Tenant Insurance: Common Misconceptions, Real Risks and the Professional’s Role
In Quebec, a significant proportion of households do not carry tenant insurance. For damage insurance professionals, this situation represents both a challenge and an opportunity: the opportunity to demonstrate their expertise and guide clients who are often unaware of the extent of their exposure to risk.
According to a survey conducted by the Insurance Bureau of Canada (IBC), more than one in three tenants does not have home insurance coverage. This figure is a cause for concern within the industry, particularly given the very real risks involved.
“This lack of coverage is worrisome,” says Salma El Maroizy, Director of the Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ). “The financial consequences of a claim can be substantial.”
What explains this situation? Tenant insurance continues to suffer from a lack of understanding, fuelled by misconceptions, false assumptions and limited awareness of the protections available. In this context, brokers and agents play a crucial role in helping consumers make informed decisions. “There is still a great deal of education to be done,” says Salma El Maroizy, who is also Vice-President, Personal Insurance at Fort Assurance.
Common Misconceptions to Debunk
Misconceptions about tenant insurance remain widespread. “Many tenants believe they do not need insurance because they own few belongings or because they mistakenly assume they are covered under their landlord’s insurance,” explains Carlos Melo, Manager, Technical Affairs and Insurance Information Centre at the IBC-Québec.
Adding to this is an inflated perception of the cost. Yet, a premium of approximately $30 per month remains affordable for most households. “That works out to about $1 a day. When presented that way, the cost of insurance becomes less of a barrier,” says Salma El Maroizy. The challenge, therefore, is often less about convincing clients and more about demonstrating the value of the protection based on their specific needs.
One commonly heard argument is: “I don’t own much, and nothing I have is particularly valuable.” “Consumers tend to assess their belongings based on perceived value rather than replacement cost,” observes Pierre Duchesne, Personal Insurance Advisor at Beneva.
In reality, tenant insurance goes well beyond covering a few pieces of furniture. It can include personal property used outside the home, such as a bicycle, and may also cover additional living expenses if the dwelling becomes uninhabitable following a loss. These realities are still not widely understood, emphasizing the ongoing need for awareness and education.
Liability Coverage: Broader Protection Than Many Realize
Although often overlooked by policyholders, liability coverage protects against some of the most significant financial risks. “A tenant can cause substantial damage to the building they occupy or to neighbouring units,” reminds Salma El Maroizy. A simple incident, such as an overflowing bathtub, a kitchen fire or a fall on a staircase, can result in substantial claims involving multiple parties.
Liability coverage typically ranges from $1 million to $2 million. In practice, $2 million is increasingly becoming the standard, particularly due to rising claim costs and landlord requirements. “The difference in premium between $1 million and $2 million in coverage is often minimal, but the potential impact is significant,” notes Carlos Melo.
“This protection is not limited to the insured’s residence. It follows them wherever they go, including abroad,” adds Salma El Maroizy. This is a key point for professionals providing advice, as it helps position liability coverage as a core component of protection rather than a simple add-on.
Shift the Discussion on Coverage, Not Price
The growing popularity of online comparison tools and ongoing pressure on household budgets have reinforced the tendency to prioritize price when purchasing insurance. Industry stakeholders, however, often view this approach as overly simplistic. “The true test of an insurance policy comes at the moment of a claim,” says Carlos Melo. A low-cost policy may come with significant coverage limitations, particularly regarding water damage or living expenses.
In this context, best practices point toward a comparative approach focused on protection rather than price. Presenting clients several scenarios with different coverage levels and deductibles allows them to visualize the practical implications of their choices. “The goal is to encourage clients to think things through, not to impose a solution,” summarizes Pierre Duchesne. This approach promotes informed decision-making and reduces the likelihood of misunderstandings when a claim occurs.
Structuring Support Around Key Life Events
Real-world experience shows that certain moments are particularly conducive to professional intervention. Moving is a prime example. “It is often during a move that tenants become aware of the importance of insurance,” says Salma El Maroizy. The growing number of landlords requiring proof of insurance, particularly liability coverage, can also serve as a catalyst and a valuable discussion point.
Policy renewals, life changes and routine client interactions all create opportunities to revisit coverage needs. “Every interaction is an opportunity to remind clients of the importance of insurance,” she adds.
Taking Inventory: A Practice Worth Systematizing
Despite being one of the most useful tools available, a home inventory remains underused. “It is an essential step in avoiding underinsurance,” insists Carlos Melo. By creating a detailed inventory of personal belongings, policyholders can better assess their needs and adjust their coverage accordingly.
To simplify the process, several resources are available. Some insurers provide tools designed to help clients document all their possessions, while the IBC offers a downloadable inventory checklist that allows consumers to catalogue their belongings and estimate their value. These resources help structure the exercise and make it more concrete and realistic for clients, while increasing their appreciation of the value of what they own.
The importance of this exercise is often underestimated, even though it plays a critical role in avoiding coverage gaps. This is where the guidance of an agent or broker can make a real difference. “Consumers must be reminded not to base their coverage on the price they paid, especially if the item was purchased at a low cost or received as a gift,” says Pierre Duchesne. “In the event of a loss, it’s important to remember that compensation is based on the cost of replacing the item with a new one. The goal is to determine how much an equivalent item would cost today, to obtain adequate coverage.”
Tailoring the Message to Different Client Profiles
Young tenants represent a segment that is particularly vulnerable to underinsurance. They are generally less likely to recognize the value of their belongings and may be more willing to accept higher levels of risk.
In this context, certain messages can be especially effective. One concrete example is the relatively modest premium increase associated with higher coverage limits. “The first $10,000 of coverage is usually the most expensive to insure,” explains Pierre Duchesne. “Increasing the insured amount can therefore provide meaningful additional protection without significantly increasing the premium.” Concrete examples such as these help align clients’ perceptions with the actual protection needs.
Strengthening Prevention and Ongoing Communication
The advisory role does not end once the policy is purchased. Increasingly, insurers are implementing ongoing communication strategies designed to raise awareness among policyholders. Seasonal tips, reminders related to weather events and educational content: these initiatives aim to prevent and thereby reduce risks early on. At the same time, these initiatives also help strengthen or build a special relationship with the policyholder. “We focus on prevention at different stages of the client journey,” says Carine Salvi, Director, External Communications and Public Relations at belairdirect.
This proactive approach is part of a broader risk management philosophy in which insurance coverage is complemented by ongoing education and awareness.
At a time when many people still view tenant insurance as secondary or optional, this type of support has become an important differentiator for industry professionals. “It is not simply about selling a policy,” concludes Pierre Duchesne. “It is about helping clients understand risk.” That is where professional advice delivers its full value!
To support your advisory role, feel free to share the following article with your clients: Assurance locataire: quoi savoir pour prendre une décision éclairée (in French only)
This article was translated with the assistance of AI and carefully reviewed by human editors.
