May 6th, 2013
Many small and medium sized landlords in Ontario and those who plan to become landlords have questions about protecting their rental property. This means getting the right insurance to make sure you are ready for any potential problems down the road. Landlords need to protect themselves and their properties because there are dangers at every corner.
Humberview Insurance Brokers helps thousands of landlords and income property investors across the province and has provided the following general information. Remember to always check with an insurance broker before making a final decision on how to best protect your investment.
1. House Keeping
Step one for insuring your income property is to ask yourself: Have all the improvements and updates in the property been completed in compliance with the most recent building code for your area?
This includes, updated electrical, plumbing and roof. Is the property in good condition? If you just purchased a home and plan on doing major renovations to it, make sure you notify your insurance company. Depending on the renovation your insurance policy may not be valid. Furthermore, you should ask yourself who will be responsible for maintenance such as clearing snow, general repairs and tenant inquires.
Important News If You Are An International Landlord
If you are an international landlord with a rental property in Ontario, please note it is a requirement that you have a designated individual residing near the property for maintenance and upkeep. This designated individual can be a friend, family member or a property management company.
2. Personal Policy vs. Commercial Policy
Did you know that as a landlord you can have your rental property insured under your homeowners insurance? Of course, there are a few catches but for the small to medium sized landlord renting out a home to 1 family or even up to a sixplex this can be a very viable and affordable way to insuring your rental property or properties. So what’s the catch?
Depending on the insurance company, most require that the rental property in question have only one related family per unit. But, what if there are two families living in one home? This can still be insured under a personal policy as long as the rental property in question has separated units and the people living within the unit are one family.
This includes each unit having their own kitchen and bathroom and that none of the facilities are shared between units. This does not include if let’s say you plan on having 1 unit rented to a family and the other unit to three university students.
Most insurance companies will accept a rental property under your home owners policy with up to 4 units, some will even do up to 6. Another restriction includes the number of rental properties or the number of units insured, most companies will only insure 3 or 4 rental properties under your homeowners policy, we represent one insurer that will insure over 20 rental properties which qualify under their rules.
Other restrictions may include having at least 3 years previous homeowners insurance, how many claims you’ve had in the past 6 years and where you live in proximity to your rental property. Another very important consideration is that if a claim were to occur on your rental property that is on the same policy as your homeowners, this claim will be reflected on your homeowners policy and may affect your ability in obtaining homeowners insurance.
What are the benefits of having your rental property insured with your homeowners policy?
Well if you have a car insured with the same company you probably qualify for a multi-line discount which could save you 10-15% on both policies. Some insurance companies will offer coverage for your rental property under an all risks basis (all risks with the exception of the exclusions) when insured under your homeowners policy. Another benefit is having the payments for your home and rental property come out at the same time. So if you live in Ontario, have a homeowners policy on your primary residence and own a rental property rented to 1 family, chances are you qualify for coverage under a personal policy.
3. Student Housing
Maybe you own a student rental house, a small apartment building or you own multiple properties and want a policy with less restrictions, than a commercial policy is the way to go. Homeowner policies are usually written under an all risk basis (with the exception of the listed exclusions) or named perils basis as mentioned above. Under a commercial policy coverages are different than a homeowners insurance policy. You as a landlord are responsible for verifying the coverages and should ask your insurance representative what the policy may cover. Under commercial policies there may be less restrictions as to the type of tenants occupying your rental property. But, the insurance company must know the exact occupancy and this must be clearly shown and rated on your policy. For instance, if your policy shows rented dwelling, and your rented dwelling is occupied by 5 students, this may not reflect the proper occupancy. The occupancy description in this case must declare rented dwelling 5 students, or along that effect.
Humberview Insurance Brokers
Humberview Insurance Brokers is an insurance brokerage headquartered in Toronto, Ontario that provides insurance for small to medium sized businesses, landlords and their families. Our services include business insurance, landlord insurance, car insurance and home insurance.
OLA Membership Benefit
As a member of the Ontario Landlords Association, you qualify for a group home and car insurance rate through Humberview Insurance Brokers in partnership with Unica Insurance. For your rental properties, Humberview Insurance offers multiple insurers depending on the type of rental property you own.