Guides for Canadian real estate investors
Landlord Insurance in Canada
If you rent out a property in Canada, your existing homeowner insurance policy almost certainly does not cover you. Here is what landlord insurance is, what it covers, and what to look for when you shop for a policy.
Why your homeowner policy is not enough
Homeowner insurance is designed for a property you live in yourself. The moment you move out and place a tenant in the property, the risk profile of that property changes in ways your insurer did not underwrite for. Tenants may not maintain the property with the same care as an owner. The liability exposure is different. The income loss risk is different.
Most standard homeowner policies contain a clause that voids coverage, or significantly limits it, when the property is rented to others. Some insurers will cancel your policy outright if they discover you have tenants. You need to tell your insurer as soon as you begin renting and almost certainly need to switch to a landlord-specific product.
Landlord insurance covers
Building damage from insured perils while rented to tenants
Liability if a tenant or their guest is injured on the property
Lost rental income if the property becomes uninhabitable due to an insured loss
Optional coverage for appliances and fixtures you own in the unit
Legal fees in some policies for covered landlord-tenant disputes
Homeowner insurance typically does not cover
Damage that occurs while the property is rented out
Liability arising from your role as a landlord
Loss of rental income
Tenant-caused damage in many circumstances
Claims where the insurer was not notified the property was rented
What landlord insurance covers
Policies vary by insurer, so always read the actual policy wording. That said, most Canadian landlord insurance policies include some combination of the following coverage areas.
Building and structure
Covers physical damage to the property from insured perils such as fire, lightning, windstorm, hail, explosion and water damage from certain sources. The covered perils and exclusions vary by policy.
Landlord liability
Covers your legal liability if a tenant, tenant's guest or other visitor is injured on the property due to negligence on your part, such as a poorly maintained staircase or broken step. This is separate from the liability coverage in a homeowner policy.
Rental income protection
If the property becomes uninhabitable because of an insured loss, this coverage replaces the rent you would have collected while repairs are being completed. Without this, you lose income at exactly the moment you are paying for repairs.
Contents you own in the unit
If you rent the property furnished, or leave appliances, a lawnmower or other items behind, optional contents coverage can protect those items. Your tenant's personal belongings are not covered by your policy and never will be.
What landlord insurance does not cover
Understanding the exclusions is just as important as understanding what is covered. Common exclusions in Canadian landlord policies include:
Your tenant's belongings. This is the most common source of confusion. Your landlord policy covers the building and your liability. It does not cover anything your tenant owns. Encourage your tenants to get tenant's insurance. Some landlords make it a condition of the lease.
Damage from lack of maintenance. If a pipe bursts because it was never properly insulated and you had not addressed a known issue, an insurer may deny the claim on the grounds that it resulted from negligence rather than an unexpected event.
Intentional damage by the tenant. Intentional or malicious damage is often excluded from standard policies, or covered only up to a low limit. Some insurers offer an add-on for tenant vandalism. Ask specifically about this if it is a concern.
Flooding from external sources. Overland flooding from rising rivers or heavy rainfall is typically a separate add-on, not included in a base policy. In flood-prone areas this is worth asking about specifically.
Vacancy beyond a set period. If the property sits empty between tenants for longer than the vacancy period in your policy (often 30 to 60 days), coverage may be reduced or suspended. Notify your insurer if a vacancy is going to be extended.
Your tenants need their own insurance
Tenant's insurance (also called renter's insurance) protects tenants' personal belongings and provides them with personal liability coverage. It is inexpensive and widely available. Your policy covers the building. Their policy covers their stuff and their liability.
Many Canadian landlords now make proof of tenant's insurance a condition of the lease. This is legally permissible in most provinces. It protects your tenants and it can reduce friction in situations where a tenant's actions cause damage, since their insurer becomes involved rather than yours.
If a tenant's bathtub overflows and damages the unit below, the question of whose insurance responds can become complicated quickly. Having both parties insured reduces the chance that you end up absorbing a cost that should fall elsewhere.
What to look for when comparing policies
Confirm the policy is specifically for landlords
Ask explicitly whether the policy is designed for non-owner-occupied residential rental properties. Some insurers sell a general property policy that technically permits rental use but was not designed for it. A purpose-built landlord policy will have better coverage terms.
Check whether rental income protection is included or optional
Some policies include rental income protection as a standard feature. Others offer it as an add-on at additional cost. Confirm how many months of income are covered and whether there is a waiting period before coverage kicks in.
Ask about the vacancy clause
Understand exactly how many days the property can sit vacant between tenants before coverage is affected. If you are in a slower rental market where units may take a few weeks to rent, this clause matters.
Understand the replacement cost versus actual cash value distinction
Replacement cost coverage pays to rebuild or repair the property using current material and labour costs. Actual cash value coverage pays the depreciated value of what was damaged. For a rental property you intend to hold long-term, replacement cost coverage is worth the higher premium.
Review the liability limit
Standard liability limits start around $1 million. Given the potential costs of a serious injury lawsuit, many landlords opt for $2 million or higher. The incremental premium difference between $1 million and $2 million in liability coverage is typically small.
Get more than one quote
Landlord insurance premiums vary significantly between insurers for comparable coverage. Premiums depend on the property type, age, location, construction materials, claims history and the insurer's own risk appetite. Getting multiple quotes is the only reliable way to know whether you are paying a fair price.
Compare landlord insurance quotes
Square One Insurance offers landlord insurance for rental properties in Ontario, BC, Alberta and Saskatchewan. Getting a quote takes a few minutes online.
Get a quote from Square OneThis guide is for general informational purposes only and does not constitute insurance, financial or legal advice. Policy terms, coverage and availability vary by insurer and province. Always read the actual policy wording before purchasing and speak with a licensed insurance broker if you have questions about your specific situation. The affiliate relationship with Square One Insurance is disclosed in our privacy policy.