“Do I need rental property insurance?” This is a common question asked by property owners who want to lease their property to a residential or commercial tenant. With very few exceptions, the answer is yes.
Calgary rental property insurance differs from homeowners insurance in several key ways. First, rental property insurance is designed to cover the actual land and building being rented and provides liability protection, but it does not cover any of the possessions or items of value inside the building. It is your tenant’s responsibility to protect his or her own assets by purchasing a renter’s insurance policy.
Another important feature of Calgary rental insurance is that your premiums are tax-deductible, since they are considered a business expense. As such, the property taxes you pay on your rental unit, as well as the money you spend marketing and maintaining the property, are also tax-deductible. However, you must make sure that you accurately report all rental income you receive from your tenants on your income tax return.
Finally, don’t assume that your homeowners insurance can double as rental property insurance. Many people make this mistake when they rent out their primary home to a tenant and fail to change over their insurance policy. Your homeowners insurance may not provide you with the full and complete protection you need as a landlord, so be sure to discuss your situation with a knowledgeable insurance broker and make any and all recommended changes to your policy.
Rental Property Insurance in Calgary: What Types of Coverage Are Available?
All rental property insurance policies should provide comprehensive protection for the building, the land it sits on, and liability coverage for your tenants as well as their guests. The policy should also cover personal injury and property damage. These protections should cover anyone and everyone who might venture onto your property.
With that in mind, here are the four most common types of rental property insurance policies:
- The simplest type of Calgary rental property insurance covers a single dwelling which you own but do not live in and rent out to tenants
- If your property has a detached garage or shed, you need a policy which covers outbuildings in addition to principal dwellings; you can also purchase separate rental property insurance for an outbuilding if, for example, you want to live in your home but rent out your garage for vehicle storage
- Seasonal rental insurance is available to property owners who rent out furnished homes on a regular but shorter-term basis
- Rental value coverage is recommended for investors who earn most of their income from their rental properties; it covers you from income losses resulting from an insured peril
If you need additional rental property coverage, or a different type of coverage, be sure to consult an insurance broker.
Are There Any Exceptions I Should Know About?
The only time you could rent out your property but wouldn’t need to carry rental property insurance is if you are hosting a short-term tenant in a property you own and live in. For example, if a friend of yours was moving to Calgary and wanted to rent a spare room in your home for a month until he or she could find an apartment of his or her own, your homeowners insurance policy would cover your guest for the duration of his or her stay.
Generally speaking, rental property insurance policies tend to be cheaper than homeowners insurance policies because they do not cover any of the items of value being stored inside the property. However, there are circumstances under which they may actually cost more than a homeowners insurance policy. If you are renting multiple dwellings contained within a single property to multiple tenants, for example, you should expect that your rental property policy will cost more than a standard homeowners insurance policy would.
Get a Free Calgary Rental Property Insurance Quote
Lane’s Insurance is a leading Alberta-based insurance brokerage, providing comprehensive insurance services to both residential and commercial clients. If you have any questions about rental property insurance in Calgary or the surrounding area, or if you would like to discuss your specific needs with a knowledgeable broker, please contact us. We provide free, no-obligation insurance quotes, and our courteous insurance professionals are happy to help you understand all the ins and outs of any type of coverage you may need.
