The short answer is no. Standard home insurance is not intended for a property that is rented to tenants. If you rent out your home without notifying your insurer, you could face coverage issues or a denied claim.
As an AMF-licensed brokerage based in Montreal, we see the same painful story far too often: a landlord files a claim after a fire or a flood, and the insurer refuses to pay because the home was rented out and never declared. This guide walks you through exactly why that happens, what coverage you actually need, and the simple steps that keep your investment safe.
A lot of Montreal landlords only start asking this question after they have already rented their place out for a year or two. They are usually fine right up until the day they need to make a claim, when it is too late to fix. The whole point of this guide is to help you make one quick call before that day, not after.
Why Standard Home Insurance Stops Covering a Rented Property
The "Owner-Occupied" Rule
Standard home insurance is designed for owner-occupied homes. When you rent out a property, the risk changes because the owner no longer lives there. That change can affect how the insurer assesses and covers the property.
Material Change in Risk (Quebec law)
In Quebec, this is not just an insurance requirement; it is a legal one. Under the Civil Code of Québec (Article 2466), you must promptly tell your insurer about any change that increases the risk they agreed to cover and is within your control. Changing a property from owner-occupied to tenant-occupied is a common example of a Material Change in Risk.
Once you report the change, the insurer may adjust your premium, modify your coverage, or set new terms. If you do not report it, you could face reduced coverage, policy cancellation, or a denied claim.
What Happens if You Stay Quiet to Save Money
Some owners keep their standard home policy after renting out the property to avoid a higher premium. The problem usually appears when a claim is filed.
Imagine a winter pipe burst causes significant water damage in a rented unit. During the claims process, the insurer may verify who was living at the property and whether the rental arrangement was disclosed. If they discover the property was rented out without their knowledge, they may investigate whether there was an undisclosed increase in risk.
Depending on the circumstances, the result could be reduced coverage, cancellation of the policy, or a denied claim. That can leave you responsible for repair costs while your mortgage and other expenses continue.
The solution is simple: speak with a broker before your tenant moves in and make sure you have the right rental property coverage in place.
What You Need Instead: Landlord (Revenue Property) Insurance
If you rent out a property, you need Landlord Insurance, also known as Revenue Property Insurance. It is explicitly designed for properties that generate rental income.
What It Covers
A proper landlord policy protects the parts of the rental that are yours, including:
- The building itself: Foundation, walls, roof, and floors.
- Detached structures: Such as a backyard shed or garage.
- Included appliances: Appliances you leave for the tenant to use, like the fridge or stove.
- Civil liability: Protection if someone is hurt on your property.
- Loss of rental income: This is one of the most valuable parts of a landlord policy. If a kitchen fire makes your duplex uninhabitable and repairs take four months, your tenant may have to move out and stop paying rent. Loss of Rental Income coverage can replace the rent you would have collected during that period.
How Your Coverage Changes Depending on How You Rent
Not every rental is the same, so the coverage you need depends on how you rent. Here are the three most common setups in Montreal.
Renting the Whole Property (Long-Term Lease)
This is the classic landlord setup: you rent out a full house, condo, or unit on a standard 12-month lease.
What you need: Revenue Property Insurance - This covers the building, your liability, and your rental income if an insured event forces the tenant out. It is the foundation every long-term landlord should start with.
Short-Term Rentals (Airbnb and Vrbo)
If you rent for stays of 31 days or less, you are no longer just a landlord. In the eyes of Quebec, you are running a small business.
Short-term rentals are regulated by the Corporation de l'industrie touristique du Québec (CITQ), the provincial body that registers tourist accommodations, under Quebec's Tourist Accommodation Act. To hold a valid CITQ registration, hosts must carry at least $2,000,000 in civil liability coverage per event. Civil liability simply means coverage that pays out if a guest is hurt or their property is damaged and you are found responsible.
Here is the trap many hosts miss:
Airbnb's Host Liability Insurance does not satisfy Quebec's mandatory $2 million liability insurance requirement. The legal responsibility to carry compliant coverage falls on the host.
Standard home insurance policies are typically not designed for short-term rental activity and may deny claims related to paying guests unless the insurer has approved the use and provided appropriate coverage. To operate legally and protect yourself financially, you should obtain insurance that specifically covers short-term rentals and meets Quebec's requirements. If the property is a condo, you may also need authorization under your condo association's rules before registering the rental.
Renting a Room or a Basement Suite
Maybe you still live in the home but rent out the basement to a student, or you rent the upper floor of a duplex you own. This feels small, but it still changes your coverage.
If that rented space has its own kitchen and its own entrance, insurers do not treat it as a simple roommate setup. They see it as a separate unit with its own risk. If a fire or flood starts there and you never declare it, you can face a reduced payout, or a denied claim, for under-insuring the property.
