Episode 47: Rental Insurances Answered!
Summary
Canadian insurance expert Scott Cameron attacks the hard questions about landlord and tenant rental coverages. What about when a rental comes with a pool, or a tenant wants to add a dog? Scott expands the top three tenant mistakes when it comes to insurance AND some sound advice to landlords of any length of experience. Learn with me about how Canadian risk exposure works from an expert!
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Full Episode Transcription
Welcome to my life as a landlord where we untangle all things housing and educate the curious. If you're
looking for some entertainment with some honest, awkward conversations, you've come to the right
show. I'm your host, Dr. Jennifer Salisbury. This is my life as a landlord. Welcome to it.
Welcome to my life as a landlord. I am Dr. Jen. I'm so happy that you've joined me today on this
podcast. The. This podcast, after all, is an effort to educate both us and Canadian landlords and tenants
who seek calm success like that calm success. We provide a predictable rotating three topics, including
landlord info, tenant resources and other Salisbury adventures where you never know what you're going
to get. And whenever possible, I invite amazing experts to join me on a variety of topics, while also
pulling from my own experience with rentals on both sides of the border. And for those of you on
YouTube, at my life as a landlord, you will see I have a guest today, Scott Cameron from Paul River,
British Columbia, who is all about the insurances. Yay! So happy to have you, Scott. Thanks for joining
us.
Thank you, Dr. Jen. Happy to be here and happy to hopefully answer some of the questions you've been
getting about insurance.
Thank you, Dr. Jen. Happy to be here and happy to hopefully answer some of the questions you've been
getting about insurance.
Yeah, so I've been working in the insurance industry since 2008, so we're basically 15 years now, ten
years full time. I started while I was at university and always wasn't sure if I was going to end up here,
but, um, you know, got out of university and kept going with it. And here we are now. So it's been really
good.
Yeah, so I've been working in the insurance industry since 2008, so we're basically 15 years now, ten
years full time. I started while I was at university and always wasn't sure if I was going to end up here,
but, um, you know, got out of university and kept going with it. And here we are now. So it's been really
good.
Yeah. I think if you're a landlord, if you're a tenant, there's going to be I mean, there's there's similar
aspects to that, regardless of where you live, anywhere in the world. And so when we're looking at
insurance, I mean, a Canadian insurance policy might be slightly different than an American one. But by
and large, the risks are the same. The types of coverage that are needed on both sides are the same. So I'll
try and speak in general terms so that regardless of where you live or where you're thinking about renting
or landlords, you know it'll be applicable. Some things to think about.
Fantastic. So let's start with a simple question. As landlords and as tenants, why do we need insurance?
Yeah, absolutely. I mean, insurance is important for everybody. It provides protection against
catastrophic events, which can lead to financial devastation. Right. I think an important part about
insurance is we don't know when a disaster is going to strike. So sometimes people will think, you know,
all that money I throw away on insurance every year. I'll just put that in a savings account. And 20 years
down the road when I have that fire, you know, I've saved up enough money. I'll be okay. Well, what if
the fire doesn't happen 20 years from now? It happens tomorrow, right? We can't, um, plan and predict
everything when it's going to happen. So insurance comes in in that. And for landlords, it's about
protecting, you know, a very valuable asset, right? Could be one of the biggest assets in your financial
portfolio. You think about a risk like a flood or a house fire. Hundreds of thousands of dollars in damage
can add up very quick. So you know you have to protect your investment there. And tenants often
question the need for insurance, especially if they think, you know, I don't have a lot of stuff. I'm not
worried about my belongings, so they assume I don't have really any value to protect, you know, what do
I need the insurance for? But as far as contents go, a lot of insurance policies will pay on a replacement
cost basis. So what that means is instead of you valuing your stuff at what am I going to get for it if I sell
my furniture at a yard sale? No, it might be replacement cost, which is if I had to go out tomorrow after a
fire and replace my TV, my furniture, my clothes, my dishes, all the food in my cupboards, you know,
that can be such a big expense. And often after an insurance claim, you don't have the luxury of waiting
for the Black Friday sale. So you know it can be a very costly add up very quick. And then beyond, you
know, the physical building or your contents that are destroyed. There's some parts to insurance coverage
that everybody should be aware of. Maybe it doesn't come top of mind, but for landlords, think about you
have a fire and while they're doing repairs for the next six months, your tenant's not there to pay the rent.
