OLA in the News: Do Renters Need Insurance?

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Original Article:
http://www.thestar.com/NEWS/article/927825

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Why tenants need household insurance
 
January 25, 2011 22:01:00
Ryan Starr      
     
 
Say someone breaks into your apartment and makes off with your cherished possessions: laptop, flat screen TV, that leather jacket you got for Christmas. Or maybe the dishwasher overflows, flooding your kitchen and the unit below. It’s quite a mess you’re in.

But it could get messier, and financially crippling, if you don’t have renters insurance. Yet despite the affordability of tenant insurance policies — versus the staggering costs incurred in a worst-case scenario — many renters neglect to cover themselves. That’s a pity, insurance industry experts say. After all, less than a dollar a day (for a typical policy) ensures that if disaster strikes, you can weather the storm.

An average package offers up to $100,000 in contents coverage and $1 million in personal liability coverage for less than $20 a month, or about $200 a year.

“It’s a no brainer — renters should carry insurance,” says Henry Blumenthal, vice-president and chief underwriter for TD Insurance. “For a small amount of money you’re getting increased peace of mind.” If you haven’t got it you should get some. Here’s what you need to know.

The Basics. Landlords have property insurance for the building itself, but this doesn’t extend to the contents of your place. Nor does the landlord’s coverage cover your personal liability if, for example, a visitor is injured at your place or you damage someone else’s property in the building.

This is where insurance comes in. A tenant insurance policy covers your valued possessions, whether it’s clothing, electronics, jewelry or musical instruments. “It also provides coverage of your personal property while you are away from home in many places across the world,” notes Cathy Roth, a spokesperson with State Farm Insurance.

You have the option of covering improvements you’ve made to your rental unit — new broadloom, built-in closets, state of the art sound system — things that may not be included in a standard policy.

Perhaps most important, financially speaking, renters insurance covers personal liability.

“That’s a piece people often miss,” says Tim Bzowey, vice-president of home insurance with RBC Insurance. “If you have a dishwasher flood in your apartment, and you flood the unit below you, you could be liable for the damages associated with that.”

Coverage also protects you if you injure another person and they want to sue, either at home or away. “You’re on the beach in Florida, you throw a ball and hit somebody, and knock their tooth out,” Bzowey says. “You’re liable for that.” Perils covered by tenant insurance include water damage, fire, smoke, theft, vandalism and lightning and wind damage.

If your home is rendered uninhabitable following an insured peril, tenant insurance also covers additional living expenses, such as moving costs, hotel rooms, meals and storage.

Getting covered. In order to determine how much insurance you need, go through your home and make a comprehensive inventory of your belongings. Then figure out how much it would cost to replace everything in the event of an insured peril like fire, flood or theft.

Insurers advise you update your inventory at least once a year. Next decide if you want a policy to cover you and your stuff in the event of all perils (the widest range of risks) or specified perils (more common risks: fire, water, vandalism). For particularly expensive items that could exceed the coverage limits of a policy — jewelry, cash or furs, for example — you can purchase extra coverage to protect against loss or damage. Insurance companies recommend you make a photographic or videotaped record of your possessions and keep a list of serial numbers and receipts in a secure location. “This makes it easier to prove your loss and to remember all the items you have,” Blumenthal says, “because it can be a stressful time.”

What it will cost? TD’s typical tenant insurance packages range from $30,000 to $100,000 in contents coverage; that works out to about $15 to $20 a month, or roughly $200 a year. “And if you combine that with auto insurance it’s cheaper than that in most cases,” notes Blumenthal. There’s a deductible. With most companies it can be $200, $500 or $1,000 — like with auto insurance, the higher the deductible, the lower your premium.

When it comes to personal liability, insurance companies offer between $500,000 and $2 million in coverage, but recommend getting at least $1 million. “I wouldn’t nickel and dime on liability,” Blumenthal says.

But though it makes sense for tenants to cover themselves, nobody’s forcing you to buy a policy.

“It’s not mandatory,” says Blumenthal. “But join us one weekend when we’re meeting with our clients after a fire or water damage, and my God, you’d wish it was.”

