What Is Rented Dwelling Insurance

Are you thinking about purchasing an income property or renting out part of your home for an extra boost to your income? It is important to consider the additional risk you will be taking on and to make sure you will be properly covered by rental property insurance, otherwise known as landlord insurance.


Is rented dwelling insurance required?

No, rented dwelling insurance is not required by law to begin renting out your property, but you will want to have this type of insurance to be covered from the additional risk.

There is a possibility that you can add on rental coverage to your existing homeowners insurance based on the type of tenants. For example, if the tenant is a student or one family, or if it is a short-term rental for a few weeks a year these are points to bring up to your insurance broker to help them determine what options are available to you. While it may be possible to add on this coverage, it is important to keep in mind that a claim on the rental will also affect your existing homeowner insurance policy which can increase your premium.

In the case where you are renting out an income property that is separate from your home, there will be further risk because you will not be living on the premises so it is again advisable to get rented property insurance.

Be mindful that if you do not add on rental coverage or you do not get landlord insurance, your regular home property insurance will not cover you if there’s a claim situation.


How is it different from my existing homeowner's insurance?

If you are only considering renting out your basement or a spare room to a student, it is understandable to wonder why your current policy isn’t sufficient. However, there is significantly more risk with having a tenant such as property damage from tenants or visitors, loss of rental earnings, on-site injuries, theft and much more. Having rental property liability insurance coverage protects your new income stream from becoming a major financial liability.


Should I still have my tenants get rental insurance?

Your rented dwelling insurance will not protect your tenant’s possessions and property so it would be in your best interest for your tenant to still get rental insurance. This will reduce the risk of conflict and potential lawsuits in cases where property is damaged or persons are injured.

In addition, some insurers will not offer you a rental property insurance policy if your tenants do not have their own rental insurance as well.


How much does rented dwelling insurance cost?

The average rental property insurance premium is around $700-1,200 but can increase depending on which additional coverages you require. Basic landlord insurance coverage can include liability protection for the actual structure and rental income protection if the property becomes uninhabitable. While additional coverages can cover theft, vandalism, and loss of rental income from unpaid rent.

There is a lot to consider when becoming a landlord, but we are here to help take rental property insurance off your mind. Drop us a line and we can advise you on what coverage you need and the options that are available to you based on your unique situation.


Why Use a Licensed Insurance Broker?

Are you thinking about purchasing an income property or renting out part of your home for an extra boost to your income? It is important to consider the additional risk you will be taking on and to make sure you will be properly covered by rental property insurance, otherwise known as landlord insurance.


What is a licensed insurance broker?

A licensed broker is a registered independent insurance professional governed by the Registered Insurance Brokers Act in Ontario. Brokers sell general insurance like coverage for your car, home, business, etc. They are not tied to one insurance company, so brokers can shop around and provide independent advice that is in the best interest of their client.


What is required to become a licensed broker?

In Ontario, insurance brokers are regulated and licensed by the Registered Insurance Brokers of Ontario (RIBO). To be licensed, your insurance broker had to study and complete the Level 1 Exam (with a pass rate of only 62% in 2019) and be employed at a RIBO licensed brokerage. In addition, they cannot hold another form of employment or participate in a secondary business and must only be employed as an insurance broker. To maintain their license, your insurance broker has to earn 8 hours of continuing education credits each year in RIBO accredited courses, adhere to the RIBO code of conduct, and be bonded and covered under a professional liability policy.


Is being licensed the same as the designations next to my broker’s name?

You may see CIP, CAIB, or CCIB (to name a few) after your broker’s name and wonder what these mean or if they are the same as being licensed. These are additional designations and are different from being licensed by RIBO. Just like other professionals, many insurance brokers are dedicated to their profession and want to stay up-to-date and learn more about their industry. Each designation has their own course requirements and final examinations but it does not mean that they are licensed to sell insurance.


How do I know if my broker is licensed?

You can do quick search on the RIBO website using their first and last name, but keep in mind that they can be licensed under their legal name but practice under an English preferred name.


What are the consequences of buying insurance through an unlicensed broker?

The Financial Services Regulatory Authority of Ontario (FSRA) advises against purchasing insurance from unlicensed brokers. Customers of unlicensed brokers will not be protected under Ontario’s Insurance Act and the regulations that govern Ontario’s licensed insurance companies and brokers.

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