Having 50 or 100 tenants sign onto a single insurance policy is an interesting concept, but there are dangers, says one Toronto broker.
“It’s an interesting idea, and in a smaller scenario of two or three tenants it would work,” says Jonathan Fraser, a broker in personal lines at BrokerForce Insurance in Toronto. “But a problem I can see with insuring every tenant in a large high rise is being on the hook for the entire loss if the building is damaged by fire, for example.”
Although the appeal of being able to tap into a large pool of clients through one contact – the landlord – may appear appetizing, there are also concerns about having that same landlord effectively become an agent for the brokerage.
“We have a trust fund and we are insured, with full errors and omissions coverage,” Fraser says. “But if you have the landlord collecting all of these cheques for the insurance, and he or she fails to maintain the policy for whatever reason – that opens up quite a bit of liability.”
What is encouraging is the more proactive approach landlords are taking towards properly insuring tenants, Fraser told InsuranceBusiness.ca.
“Landlords are now requesting that tenants carry insurance more and more I’ve noticed,” he says. “So many renters don’t understand the implications of not having insurance. And it goes beyond just simple content coverage – it is what people focus on, but that is the least worrisome (aspect). Where do you live if your appliance catches fire and you are out on the street? That should be explained to every client.”
Ironically, while Fraser sees landlords becoming more vigilant on ensuring tenants carry insurance, condominium owners are much more laissez-faire.
“They aren’t really concerned about coverage for the individual unit; maybe it is a mortgage thing,” he says. “But coverage for an entire building, it is an interesting concept, and worth a conversation with those involved in the commercial end of the market.”
