Tenants Insurance – Worth it?

A couple weeks ago I got my renewal letter from Wawanesa for our tenant’s insurance. It is awfully expensive: $516.00/year. I have the letter right here so I’ll summarize what that covers:

  • Rating information: tenants package broad form, commercial occupancy, metro A, frame, more than six apartments, within 300m of hydrant, within 13km of firehall, deductible $500 Section I, 0.5% inflation protection, replacement cost of contents section I Coverage C
  • Property coverages:
    • Property coverages: Personal Property $30,900 and additional living expense $6,180
  • Liability
    • Legal liability: $1 million each occurrence
    • Voluntary medical payments: $5,000 each person
  • Additional
    • Sewer backup/water damage
    • Replacement cost on contents

The $30,900 personal property is the minimum. I am pretty sure our personal belongings are worth less than that. We didn’t bother to insure extra items like jewellery because my parents said they have never had their jewellery insured because as they said, “they don’t have much jewellery, and they are always wearing their wedding/engagment rings.” If my wife starts taking her ring off for work or something, then maybe we will list it.

I bought tenant’s insurance in Waterloo, Ontario before and it was only about $150/year or so. But this is Vancouver, in an urban area and the other thing that I think made ours more expensive was the fact that it is in a “commercial occupancy” dwelling. Essentially, we have businesses below us, including a coffee shop and a Bikram yoga place (Bikram yoga has something to do with sitting in a sauna and sweating, so I guess the fire risk in a sauna would be high). My family was robbed while we were sleeping when I was younger. Our computer was stolen as well as a few other electronic items. We got covered for everything which was nice, not only that but we got replacement value for them so we were able to buy a brand new computer that was much better than the old one. Robbery is one of the main things I am worried about. Our building does not feel overly safe compared to some of the places I have seen in Yaletown or anywhere else for that matter. I guess fire would have to be the other. $500/year does seem like a lot, especially compared to what I used to pay in Ontario, but it is nice to have the peace of mind that if one day something very bad should happen that financially we will be ok.

Extended Warranties

I just got back from The Source by Circuit City (aka Radio Shack Canada) and had to share this story. I bought a simple 20′ stereo extension cable for $19.99. I couldn’t believe my ears when the clerk asked me if I wanted to buy an extended warranty for the cable! He said that for something like $2 I could get an extended warranty and that should anything happen to the cable over the next 3 years I could get a replacement. The day they start selling extended warranties for cables is the day that extended warranties are exposed for being the scams that they are. I should have left the store right then but the whole reason I went there is because it is within walking distance from where I lived and I didn’t feel like shopping around, even though $20 was expensive for this cable. One of the reasons I went to The Source is because I don’t like to shop at Future Shop (because I hate their commission sales people and their rebates and extended warranty rackets). It looks like everyone (not just Future Shop) is selling extended warranties these days, to squeeze out every last penny they can. I bought a Palm device for my wife this Christmas at Staples (specifically to avoid Future Shop) and was propositioned with an extended warranty there as well.

I have never bought and extended warranty and never will. It only takes a little bit of common sense to realize that extended warranties are never a good idea. This CBC Marketplace article, “Extended Warranties: Deal or Dud?” examines extended warranties in detail. The final conclusion is pretty unanimous:

As a general rule, extended warranties aren’t considered a good investment. Consumer Reports, the Better Business Bureau, Canadian consumer organizations, and the Federal Trade Commission as well as the chartered accountant we spoke with, all caution consumers against purchasing extended warranties.

The nail in the coffin for me was this data:

Consumer Reports says only 12 – 20 per cent of the money paid for extended warranties is ever used to pay for repairs or claims. The other 80 to 88 per cent of money goes into the profit margin of the third-party/manufacturer.

And some final useful advice,

Our expert, Tod Marks, advises people thinking about an extended warranty to save the money and put it into a repair fund — just in case. “An extended warranty is good for the retailer. It’s not good for the consumer.”