Many Canadian homeowners have home insurance policies. Unfortunately, most of them only have a vague idea of what their policy covers. Some also have many misconceptions about their coverage.
If you have home insurance, it is important to understand the terms and conditions of your policy, the inclusions and exclusions.
Today, many homeowners carry comprehensive home insurance covering building, contents, liability, and living expenses all in one policy. It pays to have the right coverage for each category.
Before we differentiate these 2 types of coverage, let’s first clarify what is risk.
Based on this definition, a named peril is a risk specifically indicated in the insurance policy. Named perils are covered while anything else not named is excluded. The most common perils for home insurance are fire and theft.
Further, only unforeseen perils are covered. Damage due to negligence or poor home maintenance and normal wear and tear are not covered.
When buying home insurance, there are 2 basic things that you need to consider – the risks you want coverage for and the price of your premiums.
Most insurance policies cover the following perils under a standard home insurance policy:
This standard home insurance coverage is the simplest and cheapest you can find. It comes with coverage for your personal belongings under named perils. It also comes with liability insurance which provides protection of the homeowner from expenses due to damage caused to other people’s property or injury to others.
All-risk home insurance coverage covers all perils in a standard policy plus more. Although it says all risk and comprehensive, there are exceptions in the policy. This type of coverage is more expensive than named peril policy as it provides protection from many types of risks.
Some of the common perils included in an all-risk policy include:
It is important to note that perils in an all-risk policy differ from one insurer to another.
For example, water damage claims are on the rise in Canada. Some insurers include it in their comprehensive coverage while others offer it as an additional cover.
Water damage is also a contentious issue because while most homeowner policies will cover accidental damage from burst pipes or heaters, they won’t cover it if the cause is wear and tear.
Whether you have named perils or all risk insurance coverage, there are exclusions. The most glaring differences between the 2 types is the number of perils included and the cost.
War, political events, riots, and nuclear accidents are not covered. There are also simple risks like damage from wear and tear and gradual depletion that are not covered.
It is always possible to obtain additional coverage for some exclusions. Earthquake and flood are not normally covered by home insurance and requires a separate policy.
Called a rider or endorsement, you can choose additional coverage by paying for that risk.
Home insurance actually covers many perils you may not even have thought of. To learn more about home insurance coverage, check out things you didn’t know are covered by your home insurance.
You can customize your home insurance policy with optional cover beyond the basics.
Below you can find more options for coverage you can get that are not usually covered even by all risk home insurance policies.
Water damage is becoming the number 1 threat to homes in Canada. Your home can be covered for water that seeps in because of failed sump-pumps, water main breaks, or sewer back-ups.
This optional coverage can compensate you for damage caused by an earthquake. It won’t cover damages after the earthquake. For some insurers, earthquake insurance is separate.
If you own property such as collectibles, jewelry, or other high-ticket items, you can get property endorsements to increase the amount of your coverage.
Most insurance companies have a limitation for personal property lost due to theft. You can expand the amount of coverage by purchasing additional theft coverage.
Most insurance providers don’t include watercraft and RVs in home insurance. Auto insurance also don’t generally include them. You can obtain a rider for an RV or watercraft in your home with your home insurance.
Are you running a business straight out of your home? You have additional risks in case of a fire, especially if you keep valuable inventory, software, or equipment for your business in your home.
Speak to your insurer about what your home insurance will cover for computers, laptops, etc. If not adequate, you can obtain a rider to your home insurance policy.
This is a tough question because there is no uniform answer to it. The cost of all risk home insurance will depend on critical factors including:
Insurers use these factors to calculate the cost of your all-risk insurance coverage. Costs between insurers vary because policies also vary in terms of coverage and exclusions.
The best way to get the actual cost for all risk home insurance for your property is to obtain your free home insurance quote.
One of our partners – all insurance agents and brokers – will be happy to assist you with your home insurance needs.
One of the most important components of your home insurance is the replacement cost stated in your policy.
If misfortune strikes and your house burns down, what would it cost to completely rebuild it?
You are counting on your home insurance to help get you through a very disastrous event and recover everything you have lost.
Thus, it is critical to know if you are covered for the actual amount it would take to rebuild or there is a maximum amount stated in your policy.
Guaranteed replacement policy means the insurer will replace your home, regardless of cost. This applies to the same size of home and same quality of materials. This is critical because rebuilding cost increases every year. This type of policy is more expensive and older homes may not qualify.
Straight replacement policy means the insurer will replace your home up to the maximum amount of the policy. If the actual cost exceeds the amount provided by your insurance cover, you will be responsible for the difference.
It is a good idea to talk to an insurance broker or insurance agent to know your best options. They can also clarify any questions you may have about the amount of home insurance you need.
Not a few people have neglected their home insurance and lived to regret it. It is important for you to have the right level of insurance for your home and to be protected from the perils your house is exposed to.
After all, your home is your most important investment. It is also the place you love the most, you very own sanctuary. You need to make sure that when something bad happens, you have the resources to repair or rebuild it.
We know home insurance premiums are expensive and you want to save money. But don’t compromise on home insurance for a few dollars.
There are simple ways to save on home insurance costs without putting your house on the line.
Have you decided on what you need for your home insurance?
We know you are busy. It takes a lot of time to go through various insurance websites, talk to different brokers or agents on the phone, just to find the best home insurance.
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