Protect Your Ontario Property Investments With The Proper Landlord Insurance

Landlord Insurance Ontario

Do you rent out a residential property, such as a house, vacation cottage or apartment building? Whether you have long-term renters or lease your summer home in the winter on AirBnb, it's important to have landlord insurance. A landlord policy helps protect your property from a range of insured perils—that aren't covered in a traditional homeowners policy.

Essentially, Ontario landlord insurance provides rental dwelling protection for property owners who rent their premises to others. As a landlord, you want to protect your rental property with the right landlord insurance. Not only will this help protect you financially in the event of an emergency like a fire or severe water damage, but it also protects you from liability suits.

What is Landlord Insurance?

Landlord insurance is a type of insurance that financially protects your rental property in the event of an insured loss or damage. These insured perils are usually listed in your insurance policy. If you have landlord insurance but aren't sure exactly what is and is not covered, it's best to speak with your Morison Insurance broker to learn more. It's important for individuals who lease properties to be aware of what protection is available to them in the event of an emergency. Losing your rental property can be devastating, both financially and emotionally. Protect yourself, and your possessions, with the right insurance policy.

It's important to note that, under a landlord insurance policy in Canada, the building and property are covered by landlord insurance. This includes certain personal belongings that the property owner may have on the premises like major appliances, detached structures, rental income and liability coverage. Essentially, anything that is of value to you and would be costly to replace will be covered under a landlord insurance policy.

Who Needs Landlord Insurance in Ontario?

If you own a property and are planning to rent it to tenants, you should purchase landlord insurance to protect your asset and your financial stability. Sometimes, homeowners think that landlord insurance in Ontario is only for individuals who lease properties full-time—such as property managers who run apartment complexes. This is not the case. Even if you lease out a portion of your home, say the bottom floor as a secondary suite, you need to make sure you're adequately covered. Usually when applying for property insurance, a question you’ll be asked is whether or not you have a boarder or roomer. If you only started leasing out an extra room recently, then it’s important to let your insurance broker know that your living situation has changed. Anytime you collect rent from a tenant or boarder, your insurance needs will be different from a typical homeowners policy.

Landlord insurance is tailored to your unique needs as the owner of a rental property. Without it, you may find yourself in serious financial trouble if you're forced to rebuild a damaged property, or replace it entirely. Don't let expenses come out of your own pocket for losses such as liability, property damage, or damage to your belongings. Financial concerns due to repairs or replacements are not the only peril you have to worry about as a landlord in Ontario. Without proper coverage, you may find yourself facing legal trouble as well. For instance, if a third-party is injured on your property you could be to blame—or at least, be put through the wringer legally, even if you're not at fault. Legal expenses, settlements and medical expenses can seriously stack up without the right insurance coverage. Ensure that you are fully protected before welcoming renters.

Why Should I Get Landlord Insurance?

You should get landlord insurance to protect yourself from losses and claims that can arise while renting out your property. These can range from accidents that are out of your control to liability claims that can wind up dragging you to court. There are many types of coverage—including liability insurance—available in a landlord insurance policy, and they are all designed to offer you the most protection possible.

If you, as a landlord, were to suffer a significant loss, you could face financial ruin if you had to repair or rebuild, and pay the expenses from your own pocket. Landlord insurance is essential to protect your investment and avoid substantial financial harm in case of an insured peril or loss.

What many property owners don't realize is that it is possible to lose your property entirely to an insured peril, such as a fire and still be forced to pay the mortgage. Even though you no longer have a physical structure, you would still be required to keep up with your regular payments. Also, you would be responsible for rebuilding that structure on your own. As you may be faced with a loss of income from your tenant and could be exposed to liability lawsuits, this can make meeting mortgage payments nearly impossible. Don't open yourself up to financial ruin. Talk to our licensed and qualified insurance brokers about landlord insurance in Ontario today.

Is Landlord Insurance Required?

Landlord insurance in Ontario is not required by law, but it is a wise decision to purchase this insurance protection. If you are not insured and suffer a loss, there may be considerable damages that you would be required to pay yourself. These expenses can add up quickly and may potentially far exceed your initial investment.

If the property you own has a mortgage, it is very common for financial institutions to require insurance on the property when you purchase it. Since the institution has a financial interest in your property, it wants to make sure the property is properly insured. If the buyer cannot provide proof of insurance, there is a possibility the mortgage may be denied.

Even if you had to purchase landlord insurance upon buying the property, you may want to have a closer look at the policy's details. There are different add-ons and extra coverages available to property owners that offer more protection than a standard policy. It's up to the individual to ensure he or she knows what is outlined in their insurance policy. That way, you are always prepared for the worst case scenario. An insurance broker at Morison Insurance will be more than happy to walk you through what your policy does and does not include, and help you find the best coverage for your needs.