So you've got loss of rental income. And a lot of policies will cover that rental income coverage to pay
for your expenses as you're going on. And for tenants, it's sort of the flip side. It's the loss of use. So if
I'm out of my unit now because of a fire and I might be out for a month or more, I mean, those first few
days are crucial. Getting into a hotel and making sure I'm somewhere safe. What if I don't have family or
friends in the immediate area that can take me, and paying for those out of pocket expenses? So those are
parts of insurance that people don't think about. And the last thing I'll touch on, which is part of many
policies and not always top of mind, is the liability insurance aspect. So that is to do with if there's any
sort of lawsuit. So owning or occupying a piece of property does have some risk involved with it. You
know, easy to think about a simple slip and fall. And in that instance, you know, who gets sued. Is it the
person that owns and rents out the property? Is it the person that lives at and is at the property daily? It
could be a combination of both. I think oftentimes with with when the courts and lawyers get involved, a
lawsuit will come and they will start by trying to name everybody that could be a part of the lawsuit, and
then it might come to court where they say, okay, you are responsible, but you are not. But, you know,
can you imagine being served with a lawsuit and thinking, oh boy, do I have to hire a lawyer? What do I
do from here? And having liability insurance as part of your home or renter's insurance, you know,
provides those costs and gives you that helping hand as as we go.
wow, amazing. And I can tell you've done your homework in preparation for today's podcast. Thank you
so much for all of that insight. Some of the questions that I see in the various Facebook groups and
question forums, and some of the questions that get emailed to me, is. But what about things like pools,
installed pools, or aboveground pools that either the landlord provides or the tenant wants to put in
trampoline swing sets? Things like that. Like what? How do we approach that stuff?
Yeah, definitely. I mean, it just sort of all goes back to that liability side of your insurance and the risks
involved in owning or using property. So again, thinking about what can you be sued for?
I mean. In North America. Certainly people can get sued for all kinds of things, sometimes very groundless, that just
get thrown out of court. Um, but even if if it's groundless, you know, what about, you know, a lot of
people wouldn't know where to turn to say, I need to get a lawyer to to defend me. And that's part of the
liability insurance, the duty to defend. And then if, as a result, a judge awards a, um, some amount to an
injured party being protected against that type of judgment, that type of financial loss. So in terms of
some of the things you mentioned, trampoline, swing sets, playgrounds, pools, those are all added risks to
being on the property. Right? So a couple of things you might want to think about, whether it's the
landlord's property, if they own the pool and they let the the tenant rent the house with the pool, or they
own the, the playground, or whether the tenant asks, hey, I've got a trampoline and I want to set it up. I
want my kids friends to come over and use it. Is that okay with you? You know, so who owns the
property versus whose responsibility it is to maintain and check, make sure that the property is fenced off
properly. Um, you know, making sure we're in compliance with any local rules and regulations around
owning that type of property and determining who is responsible for those types of things may also
determine how responsible you are in terms of if someone gets injured. So all things to consider, um, if
you're a landlord and you're being asked by a tenant, hey, I want to set this, this playground up on the
property. You know, maybe that's an option to talk about, you know, what does that look like? And
putting some details in the rental agreement to say who's responsible? Um, you know, it may go so far as
getting a bit of legal advice. If you're really feeling like this is an extra risk that I'm not sure about, or
possibly excluding that from your, you know, making it a no no in the rental contract. But there's ways
around working around that. Certainly having insurance is is another safeguard.
Love it. Yeah. Some of the some of the the the questions, the nuances. It all goes back to doing your
homework and having written communication. And that's what I'm finding more. And even some of
these, the hard questions like the one you just answered. It all comes back to make sure you've got
something in writing and make sure you're asking the experts, the advisors that are advising you. Right.
That's pretty it's pretty amazing.
Absolutely. And insurance is one of those pieces where, you know, having a professional, having an
expert that you can ask these questions about in your specific area, your specific circumstances. Always a
nice piece of mind to know, hey, I've got someone that I can bounce these ideas off of for sure.
And for me, I'm lucky I get to bounce my ideas off of you. Yeah, of course you're my advisor, which is
good. Yeah. Okay. So let's let's pivot here. There's been a lot of questions, especially on the US side, but
it does come up in Canada as well. What about animals and dogs. Animal bites breeds that may be
aggressive. There's some different things going on in the US about emotional support animals and and
service animals and stuff like that. So I'm not going to go down that rabbit hole. But when it comes to
insurance in Canada. How do the carriers look at the different breeds and animals in general in rentals?
