How does a renters insurance claim work?

In an ideal world, you'll never have to go through the process of a renters insurance claim. But, as you know, things happen--and most often when you least expect them to. Luckily, because you have renters insurance in place, you can have some peace of mind that your specific circumstances will be dealt with by your insurance company.

So, how exactly does a renters insurance claim process work? To make sure you're prepared to deal with the aftermath of an insurance claim, keep reading.

How to make a renters insurance claim

In the event you need to file a tenant insurance claim, knowing how to do so can help make the process run smoother from start to finish, and ensure that you receive your renters insurance payout as quickly as possible. Here's what you need to do:

1. Document the evidence of property loss

You'll first need to document the damaged property in your rental home. Take as many photos and videos as you can, as the more information you provide to your insurance provider, the easier it is for them to move your claim along.

If a break-in has occurred, you'll need to call law enforcement and receive a copy of the police report.

2. Review your renters insurance policy

Next, you're going to want to review your tenant insurance to confirm whether you have coverage in the first place, what your deductible amount is, and your coverage limits.

3. Contact your insurance company

Once confirmed, you need to contact your provider to speak with an insurance representative. At this time, the representative will ask you a series of questions in order to get a better idea about the circumstances surrounding your claim.

4. Get assigned a claims adjuster

After your information has been recorded, you'll be assigned an adjuster who will likely ask you to provide documentation of your property damage. They may also ask you to provide a home inventory of all your items that we damaged or lost.

5. Investigation or stolen or damaged property

You'll then have to wait for your claims adjuster to conduct an investigation into the evidence you've provided. They may even visit your rental property to view the loss in person, depending on the unique circumstances of your claim.

6. Reimbursement for damaged or stolen items

Once your claim has been processed, you will receive an offer from your insurance company to settle. Note that you don't have to accept the first offer they provide you--you are able to negotiate if you do not agree with your renters insurance payout amount. At the time you do agree, make sure to read the documents carefully before signing.

Then, once completed, you'll receive your payment.

Actual cash value vs. replacement cost value

When determining what your renters insurance claim payout will be, your insurance company will use two different methods, commonly known as the actual cash value and the replacement cost value:

• Actual cash value: Say your laptop that was purchased a couple of years ago is damaged. When using an actual cash value method, your provider will consider how much your laptop is worth at the time it is damaged, not the actual cost of the computer when you first purchased it.

• Replacement cost value: With replacement cost value, your provider will consider how much it would cost to buy a similar item on the market, without taking into account how much your damaged item has depreciated over time.

What does tenant insurance cover?

The types of insurance offered within standard renters insurance policies include:

Contents coverage

Think of contents insurance like your own personal property coverage. In the event a covered peril occurs in your rental unit and damages your belongings, this personal property coverage kicks into gear to pay for any repair or replacement costs of these items. Covered risks include theft, vandalism, fire, and other unexpected events, depending on your unique policy.

Tenant liability insurance

The next portion of your tenant insurance is liability coverage. Liability insurance for renters protects them from being found legally responsible for any bodily injury or property damage to a third-party. Without liability coverage, you'd be responsible for any arising medical expenses, legal fees, repairs, replacements, and settlement costs incurred throughout a third-party lawsuit. Ultimately, liability coverage offers renters financial protection against all liability claims up to your policy limits.

Additional living expenses

Now, lets say something occurs in your apartment building or individual rental home that severely damages your interior to the extent where it is no longer safe to live there. During the time where a restoration company is working on your unit, you'd be required to live elsewhere, which can cost a significant amount of money over time.

However, with renters insurance in place, the additional living expenses portion will pay for your accommodations, restaurant meals, and other expenses up to your policy limits.

Additional tenants insurance policies

Beyond a basic tenant insurance policy, Canadian's can opt to add-on additional coverage to supplement and extend the amount of protection they have from their insurance. Because Canadian cities for renting a home are diverse, each come with it's own set of risks that you may want to consider when in the market for insurance:

Identity theft

Let's say your rental property is broken into while you're away for the weekend. You come home to realize that your banking information, passport, and other personal identification information has been stolen. With identity theft insurance, you'll be reimbursed following your claims process for the costs associated with recovering or replacing your stolen documents and information.

