The Right Insurance for Ontario Landlords

If you are a new Ontario landlord, or even an older one, it’s a good idea to evaluate the insurance that you have for your rental properties. While it’s no secret that insurance for landlords is different from “regular” home insurance, there are some coverages that you may be missing out on that you need. 

Rented Dwelling Insurance

Also called landlord insurance, rented dwelling insurance offers various advantages over typical home insurance. It is necessary to switch to this, as home insurance policies will not cover a rental property. Rented dwelling insurance is specifically for landlords and covers things home insurance doesn’t, like tenant vandalism and lost rental income due to repairs.

If you are listing your property on short-term rental websites, make sure it is legal to do so in your area as some policies have language in them that prevents payouts if the short-term rental is illegal. Also, make sure you have informed your insurer that you are listing your unit as a short-term rather than a long-term rental; it will make a difference for most policies. Never withhold information from your insurer to get a better rate, it will be a problem if you ever have to make a claim. 

Flood and Water Damage Insurance

If you are anywhere in Toronto or the Greater Toronto Area, your property may be sitting on a flood plain or be in danger from culverts or local waterways. Massive flood damage in Toronto and Burlington in 2024 woke many homeowners up to the fact that they didn’t have the type of insurance coverage they needed to cover damages from this type of disaster. 

It is vital that you have overland water, sewer backup, and water damage coverage. Water damage coverage does not cover most types of flood damage, according to the Insurance Bureau of Canada, and this is the type of coverage that is standard in most homeowner policies.

To truly get the coverage you need, you need to ask for the optional sewer and overland coverages as well. To make it easy, ask your insurer to include all coverages which will protect you from flood damage. If they do not offer sewer or overland coverages, consider switching to an insurer who does. The rates for these optional coverages are high, but not as high as trying to pay to rehabilitate your property after a major flood. 

Require tenants to get Contents Insurance

Under the Residential Tenancies Act, you are allowed to require that the tenant has contents insurance. Also called tenant insurance, this coverage is extremely affordable as it only covers tenant possessions and some limited liability. Most policies will also cover the tenant’s accommodation costs if the property is damaged by fire or most other circumstances where they have to move out of the unit. Because of the tenuous nature of flood coverage, you may want to advise your tenant to ask specifically about it and purchase any optional coverage related to it, especially if they have a basement or first-floor unit. 

You want your tenant to get this coverage because most tenants are mistakenly under the impression that they are covered by your insurance if something happens to the property. This way, if something does happen, they are covered and there is no confusion about who is paying the costs. 

Legal Insurance

In some cases, legal advice may be covered in rented dwelling insurance, but rarely legal costs. If you want to spread out the costs of paralegals and court cases rather than paying in lump sums, legal insurance is a good way to do this. You just have to make sure that it covers Landlord and Tenant Board complaints, small claims court, and other types of cases that are likely to arise. There are even companies in Toronto who offer legal insurance specifically for landlords. 

Reevaluate once every three years 

Even if you’ve been in the landlord business for years, it’s worth reevaluating your coverage to make sure you’re keeping up with your needs and getting the best coverage possible. As a general rule, you should shop around for better coverage about once every three years to keep your insurance company on its toes. 

While price is a consideration, the cheapest option usually isn’t the best when it comes to insurance, because that low rate usually comes with barriers to claims if you ever have to make one. Instead, choose the coverages you want and pick the company that has the second best rate. You’ll also want to do a quick search to see if there are multiple complaints about the company not paying out on claims before you commit. 

Note: For purposes of this article, we are not providing links to companies which offer these coverages as we do not want to endorse specific insurance companies. However, you can easily find any of the coverages you are interested in by searching for them.