December 5, 2021 - Written by Greg Sanden, CAIB, Sceptre Pointe Insurance Ltd.

Insurance on a rental property is extremely important and getting the proper coverage at a competitive price is always the goal.

Over the past decade, catastrophic events have occurred throughout Canada, which has put pressure on the overall insurance market. On a micro scale (Calgary and area) we have dealt with the following: A 100 year flood, 3-5 annual wind/hail storms/year, burst pipes, and tenant vandalism.

On a macro scale (Alberta, Canada, Worldwide) we have seen Quebec ice storms, BC Flooding, Fort McMurray Fire, Tornadoes, etc. The list goes on.

How will this impact your insurance?

Whether these claims happen at your property, or in a different City or Province, we are all impacted by these events. Due to the increased costs to pay claims, and the frequency at which claims are happening, you will continue to see your insurance policy rates rise.

What does this mean for Property Management Companies?

Hiring a Property Management Company to manage your rental property has the potential to save you money and get you better coverage than your Insurance Policy if you self-manage. Specifically, Power Properties has worked with Sceptre Pointe Insurance Ltd. to build a Master Insurance Policy. This Master Insurance Policy is only available to clients that sign up for their full property management services. To date, we try to spread the risk of a few properties over their full portfolio. To ensure the Master Insurance Policy remains viable and to offset the increased costs for the upcoming term, we have increased the deductibles to avoid a large annual increase and transfer the bulk of the required increase onto properties that make claims.

Not all insurance policies are created equal…

Through the Power Properties’ Master Insurance Policy, we have been able to secure the following coverage for their rental portfolio. If you are self-managing or with another property management company, be sure to ask your ask about the following coverage:

Replacement Cost Coverage

As long as the rental property is insured to at least 90% of the actual replacement cost, insured losses will be paid out on a replacement cost basis.

Unrestricted Vacancy

Most policies severely limit coverage once a property is vacant for more than 30 days. On top of a decrease in coverage, comes an increase in cost. Power Properties’ Master Insurance Policy allows weekly inspections to maintain coverage.

Overland Water (or Flood) Coverage

This coverage is available to locations that do not fall inside a flood plain. Coverage availability is determined by the rental property’s postal code.

Tenant Vandalism

This is a standard exclusion in many policies. However, the Power Properties’ Master Insurance Policy includes Tenant Vandalism, subject to a $5000 deductible.

All Risk Coverage

Most rental property policies cover you for standard coverage. Look for an All Risk Coverage Policy, which means unless there is a specific exclusion in the wording, coverage is afforded.

Upgrade to Roof or Siding Clause

After an insured claim to the roof or siding, look for an insurance company that will pay towards the cost to upgrade to a more hail resistant material.

Do you have more questions about Rental Property Insurance? Download the Power Properties’ eBook on Rental Property Insurance to learn more.

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