Huge Toronto fire highlights value of contents insurance: experts
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TORONTO — Experts say a massive fire at a Toronto athletics facility this week that forced the evacuations of six buildings vividly demonstrates why landlords are increasingly insisting rental tenants obtain insurance for their homes.
They say the past five years have seen a noticeable spike in the number of landlords requiring would-be renters to prove that they have contents and liability insurance as a condition of their tenancy.
Though there are no numbers tracking the trend so far, they say anecdotal evidence suggests it's most pronounced in Ontario.
They say tenant insurance, which typically combines both the contents and liability components, protects both landlords and residents from unexpected incidents such as Tuesday's fire that sent heavy smoke billowing over a busy part of midtown Toronto.
The blaze ripped through the city's Badminton and Racquet Club, causing much of the building to collapse and prompting evacuations of nearby condominiums and businesses.
The cause of the fire is not yet known.
Damage from unexpected disasters, such as the Toronto fire, would be covered by many policies, though individual terms would vary, said Pete Karageorgos, director of consumer and industry relations at the Insurance Bureau of Canada.
Condominium owners would likely be covered for the cost of alternative accommodations or smoke-damaged belongings, Karageorgos said, since most have had to obtain insurance as a condition of securing a mortgage.
But renters who felt the cost of insurance was unnecessary and chose not to purchase it may find bills mounting quickly, he said, adding the relatively modest price of insurance premiums could net huge savings if disaster strikes.
"There's no law requiring a landlord to make sure that a tenant has that. It's optional," he said. "However ... it's wise to have it."
The trend towards an insistence on insurance for renters is relatively recent, according to the Canadian Federation of Apartment Associations.
President John Dickie said such clauses have been part of leases for years, but said they were not strictly enforced and rarely led to evictions.
A 2005 court decision in Ontario changed things by bringing some clarity to that province's landlord-tenant act.
“The Act is silent about whether or not a landlord has the right to demand that tenants maintain insurance, or that they provide proof of coverage to their landlords," reads the decision. "However, if the parties agree to it, it, too, becomes a contractual issue."
Dickie said that decision touched off a slow increase in the number of landlords requiring insurance from their tenants, adding the trend has gained momentum in the past five years.
If a tenant promises to obtain insurance by signing a lease requiring it and then fails to do so, the landlord could then have grounds for eviction.
Asking tenants to pay premiums as low as $15 a month has clear advantages for landlords, he said, adding tenant insurance offers financial protection from the actions of others.
"It's not our fault that a tenant let the bath overrun and the water ran down and ruined your heirloom dining room set," Dickie offered as an example. "If the tenants get insurance for that, then it doesn't turn around to be a problem that we have to deal with."