What every renter needs to know about tenant's insurance

Dozens of displaced tenants of the St. James Town highrise say they don't have apartment insurance and they are worried about where they're going to live now that the Red Cross has stopped providing hotel rooms.

About 50% of renters in Canada don't have insurance, Insurance Bureau of Canada says

Displaced resident Sandeep Shah says tapping into his insurance policy is pointless since he can't afford to pay the $5,000 deductible. (Natalie Nanowski/CBC News)

One of the first things that often comes to mind after hearing about a fire like the one at 650 Parliament Street — after everyone's safety, of course — is, do residents have insurance?

While speaking with dozens of tenants outside the St. James Town highrise, many told CBC Toronto that they don't have apartment insurance and are worried about where they're going to live now that the Red Cross has stopped providing hotel rooms.

Manisha Masih is one of them. She was put up at the Sheraton Hotel. 

"My husband gave me the form to fill in, I forgot to fill it and now we don't have insurance," said Masih. "I don't know what to do."

She said she is hoping to stay with friends, and is looking for a short-term rental.

"It's pretty awful and depressing, physically and mentally. It's a lot of pressure right now," said Masih.

Insurance is more than just your belongings 

According to the Insurance Bureau of Canada (IBC), Masih's situation is common: only about 50 per cent of Ontarians who rent have tenant insurance. One of the reasons is many think their landlord's insurance covers them, as well. But the IBC says that's a misconception, because a landlord's insurance covers the structure of the apartment, not the contents within it.

Another reason, says Pete Karageorgos, the IBC's director of consumer and industry relations for Ontario, is people often think about insurance in terms of their belongings being lost to fire, flood or theft. Many renters think their material possessions aren't worth much, so they skip on insurance entirely.

"But there's also coverage for your additional living expenses if you've been displaced from your apartment because of an event like a fire or flood," said Karageorgos.

Manisha Masih (right) reads a note handed out to tenants of 650 Parliament Street. (Natalie Nanowski/CBC News)

In the case of 650 Parliament Street, "there could be some residents who don't have fire or smoke damage. But just the very fact that there's no power in the building and the authorities have prohibited access, they need alternate living accommodations and most tenant insurance would cover that," said Karageorgos.

Make sure you can pay the deductible

Sandeep Shah thought the chances he'd have to use his insurance were slim. He got a package that cost him about $20 a month.

"It's a $5,000 deductible. I can't afford to pay that," said Shah. "I even don't spend that much in a month."

Right now, he's staying with friends and says his coverage is confusing. That's a word tenant and landlord lawyer Caryma Sa'd often hears when it comes to insurance.

"People don't understand their policies or the conditions," said Sa'd. "There are three major components to a policy that are worth examining."

Understand what clauses nullify your policy 

The first, says Sa'd, is your personal belongings. How much do you want covered and what is the company willing to pay? The second is living expenses while an insured loss is being taken care of and that includes hotel costs. The final category is personal injury and liability — so if someone gets injured inside their apartment or left the tap on and the units below get flooded.

Sa'd says when all is said and done, make sure to read the clauses carefully to see "which conditions would void the policy." Those clauses also vary. For instance, one might not have coverage if they're found to be at fault.

When it comes to choosing the right type of plan, the IBC recommends narrowing down your needs and asking a lot of questions.

"Tenant insurance can be very affordable. Shop around and make sure the package meets your needs," said Karageorgos, adding that policies generally range from a few hundred dollars a year to a few thousand.   

The Insurance Bureau of Canada offers free and unbiased advice on all types of insurance.