Landlord Insurance in Canada
Landlord Insurance in Canada
Investing in real estate can be lucrative in both the short and long term. But have you considered, or are you currently, renting out your space to tenants? Whether you’re finding a suitable residential rental property or looking for prospective tenants, being a landlord has its risks. This is where a comprehensive insurance policy comes in.
Get a free landlord insurance quote from one of our skilled brokers. Read on for more information about landlord insurance and how the right coverage can help you protect your investment property.
What is the Difference between Landlord Insurance and Renters Insurance?
Landlord insurance and tenant insurance, also known as renters’ insurance, cover different things and serve different purposes.
- Landlord insurance protects the property owner’s investment in a rental property. It covers the property’s structure and the landlord’s belongings. It also provides loss of rental income coverage and liability coverage for the landlord.
- Tenant insurance protects the belongings of the tenant and offers them personal liability coverage. Many landlords require renters to hold tenant insurance.
Landlord insurance is separate from tenant insurance, and these policies do not overlap, thus making it more necessary for both to exist to insure both parties. Landlord insurance can spare your operations from a particularly nasty loss and provide you with the necessary financial reimbursement to keep your operations going.
What is Landlord Insurance?
Landlord insurance is a form of insurance protection that, while different from situation to situation, is used to protect property owners from unexpected financial losses involving their rental properties.
Protection may include the physical building down to the structure of each unit, common areas, hallway, exterior fixtures, and any contents that do not belong to tenants. It may also include coverage for liability arising from your ownership of the rental property and, with some policies, can protect loss of rental income.
Who is Landlord Insurance for?
Landlord Insurance is designed for rental property owners and businesses that rent out property. The primary audience for landlord insurance is:
- Individual property owners.
- Real estate investors
- Property management companies
- Commercial landlords
What is the Difference Between Landlord Insurance and Home Insurance?
Landlord insurance and home insurance, or dwelling insurance, are both types of property insurance with some similarities. Homeowners insurance also caters to property owners who want to protect their property. Both insurance coverages protect against property damage, bodily injury, as well as liability coverage protection.
The difference is that landlord insurance only covers property owners who lease or rent their property, while in the case of home insurance, homeowners are expected to reside in the property and not rent it.
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Is Landlord Insurance Required in Canada?
Landlord insurance isn’t required by law in Canada. However, many mortgage lenders require you to carry coverage if you’re financing the rental unit. This ensures that their investment is protected.
Even if mortgage-free, having landlord insurance is strongly recommended to safeguard landlords and protect their investment with property coverage so they don’t have to pay money out of pocket for damage beyond their control. Whether it’s medical expenses or legal fees, having their own insurance policy ensures that they don’t have to suffer major financial losses.
Landlord Insurance Endorsements
Additional coverage is useful when you need extra protection against common perils. Endorsements provide extra coverage that adds to the cost of your insurance policy.
- Enhanced water damage coverage protects landlords against water damage due to sewer backup, overland water, and water lines.
- Sewer backup coverage protects against water damage caused by sewage or wastewater that backs up into the home.
- Overland water coverage safeguards the property from damage resulting from flooding due to excessive rain or melting snow.
- Flood insurance offers coverage against water damage due to a burst pipe.
- Earthquake insurance may be available as an endorsement to cover earthquake-related damages.
- Non-payment of rent insurance compensates landlords if a tenant refuses to pay rent and covers related legal fees.
What Does Landlord Insurance Not Cover?
There are certain limitations to landlord insurance. Typically, it does not cover any damages that affect your tenant’s property, including any furniture they bring into their unit, appliances, electronics, clothes, equipment, and more. It only includes your personal belongings. If the tenant’s belongings are damaged, they can get reimbursed through their own tenant insurance policy.
It also will not cover tenants if they are legally liable for someone else’s injuries or property damage.
Damage caused by wear and tear, as well as a lack of proper maintenance, is also not covered by insurance. It’s your responsibility as the landlord to upkeep the rental property and fix any damage, like replacing an old roof or repainting the walls. It’s important to ensure that the tenant reports all damage for you to handle promptly.
Depending on the policy, not all natural disasters are covered by Rental property insurance policies. For example, most landlord insurance policies don’t include floods and earthquakes. For that, you need specialized flood insurance or overland water coverage, or earthquake coverage. Sewer backup insurance is also purchased separately.
Basic landlord insurance does not cover vacancies in your unit. So, if your property is vacant for a long time, coverage may not apply.
Finally, like all other insurance coverages, intentional or criminal acts are excluded from coverage.
What Does Landlord Insurance Cover?
A landlord insurance policy may cover the following:
- Personal property damage coverage protects against fire, flooding, falling objects, wind damage, theft, and vandalism. Covered property may include walls and floors, building foundation, fixtures, plumbing and electrical systems, HVAC, furniture, and more. It is also known as content coverage.
- Personal liability insurance coverage if a third party suffers property damage or third-party bodily injury.
- Replacement for lost rental income if your tenants must temporarily vacate the premises of the building for a certain period due to an insured loss and are unable to pay rent.
Landlord insurance coverage may vary for damages inflicted by tenants, so it’s best to familiarize yourself with your policy documents. If you are still unsure, consider asking a landlord insurance broker for advice.
There are certain limitations to landlord insurance. Typically, it does not cover any damages that affect your tenant’s property, including any furniture they bring into their unit, appliances, electronics, clothes, equipment and more. It also will not cover them if they are liable for someone else’s injuries or property damage.
How Much Does Landlord Insurance Cost?
In Canada, landlord insurance for a standard residential rental is $40-$80 per month or about $480-$960 per year, but can start as low as $300-$500 per year for basic coverage and go up to $800-$3,000 for larger or higher-risk properties.