Yeah, definitely. So the breed of the dog, if someone is renting, they have a pet. They want to bring it in.
I mean, that is it always depends on circumstances. You know, whether you'd say yay or nay as a
landlord on that. But, you know, obviously there there can be a risk even not necessarily the breed, but,
you know, a pet gets out from the house and runs into the street and then it leads to a car accident. I
mean, there's all kinds of things. We've even seen something as crazy as people keeping exotic pets. And
you think about, you know, I have a poisonous snake that gets on the loose or things like that. I mean,
there's all these things that can lead to liability, right? I mean, if you Google some wild stuff, you can
sure find things have happened in the past. Um, but as far as how does that look on the insurance side of
things? I know here in Canada, a general home or tenant insurance application will ask, do you have any
dogs? And if so, what are the breed? But at least here I have never seen an issue where an insurance
company has come out and said this specific breed of dog. We will not write at all. I think it is on the
application though, because and this is probably similar in the states where insurance is all about
collecting the information, and then an insurance company can underwrite that information or review it
and determine how much risk are we willing to take on. Is there a way to mitigate some of that risk? And
so by them asking the question, hey, do you have a dog? And is it one of these more potentially
dangerous breeds opens up that question. And if we also find out, oh yes, I have a quite a vicious breed
of dog bite by trade. And it's also been a few people in the past. Okay, well, maybe there's some more
questions we have to dig into here before we offer you liability insurance. But again, that's another aspect
of just owning property or living or, you know, going about your daily life where there is some potential
risk involved and having insurance as something to fall back on. Important.
Amazing. Thank you so much. The the pool and trampoline swing set aspect. And then the animals.
That's typically some of the biggest confusing areas. And you've answered those questions pretty well.
But let's zoom out a second and and see you right a lot of insurance for both landlords and tenants. I
know you do because I've worked with you for years. So what mistakes do you see? Tenants. Let's talk
about tenants. What mistakes do you see tenants making regarding insurance?
Yeah, I would say there's three top mistakes that we see that a tenant might make when they're thinking
about their insurance. The first one right off the bat is being again thinking that I'm a renter. I don't really
have a lot of valuable things. Maybe I don't need insurance. And again, we've sort of talked about if the
policy is designed to be a replacement cost policy and you're thinking about, okay, if I have to go out and
buy brand new everything that I own because it's all gone in a fire, it adds up so quick. So that's part one.
The second mistake is kind of tied to that. And that's maybe not buying enough insurance. So typically
on a renters or a tenants policy, the cost of your policy is going to be based on how much insurance do
you need to replace all of your belongings. And a basic package might start with like a minimum 20 or
$30,000 contents limit. So a lot of people will think, you know what, I don't? Again, don't really have a
lot of stuff. My stuff isn't worth that much. A the minimum limits fine for me. I'll take a $20,000 policy.
And then after a major fire, you know, they're going through, they're adding up the list and all of a
sudden it's like, oh, boy, you know, these clothes that I've owned forever. And I'm replacing them all
now. And, I mean, we're no stranger to what's happening in the world with inflation. You look at going
out and replacing everything you own brand new. That can be a really big hit. And you're either saying,
okay, well, my policy is not going to cover everything. So now I'm choosing what things I'm replacing
and what things I'm I'm not. And so that that might be a tough, tough point to to think about if we don't
have enough of a limit. And then the third mistake might be a lot of renters or tenants saying, you know,
how expensive is the insurance like is is that just it's probably unfathomable, like hundreds of dollars a
month. I can't afford that, you know, making ends meet and, you know, honestly, a basic insurance policy
for a renter might only be 20 or $30 a month. You know, just to start out with a basic policy, it's not so
bad a dollar a day. And I think that surprises a lot of people thinking it's going to be much more than it is.
So overlooking that long term financial implication of not having the right insurance after disaster, the
small cost of peace of mind is worth it.
Mm hmm. Perfect. Three points to ponder for tenants making mistakes. That's that's amazing. And I
didn't even think about the inflation portion. If you've got the replacement cost and all of the clothes that
you've had, like you said for years now to replace them, they're, you know, way higher than when you
originally bought them all those years ago. You didn't even think about the inflation aspect of that. That's
so critical. Yeah. You don't want to. Sure. You don't want to underscore. 1s So you have provided such
amazing expertise on this. And I just want to ask for for my landlord folks out there, we've got the
greatest wealth transfer that the planet has ever seen is in motion. And we've got a lot of newbie
landlords out there, and their biological age does not matter, right? I've got newbie landlords that are in
their 50s that have never had a rental that they have to now work with, and they're they're educating
themselves and trying to avoid issues. And understandably and these landlords, they're just starting an
absolute ground zero for these newbie landlords. Is there anything else that you would give them advice
on maybe.
