Rental property insurance in Ontario

Rental property insurance, also called landlord insurance, is designed for tenant-occupied properties. It can help protect the rental building, landlord liability, eligible rental income loss, landlord-owned contents, and tenant-related risks that may not be covered by a standard homeowner policy.

While not legally required by provincial law, rental property insurance is mandatory if you have a mortgage on the property. Most lenders require a landlord-specific policy to protect their collateral. Furthermore, because standard homeowner insurance is usually voided once a property is tenant-occupied, a landlord policy is practically essential to avoid being personally liable for fire, water, and liability claims. 

They protect different things, and using the wrong one is the most common reason a landlord’s claim is denied: 

• Homeowner insurance covers an owner-occupied home, including the owner’s contents and personal liability 
• Landlord insurance covers a tenant-occupied building, the owner’s liability as a landlord, and lost rental income
• Landlord insurance does not cover a tenant’s belongings; that’s the tenant’s own responsibility 

Once you rent a property out, you generally need landlord insurance, not a homeowner policy, even if the building hasn’t changed. 

Yes, when loss-of-rental-income coverage is included and the loss results from an insured event. For example, if a covered fire makes a unit uninhabitable, this coverage can replace the rent you lose during the repair period. Review the indemnity period and limits so the coverage matches the time it could realistically take to repair the unit and re-lease it, not just the construction timeline. 

On average, landlord insurance in Ontario costs 15% to 25% more than standard homeowner insurance due to the higher liability and property risks associated with tenancies. Factors such as the building’s age, location, and the number of rental units will impact your final premium. 

Your building limit should reflect the cost to rebuild the property today, not its market value, purchase price, or municipal assessment. Market value includes land, which doesn’t burn down; rebuild cost includes current labour, materials, and bylaw upgrades, which have risen sharply. Regular insurance-to-value reviews matter, since an outdated limit is the most common reason landlords come up short after a total loss. 

It depends on the type of damage: 

• Sudden, accidental insured damage may be covered under the building policy 
• Intentional or malicious damage by a tenant is often excluded unless you add a vandalism endorsement 
• Ordinary wear and tear is never covered by insurance and is considered a cost of doing business 
• Poor maintenance and gradual deterioration are generally excluded 

Requiring tenant insurance and collecting a deposit where permitted can help transfer some of this risk away from your policy. 

Not by law, but as a landlord you can require it in the lease, and you generally should. Your landlord policy covers the building and your liability; it does not cover a tenant’s furniture, electronics, or clothing, and it does not cover the tenant’s personal liability. Requiring tenant insurance, and asking for proof, protects your tenants and reduces the chance a tenant turns to your policy after a loss they should have insured themselves. 

Yes, but the suite needs to be disclosed and reflected in the policy. A legal or non-conforming basement apartment changes the property’s occupancy, fire exposure, and water risk, and insuring the building as if it were a single-family home can leave a gap. Tell your advisor about any secondary suite, including how many units the property contains, so the policy and limits are set correctly. 

It depends. A standard long-term landlord policy is generally not designed for short-term or vacation rentals such as those listed on booking platforms, and using one that way can void coverage. Short-term rentals carry different liability and turnover exposures and often need a specialized policy or endorsement. If you rent the property short-term, even occasionally, tell your advisor so it can be covered correctly. 

Short turnover gaps are usually fine, but extended vacancy is a different exposure that insurers treat carefully. A property left vacant for an extended period, often 30 days or more depending on the policy, can trigger restrictions or exclusions for water damage, vandalism, and other losses. Tell your advisor when a unit will sit vacant for a renovation, sale, or extended turnover so the policy can be adjusted before a claim happens. 

Several factors are within your control: 

• Requiring tenant insurance can reduce your exposure and is viewed favourably by insurers 
• Raising your deductible lowers your premium, if you can absorb the higher out-of-pocket cost 
• Monitored alarms, water sensors, and updated wiring, plumbing, and roofing can reduce risk-based pricing 
• Insuring multiple properties or bundling with other policies can unlock discounts 

The largest savings usually come from matching coverage to the property’s real use and risk rather than over- or under-insuring, which an advisor can review with you.