Prices vary based on property type, location, rental type, optional coverages, and claims history. High-risk or commercial properties can be over $1,300 per year, and some premiums can be six figures.
Factors that impact a landlord’s premium
- Property value: The higher the property value is, the more expensive premiums get.
- Property square footage: A small condo is cheaper to insure than a house.
- Number of units of the property: The more units, the higher the insurance price.
- Property location: Different locations have different crime rates and claims stats. Natural disasters are also taken into consideration.
- Building materials: Expensive, rare materials increase the property value and insurance premium rate.
- Year the property was built: Old houses are considered more risky due to outdated heating, electricity, and plumbing systems, so they cost more in insurance premiums.
- Insurance history: Having previous claims signals to insurance companies that you are high-risk.
How to Reduce your Landlord Insurance Premium
Speak to a Sharp Insurance broker to get an accurate assessment of what it will cost to insure your rental property. Our brokers also give you tips to get lower insurance rates.
There are a multitude of factors that can affect your insurance rate. Below are a few ways to reduce your landlord insurance premium:
- Bundling insurance policies. For example, you can bundle your landlord insurance with car insurance.
- Decrease coverage limit if you’re paying for more than you need.
- A higher deductible lowers your insurance rate.
- Discounts, installing security monitoring systems, and more
- Maintain a clean claims history by avoiding filing minor insurance claims. That can help keep your landlord insurance rate lower.
To keep costs low, it’s recommended that you do your due diligence about your prospective tenants. A tenant who doesn’t look after their unit and who misses payments may cost the landlord money.
If I Have Landlord Insurance, Do My Tenants Need Their own Insurance Policy?
While not mandatory, tenants must have their insurance policy to protect them from financial loss. Landlords can require tenants to carry insurance as part of their lease agreement. A landlord insurance policy will be rather limited when it comes to protecting their tenants’ belongings and more.
Renters, or tenant insurance, protects tenants from costs associated with the negligent destruction of landlord property, losses due to theft or vandalism, natural disasters, and liability for injuries.
If a tenant needs temporary housing, a renters’ policy provides compensation for additional living expenses. A tenant policy also reduces the risk of a lawsuit for the landlord, in case the third party who may have been injured in an accident decides to sue the landlord.
Will My Home Insurance Policy Cover My Landlord’s Activities?
Because renting out your property to tenants constitutes business activity, it is not covered by your home insurance policy. Your home insurance excludes anything related to you generating a rental income. So, if you don’t rent out a full property but just a portion of it, you’ll need to have some form of rental insurance on top of a home policy. In this case, you may be able to get an endorsement for your rental endeavours. Ask a landlord insurance broker at Sharp for further advice.
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Get a QuoteWhy Choose Sharp Insurance
Sharp Insurance Provides Fair Insurance Coverage
As one of Canada’s top insurance brokerages, we work to get you the insurance you deserve. We believe in giving our customers as many options and cost savings opportunities as possible so that they can be confident that their landlord insurance won’t be an expense that tremendously offsets the revenue they generate from their rental activities.
Highly Trained Insurance Brokers
Moreover, our landlord insurance brokers are highly trained and dedicated to working for you. Before advocating on behalf of an insurance provider, we advocate on behalf of you. We do the heavy lifting for you and work hard to find you rental property insurance or landlord insurance that is most suited to your needs.
Digital Round-the-Clock Assistance
You can also benefit from getting in touch with us over the phone, our online portal or app, social media, e-mail, or in person. We offer a myriad of service options you can choose which is most convenient for you.
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What Are the Landlord’s Responsibilities and Risks?
Landlords have responsibilities towards their rental property and tenants. Knowing them prevents incidents that may void your insurance or lead to rejected claims. Below are some of the general rules.
- If a property is left vacant, landlords may need to purchase additional coverage as standard policies often do not cover vacant homes.
- Insurance companies may look at a landlord’s claims history when determining insurance premiums; thus, filing too many claims can increase costs.
- Landlords should conduct regular inspections of their rental properties to ensure that safety and maintenance standards are met.
- Landlords must respond promptly to tenant complaints or requests for repairs to prevent small issues from escalating.
- Under the Residential Tenancies Act, landlords must give proper notice before entering a tenant’s rental unit, usually 24 hours unless in an emergency.
What You Need to Know About Landlord Insurance: FAQs
Yes, many policies include loss of rental income, which compensates the landlord if the property becomes uninhabitable due to an insured event.
Yes, but you may need a specialized policy or endorsement, as standard landlord insurance is designed for long-term rentals.
Yes, landlord insurance includes liability coverage for the landlord. Moreover, some policies offer optional legal expense coverage for disputes like evictions or tenant damage claims.
No, standard home insurance isn’t designed for rental risks. For that, you’ll need a landlord policy.
Yes, you can include a tenant insurance requirement in the lease, though it’s not a legal mandate.
No, it’s not legally required, but many mortgage lenders mandate it, and it’s strongly recommended for financial protection.
No. Tenants need their own renters insurance to cover personal possessions.
On average, $40–$80 per month, depending on property type, location, coverage, and risk factors.
It usually excludes normal wear and tear, tenant belongings, certain natural disasters (like floods or earthquakes without add-ons), and intentional damage.
The most common landlord insurance claims are for water damage, including burst pipes, appliance leaks, and sewer backups. Other frequent claims include fire damage and tenant-caused property damage.
In Ontario, you can protect yourself by carrying comprehensive landlord insurance with coverage for property damage, liability, and loss of rental income. You can also:
- Screen tenants thoroughly,
- Use detailed lease agreements,
- Require tenants to have tenant insurance,
- Keep the property well-maintained,
- Document the condition of the unit before and after tenancies.