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About home insurance in Canada
For most people, their home is their single most prized and valuable possession. This is why it is so important to make sure you protect it with the appropriate insurance coverage. Make sure you understand what type of home insurance you are buying, who or what is covered, exclusions, policy limitations, how much coverage is provided and how to report a loss or claim.
Why have home insurance?
Home insurance reimburses you for your financial loss arising from accidental losses such as fire, vandalism and water damage. Home insurance also ensures you are protected against lawsuits arising from your personal actions or ownership of your property. Most banks and mortgage companies will insist that you purchase home insurance before lending you money to buy a home or condo.
If you are renting an apartment, room or house, tenants insurance offers two kinds of coverages; liability and contents. Liability coverage will protect you from your personal actions where you are held responsible for damage to the building or injury to others who live or visit your rented premises. Contents coverage reimburses you for loss or damage to your personal belongings arising from insured perils including fire, smoke and theft.
Different types of home insurance policies
Home insurance policies usually come in three forms. The Basic homeowner’s package is ideal for individuals looking to save a little bit of cash. This package provides coverage for your house, contents and liability. Basic home insurance provides coverage on a named perils basis.
If the Basic homeowners coverage seems to minimal, you can upgrade to the Broad homeowners package. This policy provides all risk insurance coverage to your home and named perils coverage to your contents. This package is typically priced higher than the Basic homeowner’s package.
The most inclusive (and typically, expensive) home insurance coverage you can purchase is called a Comprehensive homeowners package. This policy provides all risk insurance coverage to your home and contents.
In all cases, it is important to review the policy wordings as there are certain situations not covered under all risk insurance.
What does home insurance cover?
Building & Detached Structures - Depending on where you live, and the type of home you live in, home insurance coverage will vary. If you own a house, your home insurance policy will cover your house and any detached structures, which includes a garage or shed.
Personal Property - Your home insurance policy will also cover your personal contents such as your appliances, clothing, electronics and jewellery.
Additional Living Expenses - If your home was deemed unfit to live in or you were denied access into your home by the police or civil authority as a direct result of damage by an insured peril (e.g., fire, smoke, water damage), your home policy offers coverage in the form of “additional living expenses”. Your home insurance policy will reimburse you for the additional living expenses while living away from home.
Legal Liability - The legal liability portion of your home policy will protect you against lawsuits arising from your personal actions or ownership of your property. For example, it will protect you if a visitor were to slip and fall on your driveway because you failed to shovel a build up of ice and snow.
What determines the cost of home insurance?
There are a wide variety of factors insurance companies consider when deciding how much to charge you for your home insurance. Insurance companies analyze these factors and determine the likelihood that you or a group of people with the same set of circumstances as you will make a claim and how much it will cost. Some of these factors include:
• Where you live
• Type of heating source
• Type of electrical distribution
• Pipes
• Age of roof
• Primary use of your home
• Your claims history
• Proximity to fire hydrant and fire station
• Proximity to surrounding businesses
• Cost to rebuild your home