

Still, tenant insurance typically covers damage to the renter’s possessions. Yet, according to Tony Irwin, President and CEO of the Federation of Rental-Housing Providers of Ontario (FRPO), there’s a common misconception among tenants that their landlord’s insurance covers their belongings, and it’s for that reason FRPO recommends tenant insurance.

“The reason for you to get tenant insurance is to make sure your own possessions are protected in the case of a loss, because your landlord’s insurance won’t cover that,” Irwin said. “If something happens to your possessions, which many people hold dear, you want insurance for that, and if you think landlord insurance covers it, it doesn’t. You probably have a lot of possessions you’ve worked hard for and while you think the odds of something happening are low, and that may well be, what if something does happen? The cost of insurance for you, an individual tenant, is probably relatively affordable, especially compared to the loss of your valuables and the cost to replace those things. It gives you peace of mind.”