Does My Homeowners Insurance Cover My Rental Property?

As mentioned earlier, your standard home insurance policy does not cover your rental property. Typically all rental properties are specifically excluded from your homeowners insurance policy. This even includes tenants living in your home while you also reside there. As long as they pay rent, they're considered tenants.

All damages and losses, including liability claims associated with a rental property, would be denied without the appropriate coverage in place. This is because renting a property, whether it be a separate residence or a portion of your primary residence, increases your liability exposure. Basically, by having tenants you open yourself up to more risks. This could include the risk of a fire started by your tenant's curling iron left on overnight, or the tenant damaging part of the property. Not to mention liability claims. For instance, if you're not diligent about putting salt down on icy patches leading up to your property and your tenant slips and falls, injuring themselves in the process, you could find yourself at the start of a very long legal battle. It's important to get Ontario landlord insurance to properly insure your investment, and to protect yourself financially.

How Does Landlord Insurance Work?

Landlord insurance protects your rental investment and provides liability protection when you rent your property. Landlord insurance is not legally mandatory, however, it is essential protection in case of insured losses. Should you find yourself needing to make a claim, all you have to do is reach out to your insurance company and notify them of the claim. Then, you will be able to access financial help that can help you repair, rebuild or replace part/all of your rental property, or access financial help in the event of a lawsuit.

When Should I Get Landlord Insurance?

You should get landlord insurance when your purchase offer for a rental property is accepted by a seller. Contact a Morison Insurance broker to learn more about rental insurance coverages.

Landlord insurance needs to be in place before the transfer of ownership. Typically, once an offer is accepted, you have weeks, if not months, before the title is transferred. Your insurance broker can properly assess your insurance needs and determine what the best coverage options will be for you. The broker will provide several rental property insurance quotes, and you can decide which insurance policy best meets your needs.

If you acquire an investment property by succession or other means, you should reach out to your insurance broker as soon as possible.

Should you choose to use a second property, or part of the property you live in, as a rental property, then you need to acquire landlord insurance in Ontario before leasing the property. It's essential that your insurance policy is in place before taking on tenants. If you are leasing the property and don't have insurance and something happens, you won't be able to make a claim. It's also important to note that it can be more difficult to acquire insurance if you've been leasing your property without it.

What Coverages Does Landlord Insurance Provide?

Landlord insurance can cover the physical damage to the dwelling and attached or detached structures, any personal property such as major appliances, lawnmowers, and snowblowers included in the unit, personal liability against liability claims or lawsuits such as legal costs, and any lost rental income if the unit becomes uninhabitable due to an insured peril. We've broken this down further in the following:

• Dwelling or personal property coverage: Landlord insurance typically covers any physical damage or loss to the property caused by acts of nature and/or a natural disaster such as wind, hail and fire. The policy will also cover damage to appliances, carpeting and household furnishings that are on your property. When applying for landlord insurance, it's important to provide your insurer a list of all the valuable items you'd like protected in the policy.
• Vandalism and theft: While not all insurance policies offer coverage for vandalism and theft in a basic policy, it's important to make sure that your assets are adequately protected from malicious intent. Burglars may take costly tools and equipment you need to maintain the property. Vandals could seriously damage the property, making it more difficult to lease it in the first place.
• Other structures coverage: It's possible to protect other structures that reside on the property through a landlord insurance policy. This can include structures such as a fence, greenhouse, shed or pool.
• Personal property: Any personal items that you use on the property for maintenance or other uses can be included under a landlord insurance property. Examples of this would be a lawnmower or leaf blower.
• Loss of rental income: If your property is damaged due to an insured peril, say a fire, and it's unfit for renters until repairs are completed, then your landlord insurance policy may reimburse you for the loss of rental income. Keep in mind that you'll only be reimbursed up to the policy limits, as the expectation is that you will fix the property so that it can be safely leased once more. With this specific coverage built into your landlord insurance, the loss of that income would be covered for a reasonable amount of time while the building or unit is repaired.
• Liability insurance: This is one of the most integral parts of a landlord insurance policy. Suppose someone, who does not belong to your household, is injured on the rental property. Perhaps they slip and fall, or trip on uneven paving. If you're found legally responsible, liability coverage will pay for the person's medical bills. It will also cover your legal fees if you're sued.