Yeah. So I mean, I think if you are a landlord and you're thinking about insuring your investment, your
buildings, you know, we've talked about some of the things that a policy will cover. So those are all
important things to check with your broker or your independent insurance agent to find out. Are these
parts of my policy? Are they covered? Um, and I think a lot of people also think insurance it all covers
the same thing. Every policy is the same. It's just a matter of dollars and cents. What's my premium going
to be at the end of the year? And the thing about insurance is that every policy is going to be slightly
different. There's going to be a nuance the way it is worded, what it covers, what it can cover. Some
insurance companies offer optional coverages for places that are prone to earthquakes, floods, hurricanes.
Sometimes there's a trick in making sure that you're protected against all the risks that are even in your
particular area, so it's not all to be painted with the same brush. Don't shop based on price alone. You
really have to understand what the policy is covering and what the best policy for your situation is. And
to that I would say, yeah, working with an insurance broker or an independent insurance agent in your
area, an insurance professional who can analyze multiple different policies from different insurance
companies. To find you the coverage you you want in need at at a good price. I mean, obviously there's
cost is another consideration. It's sometimes if you have a mortgage or a lender involved in your
property, it's a necessary expense. But there's ways to to work around getting the right coverage for the
right price. And having someone a professional in your corner can be can go a long way.
Amazing, Scott. Absolutely amazing. Um, you know, we have we've gone through so much information.
Is there anything else that you want to talk about? As as we start to close out the podcast, is anything,
anything we left on the table?
I mean, if I could throw out a bonus tip for landlords, I would say, um, you know, tenant quality also
matters, right? We sometimes see the unfortunate leftovers of what's happened after, um, a tenant and a
landlord haven't been a good match. The tenant leaves and maybe wasn't who we expected them to be,
and we found out our place. Our investment is not in in the condition we left it. You think about $1,000
damage deposit doesn't go very far to a suite that needs to be gutted and rebuilt from scratch to get it back
to where it was. Right? So, I mean, I think that's one other consideration to make, especially in that, uh,
another important aspect of your insurance policy is that there's always going to be some exclusions. And
it's not all almost as important as understanding what is covered by your insurance is understanding what
is excluded by your insurance. So sometimes the nuances are in the exclusions. So there are there are
situations where people realize, oh boy, this this wasn't covered by insurance. I can't turn a blind eye to
who I'm renting my space to knowing that I've got an insurance policy. And so sometimes doing a little
work on the front end of things, screening your tenants, having good rental contracts in place, all of those
other things you talk about, um, are all part of protecting your investment. 1s Love it. Oh my goodness.
Wow, Scott, you've given us so much to think about today. Thank you so much for joining me. I really
appreciate it. And you know there's always there's always questions that come up. And maybe in 2024 I'd
love to have you back on the show. You did great today. I'm so excited that you joined us. And I love
that. The call to action today, you actually came up with it, which was great. So for those listeners out
there, whether you're in the US or Canada or beyond, here's your call to action. And this is from Scott.
Not only do we want you to read your policy, read your insurance policy, like find it and read it, but then
make sure you're talking to your local insurance agent about your coverages, your deductibles, your
exclusions, and answer any questions. Make sure you really understand your policy. That's a tall order
when you're talking about someone that may be new to rental insurance, but for my landlords out there,
make sure you not only find your policy, read it and you understand it. So there's your call to action
today. As always, let me know your comments and questions by emailing me at learn at my life as a
landlord and don't forget comments and questions. Create the next podcast and more resources. Speaking
of resources, don't forget the free resources on the website. My life as a landlord, including two free
Blackout Bingo cards. So if you have not checked out the bingo cards, go to the website. Check it out.
They're actually pretty cool. Me and my design team created a. And it's all about helping not only the
newbie landlords, but also the pickle landlords. And you fill in the Blockout bingo card as you complete
your your own education is what it is and it's a free resource. Next week's podcast topic is tenant based.
It's episode 48 and we're going to be doing a deep dive into normal wear and tear. Thank you again so
much Scott. We will see you next time.
Thank you for joining us this week. To view the complete show notes
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Thank you again for joining me, Dr. Jennifer Salisbury in this episode of My Life as a Landlord. I'll see you next time.