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Original Article:
http://www.thestar.com/article/406936

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Fire takes toll on uninsured tenant


For 20 years Michael Dubrule called 611 Queen St. W. home. For the last couple of years the commercial photographer ran his business out of the studio apartment over a storefront, after he gave up his studio space at Queen and Shaw Sts.

Recently, he had invested $5,000 of his own money to install a gourmet kitchen in the apartment, thinking he could also use it for photo shoots. But on Feb. 20, a fire that ripped through a large section of the historic Queen West neighbourhood between Portland and Bathurst Sts., destroyed his home and the business below it, the Jupiter Cannabis Shop.

Along with his personal belongings, his life's work in photos and camera equipment were also lost – equipment estimated to be worth about $50,000.

Dubrule, 45, was one of about 25 people who lost their homes in that fire, while many others lost businesses and jobs. He had explored tenant insurance years ago, but says that as an artist, it was difficult to budget for and he found the insurance companies difficult to deal with and the process never easy.

"If you get a tenant's package it's impossible to get business equipment insured under that, never mind putting a value on my photos," he says. "They make it extremely difficult to do that."

He had installed a smoke alarm system, but never imagined a fire such as the one that destroyed the historic section of Queen West could destroy all his things, including a painting and sketches from Aboriginal Canadian artist Norval Morriseau, who died Dec 4, 2007. Dubrule hadn't had a chance to get them reappraised after inheriting them from his father.

"I never thought about fire," he says. "Fires happen to people who smoke in bed."

More than a month after the fire, Dubrule has been busy working as part of the committee to help raise funds for the victims of the fire, acting as a volunteer member of the steering committee. The fund currently stands at about $18,000. Dubrule has been staying with an old college roommate and considering some offers to house sit for friends.

Some of the other unpleasant things he's had to deal with in the aftermath include settling with the utility companies such as his Internet provider, Bell, which wanted $250 for the high-speed modem he had that was lost in the fire.

And while he may be able to recover what remains of his equipment once the Ontario Fire Marshal's office has finished its investigation (some of it was stored in fireproof containers), right now all he knows is he's lost his personal and professional belongings.

According to the Insurance Bureau of Canada, about half of all renters don't take out any kind of tenant's insurance. Often it's because they think they don't have anything of value or that the cost is too high. A basic tenant's insurance package for an apartment in a building can cost between $125 and $200 a year. The cost increases if you live over a store or restaurant and the risk increases or if you add additional coverage for items of higher value, or if it's related to a business.

However, the reasons to have tenant's insurance goes beyond coverage of material goods. It can also cover things such as personal liability, tenant's legal liability and a portion of additional living expenses should something such a fire or damage to the building occur, says Eve Patterson, regional manager for Ontario with the Insurance Bureau of Canada.

Last October a small aircraft struck the ninth floor of a 15-storey apartment building in Richmond, B.C. It was estimated it will be six months before the tenants of the affected units can occupy the building again.

Patterson says "If those tenants had insurance their living expenses would be covered."

Personal liability coverage even extends to when you're vacationing abroad. If, for example, you accidentally cause a fire due to smoking or a small personal appliance such as a curling iron, you would be covered by your renter's policy.

If you run a business out of the same space you are residing in and it is used to conduct business, in many cases insurance companies will require a separate commercial policy.

Often an insurance company will extend homeowner's insurance to the cost of equipment you would use in a business, but it depends on the underwriter of the policy.

"It can be a higher premium, but often companies will offer a payment plan that can be spread out over the course of the year and you can choose to use a credit card to finance it," says Patterson.

Insurance policies will also cover tenant's legal liability. "If you're cooking French fries on the stove and a fire starts and the landlord blames you, it is covered in the tenant's package," she says.

It may also be beneficial to seek out specialized policies that cover the specific industry in which you work. For example, while he is not a member of the Canadian Association of Photographers and Illustrators in Communications (CAPIC), Dubrule says he knows CAPIC offers a special policy for studio and camera insurance, including negatives and artwork, as well as loss sustained from business interruptions.

To get an idea of what your goods are worth Patterson suggests conducting a home inventory listing all your goods and taking digital photos of all items including clothing and furniture.

The Insurance Bureau of Canada offers software to download from its site: knowyourstuff.org, which will also connect you to a secure server to store your list for use if you should lose your goods in a fire or other disaster.

