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Tenant insurance

Insurance experts say they don't know how many renters have tenant insurance, but they suspect the numbers are low. That's no reason to think it's not a good idea, they say.

The biggest misconception tenants have about insurance coverage is that it's the landlord's responsibility if something goes wrong.

"It's not just about your possessions," says Anne Marie Thomas of InsuranceHotline.com. "Tenants are liable in a number of ways for damage done to their own unit or to a neighbour's apartment or to the building itself."

For example, if you forget to turn off a faucet when running a bath and the water leaks to your downstairs neighbour's place, it's your responsibility to pay for any damage to their apartment, as well as your own. This includes damage caused to another tenant by someone who's a guest in your apartment.

Limits to landlord liability
Thomas says landlords are only responsible for areas of their property (including the building itself, grounds and parking garages) and damage caused by such things as faulty wiring or plumbing.

In the bathtub water example, if the flood damage had been caused by burst pipes, it would fall within landlord liability.

Pete Karageorgos, manager of consumer and industry relations at the Insurance Bureau of Canada, explains that even if damage occurs to your possessions or apartment from another source (landlord or a fellow tenant) having your own coverage will still be of benefit.

Sooner is better
"Your insurance will pay your costs and then go after the insurer of the person responsible for the damage," says Karageorgos, meaning you'll get money much faster than waiting for liability issues to be resolved.

"This is especially important when it comes to living costs," he adds. "If you are put out of your apartment because of a fire or flood you need somewhere else to live immediately. Your tenant insurance may pay for you to stay in a hotel and other living costs."

The cost of tenant insurance is surprisingly low. For a typical package of $50,000 contents and $1-million liability, says Thomas, "it would amount to around $240 a year."

Worth more than you think
Another stumbling block to taking out tenant insurance is the mistaken belief that your possessions aren't worth much.

Even such things as secondhand music collections have value and deserve compensation if they are stolen or destroyed.

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-- Posted March 23, 2012
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