5 factors that determine your renters insurance premiums

By SmartCoverage Team on March 14th, 2018

By some estimates, less than half of all Canadian renters choose to purchase renters insurance. Though landlords do often insure the buildings themselves, their insurance policies won’t protect tenants’ personal property, nor will it protect them from being held liable for accidents and injuries occurring on the premises.

Luckily for renters, renters insurance is relatively inexpensive, with standard policy premiums averaging around $25 per month for $50,000 in content coverage and $1,000,000 in liability coverage.

Insurance providers will assess a number of factors when determining your premium including the location and history of the building, its amenities, and your personal financial and claims history.

The following five factors may be considered when determining how much you’ll pay to insure your rental unit:

1. How much insurance do you need?

As a rule of thumb, the more insurance you require, the higher your premium. Renters insurance seeks to protect a tenant’s personal belongings – both inside and outside the house – so step one is to take a personal inventory.

Pay attention to whether your policy reimburses the actual cash value or the replacement value of your belongings. It will cost you significantly more to replace an old stereo than its depreciated cash value.

After you make a list of all your belongings, research how much it would cost you to replace each item. The sum total is how much insurance you would require if you had to replace everything after a fire or flood.

Note that some policies will also have maximum limits on the value of listed items. For expensive items like jewellery and furs, consider taking out additional insurance policies instead of paying a higher renters insurance premium.

If you require auto insurance, life insurance, or health insurance as well, some providers will offer discounts for bundled packages. Keep an eye out for these discounts when shopping for rates. 

2. What is your deductible?

Unsurprisingly, your desired deductible will greatly affect your premium. The more you’re willing to cover before your insurance kicks in, the less expensive your premium will be.

3. Where do you live?

Insurance companies set premiums based on how risky you are to insure, and part of this assessment depends on where you live. High crime neighbourhoods, proximity to bodies of water or fault lines, and your distance from the closest fully manned fire department can all play into the calculus.

Overall, apartments are less expensive to insure than full houses. Apartments are typically smaller and outfitted with smoke alarms, sprinkler systems, and carbon monoxide detectors. The limited outdoor space means insurance providers don’t need to insure you for outdoor accidents like slips and falls. On-site management will also decrease your premium.

Houses with yards and outdoor spaces that must be maintained will have higher premiums. Houses with pools are more expensive to insure as well.

4. The construction and age of your home

To determine premiums, insurers will ask tenants about the structure and upkeep of the building. New buildings or buildings with recent updates to roofs, electrical, pipes, and heating are less expensive to insure than older buildings. Contact your landlord for a full breakdown of recent updates and upgrades. Most insurance providers will insist on knowing this information before taking you on as a client.

Houses outfitted with wood stoves are more expensive to insure.  Households with wood stoves are more likely to experience carbon dioxide poisoning and fires, so providers consider them riskier to insure.

5. Your financial history

Insurers will also take a peek at your credit history and debt before setting your premium. The more confident they are in your ability to pay your premium on time, the lower the risk involved in insuring you as a client.

Any history of previous claims can also raise your premium.

Before you start shopping the rates, be sure to have your building history and personal inventory in-hand. Going into the process fully-informed is the best way to get the most out of your renter's insurance coverage.

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