Additional Coverages

There are a number of additional coverages available to add-on to your standard landlord insurance policy. It's also important to note that policies vary per different insurance providers, so you'll want to check that the above is included in your unique policy. If not, inquire about add-ons. Some common add-ons that are highly beneficial to landlords include:

• Debris removal: Should a natural disaster occur and you need to pay for debris removal, say after a flood, this add-on will cover the labour costs.
• Protect trees, shrubs and plants: Landscaping can be a costly investment for property owners. If you have valuable trees, shrubs and other features as part of your landscaping, then you should inquire about adding a landscaping insurance policy to your landlord insurance policy.
• Collapse of property: Should the property collapse due to an incident like a fire, you may be covered under a traditional landlord insurance policy. However, should a collapse occur for another reason—say poor infrastructure or serious water damage—you may need additional coverage to protect your investment.
• Bring up to code: Some insurance companies offer coverage for if you need to make updates to the property to bring it up to code. If you are planning to lease an older building, for example, it may need to be rewired before it's safe for tenants to use.
• Water and flood damage: Many standard landlord insurance policies do not include coverage for different types of water damage and flooding. This is particularly the case if your rental property is in a flood zone. Inquire about add-ons to help protect your property from sewer back-ups and overland flooding.
• Vacancy insurance: If your rental property is going to be vacant for more than 30 days, you need to notify your insurance agent right away. There are insurance options available to ensure the property is still covered in your absence or the absence of any tenants. However, if you don't notify your insurance agent you will not be properly covered in the event of an accident or other damage.

What Does Landlord Insurance Not Cover?

As comprehensive as your landlord insurance policy can be, it's important to understand its limitations as well. Some of the common landlord insurance policy exclusions include:

• Any personal belongings of the tenant: Landlord insurance is not renters insurance. While you need to protect yourself and your interests, it's important that you also require your tenants to have their owner insurance. This will protect their personal property from a list of insured perils, such as a fire or theft.
• Wear and tear or maintenance of the building: Typical wear and tear is not covered by a landlord insurance policy. This is because wear and tear is natural over time, and it's assumed that you, as the property owner, are doing all that you can to properly maintain the building.
• Damage caused in part of business or farm use: Unless otherwise specified in your insurance policy, damage caused by commercial uses, such as a business operating out of your home or farm use (if you lease part of your farmyard to tenants) are not covered under a landlord insurance policy. Instead, inquire about what options you have to make sure your property is protected from accidents during commercial use.
• Any property illegally acquired (kept or stored): Under no circumstances will illegal property found on or stored at your rental unit be insured.
• Any loss occurring after the dwelling has been vacant for more than 30 consecutive days:  As mentioned above, it's integral to notify your insurance agent if your rental property is going to be vacant for more than 30 days. Otherwise, your insurance policy will be null and void and you will not be covered for any damage that may occur in your absence or the absence of any tenants.
• Intentional vandalism or damage by tenants: Unfortunately, intentional damage is not covered by your landlord insurance policy. That's why it's essential to vet your tenants as much as possible before signing a lease. Usually in the lease there will be a clause outlining that damage needs to be repaired, or the costs will come out of a damage deposit.
• Any damage caused by an animal owned by the tenant: Just like how you should have a damage deposit, if you allow pets at your rental property then you should also consider having a pet deposit as part of your lease. Animals are prone to causing damage, and unfortunately any damage pets cause will not be covered in your landlord insurance policy.

Each insurance company offers slightly different coverages and additional landlord insurance coverages are available. This means insurance companies can provide landlord policies uniquely tailored to you. Note that along with these policies, there are unique exclusions. A broker can review all the coverage exclusions and limitations with you to determine if you want additional coverage added to your rental home insurance policy.

An insurance broker will get you a landlord insurance quote that is tailored to your specific rental unit insurance needs, and will discuss optional coverage options with you to ensure you and your residential properties are properly protected.

What Landlord Insurance in Ontario Do I Need?

Since rental properties come in many forms like a detached dwelling, townhouse, condominium, or a duplex, triplex, or fourplex using an insurance broker is the best option to select the appropriate landlord insurance for your specific needs and circumstances. An insurance broker will help you figure out the best coverages to ensure you and your rental property are properly protected.

Rental Property Insurance For Detached Dwellings, Houses

If you own a detached building, the structure of that building and any other detached structures on the property must be taken into consideration when determining the amount of insurance required. If you update the rental property at any time, then it's important to let your Morison Insurance broker know. Renovations could result in increasing the property's value. In turn, this may impact how much insurance you need to repair or replace the building should an accident happen.

Rental Property Insurance For Condominiums

If you are renting a condominium that you own, it is essential to first determine what portion of the structure you own and are responsible for insuring. This can be determined by the "standard unit" definition, which is commonly provided to you by your condominium corporation board. It is very important to know that any improvements made to the unit are always the unit owner's responsibility to insure. For instance, if the condo board requires you to swap out old PVC pipes for copper pipes, it's up to you to make sure these changes are adequately insured. Any updates to the condominium will alter its value. In turn, this may impact what coverage you need. A rented condo insurance policy will include specific coverages that are unique to a condominium, such as improvements and betterments, in addition to loss assessment coverage.

