New Aviva Canada partnership targets rent deposits

Aviva Canada has partnered with technology company RentHaven Inc. to offer tenants a product that provides an alternative to large upfront security and last month’s rent deposits through a surety bond.

Underwritten by Aviva Insurance Company of Canada, the surety bond from Oakville, Ont.-based RentHaven replaces traditional cash deposits with the Aviva-guaranteed bond. The insurer calls the product a first in Canada.

It works through RentHaven’s partnerships with landlords to offer the bond for an $8 to $20 monthly fee to the tenant, driven by the rent amount, Andy Armstrong, Aviva Canada’s head of developer surety & home warranty, told Canadian Underwriter Thursday.

“As we grow and write more policies/bonds, we aim to bring this amount down and to pass on savings of low defaults to tenants,” he said. “Our landlord partners are able to provide a low-cost and scalable bond product as a result of a low claims rate.”

Here’s how it works: Through Aviva’s landlord partners, prospective tenants are offered the choice to provide a traditional cash security deposit or select the RentHaven product when they sign a lease. Once the tenant signs up on the app, the landlord receives a copy of the Aviva bond and is protected from any default of the tenant up to the amount of the bond.

“As an example, this represents one month of rent in Ontario and half month’s rent in British Columbia,” Armstrong said. The product is offered in these two provinces, with more provinces slated for early in 2024.

The project will be available nation-wide, and several institutional and private landlords are already lined up to partner with the insurer. The product is currently not linked to a tenant’s insurance policy but offered at the point of a tenant signing a lease from their landlord.

Armstrong said the process for both parties is quick and powered by an easy-to-use technology platform. When signing up to the platform, tenants can consent to their information being forwarded to RentHaven by way of a simple waiver.

“In most cases, if the landlord is satisfied through their own background and screening process, which typically involves references, proof of employment/income, credit checks, etc., then tenants don’t need to undertake additional verification checks to register,” Armstrong added.

Armstrong estimated one-third of Canadians are renters “and represent an underserviced market.” With the housing and rental markets impacted by economic factors, the product help renters with not having to pay large upfront deposits and also protects landlords from unpaid rent.

“The traditional model of cash deposits is antiquated and inefficient, especially at a time when pressure on renters is at an all-time high and so many are under financial strain,” RentHaven CEO Ian MacLeod said in a press release.

While common in the U.S., U.K., and Europe, there are currently no rent deposit alternatives in the Canadian market, Aviva reported.

 

Feature image by iStock.com/Iryna Drozd