The good news: you usually do not need a full commercial policy. A simple rental endorsement, a small add-on to your existing home policy, can extend your coverage to include the tenant's space, affordably.
Does Home Insurance Cover a Rented-Out Condo?
Renting a condo trips up a lot of owners, because two policies are in play at once.
Your condo building has a syndicate of co-owners policy (the master policy). This is the shared insurance that the building's owners pay into together. It covers the shared structure, including the roof, exterior walls, and common areas, but it does not cover the inside of your unit, your liability as a landlord, or your lost rent.
So even as a condo owner, you still need your own landlord condo policy. It protects your unit's improvements (flooring, cabinets, fixtures), your civil liability, and your rental income if the unit becomes unlivable. Many condo buildings in Montreal also have bylaws about renting, so it is worth checking your declaration before you list the unit.
What Landlord Insurance Does NOT Cover
Knowing the limits is just as important as knowing the coverage.
Your Tenant's Belongings
This is the single biggest point of confusion. Landlord insurance covers your building and your liability. It does not cover your tenant's furniture, clothing, electronics, or other personal belongings.
So if a fire damages the unit, your policy pays to repair the building, but it does not cover the tenant's lost belongings or their temporary living expenses while repairs are being completed.
Why Your Tenant Needs Their Own Insurance
Tenant insurance helps protect a renter's personal belongings, liability, and additional living expenses after a covered loss. Without it, a tenant may have limited protection if their belongings are damaged or the unit becomes uninhabitable.
The smart move is to make tenant insurance a written condition of the lease. Require the tenant to carry renter's insurance with at least $1,000,000 in liability coverage and ask for proof before handing over the keys. This helps ensure the tenant has their own protection in place and clearly separates their coverage from yours.
How Much More Does Landlord Insurance Cost?
Landlord insurance typically costs about 15% to 25% more than a standard home insurance policy, although the exact premium depends on the property, location, and coverage selected. In return, it provides coverage designed for rental properties, including liability protection and, in many cases, loss of rental income coverage when a covered event makes the property uninhabitable.
The additional cost is often small compared with the financial risk of carrying the wrong type of insurance on a rental property.
Many mortgage lenders may require appropriate insurance coverage for rental properties. Landlord insurance premiums are also generally deductible as a rental expense in Canada, although you should confirm the details with your accountant or tax professional.
Simple Steps to Protect Your Rental Property
Keep it easy. Follow this short checklist:
Call your broker before the lease starts - Update your insurance to the appropriate landlord or rental property coverage so there is no gap.
Add the right water protection - Ask for water damage and sewer backup coverage to handle Montreal's freeze-and-thaw winters.
Require tenant insurance - Include the requirement in the TAL lease and ask for proof before handing over the keys.
Match the rental type - Long-term, short-term, or a single room, make sure the policy fits how you actually rent.
Need Help With Rental Property Insurance?
Protecting a rental property starts with having the right insurance in place. Whether you're purchasing a new investment property, renting out your current home, or reviewing an existing policy, professional guidance helps you make informed decisions.
Disclaimer: This guide is for general information only. Policy wordings, exclusions, and conditions vary by insurer. Always speak with an AMF-licensed broker at qubitinsurance.ca to review your specific property and arrange the right coverage under Quebec law.
Frequently Asked Questions
Can I keep my home insurance and just tell my insurer my tenant is a "friend"?
No. Giving your insurer inaccurate information about who lives in the property can create serious coverage issues. If the property is being rented out and was not disclosed, you could face reduced coverage, a denied claim, or cancellation of your policy.
How much more does landlord insurance cost than home insurance?
Usually about 15% to 25% more. That increase pays for wider liability coverage and the rental income protection that keeps your bills covered if a tenant has to move out during repairs.
Does landlord insurance cover damage a tenant causes on purpose?
Standard landlord policies do not cover intentional damage or vandalism by a tenant or their guests. This is a known gap, and it is easy to close. Ask your broker about coverage options that may help protect against this risk.
Read More - Hiring an Insurance Broker in Montreal
I only rent out my basement. Do I still need to tell my insurer?
Yes. If that basement has its own kitchen and entrance, insurers often treat it as a separate unit. Not declaring it can lead to a reduced payout or a denied claim if something goes wrong. A simple rental endorsement usually fixes this.
Do I need special coverage for an Airbnb in Montreal?
Yes. Short stays of 31 days or less count as business. Quebec's CITQ rules require at least $2,000,000 in civil liability per event, and your standard home policy will not cover guest claims. Important: Airbnb's host protection does not replace the insurance required under Quebec law. You should have insurance specifically designed for short-term rentals.
I have already been renting my place without telling my insurer. What should I do?
Act now. Call your broker, explain the situation, and update your coverage as soon as possible. The sooner your policy reflects how the property is actually being used, the lower the risk of coverage issues if a claim occurs.