It's also a good idea to keep receipts for large items such as televisions and computers and scan them to a digital format to be recorded electronically and kept online on a remote server or on a disc kept off-site.

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http://www.thestar.com/Business/article/476301

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Risky business to rent without home insurance


Ali was robbed. Burglarized, actually. He doesn't live in an especially criminal neighbourhood, but he knows these things can happen anywhere to anyone. Or at least he does now.

Ali (who didn't want his last name published because he's afraid it'll mark him as an easy target) is a securities technology specialist in Toronto. Since he sends a lot of money back to his family in Mali, he has been putting off buying a house or condo and instead rents the first floor of a house in the Broadview and Danforth neighbourhood.

While he was at work, his backdoor was kicked in and his laptop, cameras, iPod and a few other small things were taken. The placement costs were very close to $5,000. And it all came out of his pocket as he didn't have appropriate insurance.

"It seems silly now, but I just never thought about insurance," he said. "I'm so busy and I rent, so it just never crossed my mind."

That's often the case with people who rent. Because they aren't required to buy insurance by a bank, mortgage company or condo board, it often slips through the cracks of their responsibilities.

"We don't have hard numbers, but anecdotally we've heard that it may be less than 25 per cent of tenants who actually carry tenant's insurance," said Lindsay Olson, a vice-president of the Insurance Bureau of Canada (IBC) in Vancouver.

That shouldn't be the case, said Eve Patterson, the IBC's manager of regional services for Ontario.

"By not getting insurance, it puts all of the risk into their hands," she said. "It's not just about your possessions, it's about your liability."

Possessions may be valuable, but liability costs can be enormous.

"Suppose you have a fire," said Patterson. "You not only have to replace your possessions and find some place to live, you're also responsible to the damage to the property."

Since many people rent because they can't afford to own, a fire or other catastrophe could leave them on the hook for the entire value of a house they don't even own.

"Even if a landlord has fire insurance, if the fire was the tenant's fault, the tenant is expected to pay," she said. Various insurers across Canada offer protection against earthquakes, floods, tornadoes and even identity theft.

The best way a tenant can make sure he or she gets proper coverage against loss is to assess their possessions. The IBC has a website – knowyourstuff.org/IBC – that provides help with establishing a personal inventory. And reminding them of some valuables they may have forgotten.

"I guarantee that if you listed every single item that you own, you would have twice as much as you expect," said Patricia Stirling, manager of underwriting development for the British Columbia Auto Association, which offers tenant's insurance.

"People tend to forget that the cost of food items like spices can really add up if you have to replace them all at once – or they forget things that are only used occasionally, like rollerblades, or the box full of Christmas decorations on top of the closet."

And it's also wise to keep a record of your possessions to make the claims process run more smoothly.

"You can take pictures of all the valuable things you own – or even use videotape," said Patterson. "But make sure you store the pictures away from home so that they aren't exposed to the same risks."

Digital photos of your possessions can be stored as sites like Yahoo's Flickr.com, which has a privacy setting to keep others from viewing them.

Patterson said that the value of storing records away from home can't be overstated.

"We had one woman whose apartment burned down; her most prized possessions were her photo albums that were filled with pictures from her entire life," she said. "They were destroyed, but she was wise enough to store the negatives off premises and was able to get them all printed again."

While renter's insurance is available as a stand-alone policy from many brokers, it is usually paired with auto insurance.

"Many auto insurance companies will give a client a break on their rates if they also purchase home insurance," said Patterson. "It makes sense to do it that way."

But no matter how you buy your home insurance, read the policy closely to make sure it covers you properly. "If you have a $25,000 ring, you probably don't want insurance with a $2,000 limit on jewellery," she said.

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http://www.thestar.com/article/205580-- ... -insurance

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Safeguard all your stuff with contents insurance



When Sumitra and Brian Robertson and their three children moved to Toronto from New Westminster, B.C. in August, they packed up their belongings and chose to rent, instead of buy, a home in Bloor West Village.

The Robertsons wanted to find out more about Toronto's many neighbourhoods before buying, so renting was a good option.

It meant doing things they hadn't done for about a decade – signing a lease, dealing with a property manager and shopping for tenants insurance.

