The Complete Rental Property Owner’s Guide for Insurance

Homeowner’s Insurance vs. Landlord Insurance: What’s the Difference?

If you’re new to rental property ownership in Saskatchewan, you might think your standard homeowner’s insurance policy will cover your rental property, but that’s not the case.

Homeowner’s insurance is designed for owner-occupied properties, while landlord insurance (sometimes called rental property insurance) is specifically created for properties you own but rent to others. This distinction is crucial because renting your property creates different risks and liabilities that standard homeowner’s policies don’t address.

Landlord insurance typically costs about 15-20% more than standard homeowner’s insurance, but the additional coverage is essential for protecting your investment. Those extra costs reflect the increased risks associated with having tenants occupy your property rather than living there yourself.

Essential Coverage Types for Saskatchewan Rental Property Owners

Property Coverage

Your policy should specifically include coverage for:

• Fire and smoke damage
• Wind and hail damage
• Water damage from burst pipes
• Lightning strikes
• Vandalism and malicious damage (may be available)

This coverage applies to the building: the walls, roof, foundation, and any permanently attached fixtures. Many policies also cover detached structures on the property, such as garages, sheds, or fences, though typically at a lower percentage of the primary dwelling coverage.

Liability Coverage

Liability coverage steps in to handle your legal responsibilities if you cause bodily injury or property damage to others related to your rental property. For example, if a tenant or visitor slips on an icy walkway you failed to maintain properly and gets injured, liability coverage would help pay for their medical expenses and your legal defence if they sue you.

In Saskatchewan’s litigious environment, having adequate liability coverage is essential. Those expenses can really add up, often to more than most people can afford to pay right away. Most insurance professionals recommend carrying at least $2 million in liability coverage for rental properties.

Loss of Rental Income

If your rental property becomes uninhabitable due to a covered loss (like a fire), loss of rental income coverage provides compensation for the rent you would have collected while the property is being repaired.

Without this protection, you’d still be responsible for mortgage payments, property taxes, and other expenses even if you received no rental income.

Equipment Breakdown Coverage

Many Saskatchewan rental properties include appliances like furnaces, water heaters, and air conditioners. Equipment breakdown coverage helps pay for repairs or replacement if these systems fail due to mechanical or electrical breakdowns.

Given our extreme temperature fluctuations, from -40°C in winter to +30°C in summer, HVAC systems in Saskatchewan rental properties often work overtime, making this coverage particularly valuable for landlords.

Risk Prevention Strategies for Saskatchewan Rental Properties

Winter Damage Prevention

1. Ensure proper insulation and weatherstripping around windows, doors, and in attics to prevent heat loss and ice dam formation.
2. Maintain adequate heating throughout the property, even in vacant units.
3. Consider smart thermostats that alert you to temperature drops before pipes can freeze.
4. Educate tenants about winter procedures, such as identifying water shutoff valves and reporting heating issues immediately.
5. Schedule fall maintenance to check heating systems, clean gutters, and inspect roof condition before winter arrives.

Fire Prevention Measures

1. Install and maintain smoke detectors in all required locations. Saskatchewan fire codes require working smoke alarms on every level of the home and outside sleeping areas.
2. Provide fire extinguishers in accessible locations and ensure tenants know how to use them.
3. Schedule regular inspections of heating systems and fireplaces before the heating season begins.
4. Establish clear smoking policies and provide proper receptacles for cigarette disposal if smoking is permitted.
5. Consider requiring tenant insurance that includes liability coverage, which can provide an additional layer of protection.

Please see the PDF below for a comprehensive list of areas and suggestions to help with risk management.

Risk Prevention  Pdf download ←

Navigating Insurance Claims for Rental Properties

Documenting Your Property

Before any loss occurs, thoroughly document your rental property:

1. Maintain a detailed inventory of any landlord-owned appliances, fixtures, and property features with approximate values.
2. Take dated photographs or video of the property’s condition at regular intervals and after any significant improvements.
3. Keep organized records of all maintenance and repairs, which can help demonstrate that you’ve properly maintained the property if a claim is questioned.
4. Store documentation securely in cloud storage or other off-site locations where it will remain accessible even if your property is damaged.

When a Loss Occurs

If your rental property experiences damage:

1. Take immediate steps to prevent further damage, such as shutting off water in case of a leak or securing the property after a break-in. Your policy requires you to mitigate further losses when possible.
2. Before beginning any cleanup or repairs, document the damage thoroughly with photographs and notes.
3. Contact your insurance company promptly to report the claim. Most policies have specific timeframes for reporting losses.
4. Maintain communication with your tenant throughout the process, as they are a key stakeholder and may provide important information for your claim.
5. Keep detailed records of all expenses related to the loss, including temporary repairs, emergency services, and any lost rental income.

Tenant-Related Insurance Considerations

Requiring Tenant Insurance

While not legally mandatory in Saskatchewan, requiring tenants to maintain their own insurance policy offers several benefits:

1. Provides coverage for tenant belongings, eliminating disputes about responsibility for their personal property.
2. May cover alternate living expenses for tenants if the property becomes uninhabitable due to a covered loss, potentially reducing conflict during repairs.
3. Often includes liability coverage that can serve as a first line of defence if the tenant causes damage to the property.

You can legally require tenant insurance as a condition of the lease in Saskatchewan, and many professional property managers now make this standard practice. To enforce this requirement, collect proof of insurance before giving possession and require policy renewal certificates annually.

Insurance Cost Management Strategies

Deductible Considerations

Choosing the right deductible involves balancing monthly premium costs against your financial readiness to pay out-of-pocket costs:

1. Higher deductibles lower premium costs but require more out-of-pocket expense when claims occur. Consider how much you could comfortably pay for each property in an emergency.
2. Consider separate deductibles for different perils. Many Saskatchewan policies can offer varying deductibles for wind/hail, sewer back-up damage, flood damage, etc., to help keep the cost of additional coverages low.

Annual Coverage Review

The rental property market in Saskatchewan changes quickly, and so do your insurance needs. Set a calendar reminder to review your coverage annually. During this review, adjust coverage to reflect:

1. Replacement costs are the primary driver of your insurance premium in the amount of coverage you need for the rental property. We recommend reviewing your rebuild value at least every 5 years.

2. Changes in property use or occupancy that might qualify for different rate structures.

Current Trends in Saskatchewan’s Rental Property Insurance Market

Rising Premiums and Changing Coverage

Saskatchewan’s rental property insurance market has seen significant changes in recent years:

1. Premium increases were seen in many personal line insurance policies, as annual increases were due to rising claim costs and increasingly severe weather events.
2. Higher deductibles are becoming standard, especially for water damage and weather-related claims.
3. Greater emphasis on property age and condition in underwriting decisions, with insurers requiring more detailed property information before providing coverage.

Remember, proper insurance coverage isn’t just about meeting legal requirements; it’s about protecting your investment and ensuring your rental property business can withstand unexpected challenges.

In Saskatchewan’s dynamic property market and unpredictable climate, comprehensive insurance coverage is a fundamental component of successful rental property ownership.

This guide provides general information about rental property insurance in Saskatchewan and should not be considered legal or insurance advice. Always consult with qualified insurance professionals regarding your specific situation and needs.

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