Home Insurance – What You Need to Know

What Kind of Home Insurance Is There?

  • Comprehensive Coverage – applies to both building and its contents (excluding items named specifically in the policy).
  • Basic or Named Perils Policy – covers against dangers that are named in the policy (ie. Fire, earthquake).
  • Broad Policy – provides comprehensive coverage on the building and named perils on the contents (usually cheaper than comprehensive coverage).
  • You can purchase additional coverage (usually in the form of named perils policy) to cover accidental damages not normally covered in a home insurance policy (ie. Sewer back up and furnace oil sills)
  • Renters’ Insurance – landlords are not responsible for the possessions of a tenant. I have seen a case in a condo where the fire sprinkler upstairs was activated and flooded the unit downstairs. The landlord’s insurance and the strata insurance covered the damages to the unit downstairs but not to the tenant’s possessions inside the unit.

How Much Will It Cost

  • Comprehensive coverage will cost the most but will provide the most coverage
  • Name perils policy costs less but may not cover all the damages you could suffer in an accident
  • Ask your insurance broker if you can get discounts for installing smoke alarms, sprinkler systems, monitored burglar alarms or if you’ve been the same insurance company for a long time.
  • The deductible may also affect the price of coverage (the more deductible you pay in case of damages, the less premium. Deductibles range from $200-$10,000).
  • The larger the risk a home carries, the more expensive to get it covered. Risks depend on the age of the home, if it has a wood stove or an underground oil tank, the location whether it is in earthquake zone, number of previous claims, the type of wiring, etc.
  • Some insurers are refusing to cover or renew policies on homes with 60-amp electrical service, aluminum wiring or knob-and-tube wiring.

Other Points to Consider

  1. Request for a homeowner policy once an offer has been accepted because most mortgage lender will require property insurance.
    Insurance companies will review a variety of factors such as certification of the fuel tank and the type of wiring (well and septic systems in rural properties).
  2. Most homeowners believed their policy would provide home replacement of like kind and quality in the event of a major loss but the most common homeowner policies DO NOT cover extra costs caused by code changes and other unexpected costs.
  3. Remember to increase your insurance coverage when your home has increased in value so you are covered because home reconstruction and replacement costs usually increase with home value.
  4. If a home is left unsupervised for an extended period of time, many property insurance policies will consider it empty and will not cover for vandalism or damages caused by an incident such as a water pipe break. Inform your insurance broker is you plan to leave your home vacant for an extended period of time and there is insurance that covers vacant properties.



Source: The Canadian Real Estate Association 2005