Rental Property Insurance For Vacant Properties

If you purchase a property that you plan to rent, but it is not occupied, or you are in-between tenants and want to make improvements before renting it, your property is considered vacant.

There is a lot more risk exposure when a building is vacant, as there is no one living at the residence to regularly monitor it. As such, some coverages are limited or removed during this period of time and can be re-added once the unit is tenanted again. This is similar to altering an auto insurance policy if you have a vehicle that no one is driving.

In the meantime, a vacancy permit will be applied to the property, and further questions will need to be answered for the insurance provider to maintain coverage. The company will request that a “vacancy questionnaire” be completed, which simply confirms what precautionary measures are in place while the premises are vacant. Once you find suitable tenants and they move into the unit, the vacancy permit can be lifted, and all eligible coverages can be reinstated.

According to the Canadian Mortgage and Housing Corporation's 2020 Rental Market Report, vacancy rate increased from 2.0% (2019) to 3.2% (2020), and the average rent for a 2 bedroom apartment increased from $1,113 (2019) to $1,165 (2020) in Canada.

How Much Does Landlord Insurance Cost?

The cost of landlord insurance depends on many factors. To determine the annual premium or your landlord insurance policy, the insurance company takes into consideration multiple factors, such as:

• Geographic location, including fire protection, proximity to water and the surrounding buildings.
• The value of the home/condo/premises. Your property's value may change over time, thus your insurance costs may also change.
• The size, condition, and age of the dwelling. Any improvements to the dwelling will also be reflected in the insurance costs.
• The number of rental units you have. Talk to your broker about how the number of units you lease impacts your insurance costs.
• The heat source within each unit. It's important to note that rental units, such as a cottage, which include a wood-burning stove or fireplace will be much more costly to insure because these heat sources are vastly more hazardous than a traditional HVAC unit.
• If the tenants are smokers. Smoking is a fire hazard, and can also cause damage to your building's drywall.
• The type of coverage that is requested by the owner. Keep in mind that add-ons provide further protection, and this may be reflected in the overall cost of your insurance policy.
• If the tenants are students. Often, student residences come with additional risks, so it’s important to let your Morison Insurance broker know if your tenants are students.

How Much Renters Insurance Should a Landlord Require?

As a landlord, you want to protect your rental property investment. You can stipulate in your renter's agreement that tenant insurance is required to rent the property.

A tenants insurance policy will not only protect the renter's personal property and belongings, but it will provide personal liability coverage for the tenant. This could potentially alleviate additional liability exposure for you as the landlord if personal injury were to occur. The average tenant policy requires a minimum limit of $1 million in liability. The contents limit, which insures the individual's belongings, can be more flexible in relation to the amount of coverage required by the tenant.

Who Needs Renters Insurance?

Any person who occupies a residence they do not own should obtain renter’s insurance. Renter’s insurance provides personal liability coverage as well as coverage for the renter’s personal belongings. The cost of this coverage can be minimal, depending on the coverage limits requested.

As a landlord, it is a good idea to require that your tenants have renter’s insurance. Renter’s insurance is also called tenant's insurance.

How Do I Get Landlord Insurance in Ontario?

Landlord insurance is available through insurance brokers. Insurance brokers are unique because they have access to many different insurance companies, each of which offers different insurance coverage. This access helps you save valuable time and stress by enabling your insurance broker to shop around on your behalf. He or she will help you find the best insurance coverage for your needs.

The moment you contact an insurance broker, your options, and the variety of insurance coverages available to you are multiplied—compared to when you are searching for landlord insurance on your own. You have choices. You can choose among several landlord insurance options.

Working with a broker gives you extra peace of mind. You have an insurance expert helping you find the best coverage and competitive prices in the insurance market. At Morison Insurance, our focus is to make sure all our clients are completely satisfied and have the right protection for their needs.

Our Morison Insurance brokers know landlord insurance. Every Morison Insurance customer has a dedicated insurance broker—one specific insurance broker looking after your insurance. This way, we seek to build long-term relationships with all our clients. You'll be at an advantage because we already know the details of your insurance needs, and will grow with you as your needs change and adapt. Your broker will answer your questions, make changes to your insurance if needed, and provide assistance and insurance service at any time.

If you're ready to inquire about landlord insurance in Ontario today, reach out to our licensed brokers at 1-800-463-8074. We look forward to helping you find the best coverage for your needs.

This content is written by our Morison Insurance team. It is provided for general information only. Insurance needs differ from person to person, and this article is therefore not a substitute for professional advice about your individual insurance needs which can be obtained by speaking to one of our brokers.