High-value items coverage

If you own personal items that have a high price value, a standard tenant insurance policy may not be enough coverage to compensate you following a claim. High-value item insurance is meant to supplement your personal property that goes beyond your coverage limits listed within your contents coverage.

Sewer backup

If you live in a basement suite or an area of Canada that experiences heavy rainfall throughout the year, sewer backup coverage may be something you want to think about. With this insurance, all your belongings will be protected in the event your sewers backup into your home due to flooding, a clog, or other plumbing problem listed in your policy.

Overland flooding

Overland flooding insurance is specifically designed to protect renters who live in a property that is located near a body of water. While standard tenant insurance policies do not offer water damage protection, overland insurance will aid with reimbursing you for the cost of lost or damaged items that occur from water damage resulting from overland flooding in your area.

Methods of compensation following an insurance claim

To make your claims process as easy as possible, your insurance provider typically offers different methods for you to receive your payout amount to fit your needs:

Direct deposit in your bank account

Most commonly, your insurance company will direct deposit your claim payout into the bank account of your choice. The nice thing about direct deposit into your bank account is that it takes only a few minutes, so you can get back to enjoying your day.

A cheque

On the off chance your insurance company doesn't offer direct deposit, the next form of payment is a physical cheque. Most likely, the cheque will be mailed to you, which may take a couple of business days.

Direct payment to contractor

The last is a direct payment to your contractor. In the event your rental undergoes a restoration following an insured event, your insurance company may offer to pay the company directly, rather than making you the middleman.

Is fire damage covered under renters insurance?

Now, you're probably wondering, "does renters insurance cover fire?" Most often, unintentional fire damage that occurs in your rental property will be covered by a standard tenant insurance policy up to your policy limit.

Are bed bugs covered by renters insurance?

Okay, now what about infestations? Does renters insurance cover bed bugs? Unfortunately, bed bugs are not something your policy covers. As insurance companies view bed bugs as a preventable matter, any infestations that occur in your rental home would be your landlord's responsibility and does not qualify for a claim payout, but rather, a maintenance issue.

Do I have to have renters insurance?

Now, you may be thinking, " Do I need renter's insurance in Canada?" "Is home insurance a legal requirement in Canada?" While it's not illegal to not have renters insurance, your landlord can require you for insurance purposes. A common misconception is that your landlord's insurance policy will cover your personal belongings, or interests when in fact, this is not the case. This is why getting renters insurance is all that more important.

Without it, you could be stuck with the bill when your personal belongings are damaged or in the event a third-party insurance claim is filed against you for bodily injuries or property damage. It's also important to mention that even if you live with roommates, each tenant needs renters insurance individually.

Can I be evicted for not having tenant insurance coverage in Ontario?

Believe it or not, just like a landlord rent increase is possible, you can also be evicted for not having renters insurance. While your landlord is not legally allowed to evict you from your unit if you've already signed your lease agreement, that states the requirement for rental insurance.

However, they aren't able to evict you after the fact, meaning if you've already signed your lease agreement and it doesn't mention the need for tenant insurance, you won't be evicted for refusing to purchase it. Another thing to note is that your landlord can only request that you purchase liability coverage. It is up to you whether you want to buy content coverage for your personal belongings.

How much will my renters policy cost?

When crafting your first budget and finalizing your plans for spending and saving, you probably have some questions like, "how is homeowner's insurance calculated? How much of your income should be rent? And how much does renters insurance cost for an apartment?"

Truth of the matter is that providers will consider several factors before calculating your premium, similar to how they would for car insurance. Factors include where you live, your credit score, the value of your items, your claims history, and more.

Get affordable renters insurance with KOHO

Now sure whether you should get insurance early? Contemplating rent vs. own home? KOHO is the information hub you've been looking for.

There's no denying that renters policies are an invaluable protection that all Canadians need when renting a home. If you're concerned about renting with bad credit, learn how to build your credit with KOHO and get a free credit score check online today.

Concerned about how to save on monthly expenses? Open a high-interest savings account with overdraft protection coverage to stay on top of your bill payments year-round!