They had held insurance on the house they owned in B.C., but now they were renters, they had to shop around for contents, or tenants insurance.

The family had brought "every stick" of their belongings with them. It posed a tough question: How much, exactly, was their "stuff" worth? It's a question insurers want to know when trying to evaluate what plan an individual should purchase and what the premium will be.

Sumitra estimates it took about a month to shop around, research companies online and talk to brokers by phone. After having her policy with one company for many years, she found it difficult. "We had all kinds of flyers through the door for insurance. It was lovely, in a way, to have so much choice in terms of finding an insurer, but it's scary and overwhelming at the same time, because you don't know whom you can trust."

Robertson tried aggregate websites that provide multiple quotes from different insurers, but quickly dismissed them as there were too many unique factors about each insurer's policies to get a sense of value comparing quotes from one company to the next. "There are any number of loyalty programs that allow you to get cheaper rates so people should always check their options. But in the end it's really difficult to make a good evaluation of what you're actually getting for your money."

For example, the CAA (Canadian Automobile Association) offered a basic replacement value of $50,000 and President's Choice Financial had a value of $80,000 and she could choose different options, but they were not necessarily the same as an offer from another company.

"I was challenged by this," she says."Things in the contents insurance industry have changed quite a bit. Before we bought our house 10 years ago, you always got extra insurance for computers. Now you can buy one for $699 and so policies don't provide for extra to replace them. Some companies want you to pay extra to insure jewellery or bicycles, things like that."

Robertson eventually went with a policy she found online from President's Choice Financial. It cost her roughly $500 for a contents policy worth $80,0000. She chose it for two reasons – she belongs to their loyalty program and got a better deal by buying both her contents and auto insurance from the company, even though the contents insurance was about $100 more than another quote.

"It was more than I wanted to pay, but the combination between my contents and car insurance came out to be the same," she said. "With another company, my contents insurance was $200 more, but my car insurance was $300 less, so when I balanced it I saved $100. If I was insuring just my contents, one quote I got for $50,000 replacement value was $280, so you can get it that low."

The Robertsons are an exception, in terms of time spent to buy contents insurance, says Eve Patterson, Ontario manager for the Insurance Bureau of Canada. About 50 per cent of people – especially if they are younger – don't take out insurance when they rent and fail to appreciate the value of their personal belongings, she says.

"Look how much money young women spend on clothes and shoes and what the replacement cost would be on that," Patterson says. "The average person would find that with a one-bedroom apartment, a policy for $15,000 coverage would probably not be adequate. Someone out of university may just need the bare minimum, but they add to their belongings pretty quickly over time."

The Robertsons were also realistic about the value of their contents, which Patterson says is not common. Many tenants don't consider the real value of their possessions.

Policies usually start at $15,000, with other factors to consider, such as a tenant's legal liability. "If water damage was done to the premises, or, if they were cooking on the stove and forgot about it, they are liable and the owner can come back at them for the cost of the damage,'' Patterson said. "If they had contents insurance, they would have coverage for tenant's legal liability – something they'd have to pay out of pocket if they didn't already have it."

Contents insurance also provides for extra living expenses – up to 20 per cent of the amount if you have to leave due to a fire.

Renters should also consider estimating the true replacement value of goods, especially furniture and electronics, not simply what they think the value of a 10-year-old sofa is.

Contents insurance also includes personal liability anywhere in the world.

For example, if you leave a curling iron on in a hotel room and it causes a fire, you would have coverage.

Or, you can have coverage while you are away from your apartment or rented home – so if you are on vacation and items are stolen, they can be covered.

To determine the value of your contents, Patterson suggests making a written list or recording your belongings with a camera, video recorder or audio digital or tape recorder.

It's also a good idea to keep receipts and warranties for things like televisions and computers – they serve as proof of ownership and value if you need to make a claim. Store records in a safety deposit box at a bank, at another location or in a fireproof box.

For something like a china cabinet, open drawers and take a picture of what's in the cabinet.

Patterson notes some items often have special liability limits. Jewellery is limited to $5,000, but you can buy extra insurance on a $10,000 engagement ring, for instance.

Ask about liability limits and if you feel they're inadequate, purchase extra.