As a small to medium sized landlord in Ontario or even a landlord to be, this post will give you a general overview of your options when it comes to insuring your rental property and getting landlord insurance. We will try and break things down and make it as easy as possible to understand, but if you’re too busy to read this or would like a more direct answer feel free to pick up the phone or send us an email. The information below is intended for general knowledge. Always check with an insurance broker when making a decision about insurance coverage on your policy, as every situation is unique.
House Keeping
First and foremost, when it comes to insuring any property whether it be income generating or your home you should ask yourself. Have all updates been completed to the most recent building code? This includes, updated electrical, plumbing and roof. Is the property in good condition? If you just purchased a home and plan on doing major renovations to it, make sure you notify your insurance company. Depending on the renovation your insurance policy may not be valid. Furthermore, you should ask yourself who will be responsible for maintenance such as clearing snow, general repairs and tenant inquires. If you are an international landlord with a rental property in Ontario, it is a requirement that you have a designated individual residing near the property for maintenance and upkeep. This designated individual can be a friend, family member or a property management company.
Personal Policy vs. Commercial Policy
Did you know that as a landlord you can have your rental property insured under your homeowners insurance? Of course, there are a few catches but for the small to medium sized landlord renting out a home to 1 family or even up to a six-plex this can be a very viable and affordable way to insuring your rental property or properties. So what are the catches?
Depending on the insurance company, most require that the rental property in question have only 1 related family per unit. But, what if there are two families living in one home? This can still be insured under a personal policy as long as the rental property in question has separated units and the people living within the unit are one family. This includes each unit having their own kitchen and bathroom and that none of the facilities are shared between units. This does not include if let’s say you plan on having 1 unit rented to a family and the other unit to three university students. Most insurance companies will accept a rental property under your home owners policy with up to 4 units, some will even do up to 6. Another restriction includes the number of rental properties or the number of units insured, most companies will only insure 3 or 4 rental properties under your homeowners policy, we represent one insurer that will insure over 20 rental properties which qualify under their rules. Other restrictions may include having at least 3 years previous homeowners insurance, how many claims you’ve had in the past 6 years and where you live in proximity to your rental property. Another very important consideration is that if a claim were to occur on your rental property that is on the same policy as your homeowners, this claim will be reflected on your homeowners policy and may affect your ability in obtaining homeowners insurance.
What are the benefits of having your rental property insured with your homeowners policy? Well if you have a car insured with the same company you probably qualify for a multi-line discount which could save you 10-15% on both policies. Some insurance companies will offer coverage for your rental property under an all risks basis (all risks with the exception of the exclusions) when insured under your homeowners policy. Another benefit is having the payments for your home and rental property come out at the same time. So if you live in Ontario, have a homeowners policy on your primary residence and own a rental property rented to 1 family, chances are you qualify for coverage under a personal policy.
Ok, so maybe you own a student rental house, a small apartment building or you own multiple properties and want a policy with less restrictions, than a commercial policy is the way to go. Homeowner policies are usually written under an all risk basis (with the exception of the listed exclusions) or named perils basis as mentioned above. Under a commercial policy coverages are different than a homeowners insurance policy. You as a landlord are responsible for verifying the coverages and should ask your insurance representative what the policy may cover. Under commercial policies there may be less restrictions as to the type of tenants occupying your rental property. But, the insurance company must know the exact occupancy and this must be clearly shown and rated on your policy. For instance, if your policy shows rented dwelling, and your rented dwelling is occupied by 5 students, this may not reflect the proper occupancy. The occupancy description in this case must declare rented dwelling 5 students, or along that effect.
2018 Update
As the original post above was written some time ago – February 8th 2013 – a lot has changed since than. Many insurance companies have become stricter on the number of rental properties they insure and the types they insure. In general premiums have gone up as a result of claims – mostly to do with water damage. Contact us today to get up to the minute advice on how to insure a rental property in Ontario.
