Home insurance and subletting: What you need to know

Subletting your dwelling is different from transferring your lease. The concepts are very different. When you transfer your lease, you lose the right to return to your rental. You will need to find another tenant to take over your lease as of a specific date. If your landlord approves the lease transfer, you’ll be released from any further obligations under the lease.

At first glance, subletting can seem like an attractive option. You may want to sublet your place to manage your regular housing expenses while you’re off on your new venture. But keep in mind that your responsibilities as a tenant do not disappear!

When you sublet, you are still considered the tenant even if you’re not living in the unit. You’re still responsible for paying rent and covering the cost of any damage. You also retain the right to access your place. If your subtenant fails to pay rent, you’re the one who’s on the hook. And like a lease transfer, the landlord has the right to refuse a sublet. There are two main types of sublets: long-term and short-term.

Home insurance: What does a long-term sublet involve?

With a long-term sublease, you normally intend to return to your home at some point in the future. By subletting it, you effectively become a sublandlord. And you become the main contact person for your tenant. As mentioned earlier, you are still responsible for your place and you retain your rights to it. After you’ve found a subtenant, you will have to notify the landlord by means of a sublease notice, which is available on Quebec’s Tribunal administratif du logement website.

However, your existing home insurance will not cover your subtenant. Tenant insurance only applies to the tenant named in the policy, not to everyone living in the space. Not only are you required to inform your insurance provider of the change, the insurer will have to assess the risks of the new arrangement. The new occupant will need to purchase their own home insurance policy to ensure they have coverage.

Home insurance: What does a short-term sublet involve?

Platforms like Airbnb and Vrbo make it easy for hosts and guests to connect. Renting out your place through these services for short periods is considered subletting. But be careful! Some cities prohibit this type of rental, so make sure you check your local regulations before posting your listing.

In many cases, short-term rentals are not covered by home insurance if they exceed a total of 30 days per calendar year. Regularly renting out your place for financial gain is considered a business activity, which is not covered by a standard tenant’s insurance policy.

Your insurer may require you to add a short-term rental endorsement or rider to your policy to cover potential property damage by guests or civil liability if a guest is injured during their stay. Home-sharing platforms offer additional insurance, but it doesn’t replace your own home insurance—it’s typically the second payer on any claims!

Subletting: The Tribunal administratif du logement keeps a watchful eye

In this webinar, the Tribunal administratif du logement covers everything you need to know about transferring your lease and subletting your home. The Tribunal also dispels some common myths on the subject. For instance, contrary to popular belief, a tenant cannot break their lease at any time for any reason by giving 3-months’ notice.

Mishaps can occur, of course, while you’re a tenant. Before you decide to sublet, your trusted insurance provider is a valuable resource to consult to avoid finding yourself in a tricky situation, like dealing with an uninsured subletter!