A beginner’s guide to home insurance coverage
A beginner’s guide to home insurance coverage
You did it. You finally did it.
You’ve bought a house for your family, a place to call your own. Memories will be made there, and you will have something to leave behind to your children.
So, I guess that’s it then, right? Not so fast.
Before you can carve out new memories and start a new chapter under your new roof, you need to think about the intangibles.
You need house insurance.
I know, it seems like a tedious task. After all, what could possibly happen to a house that is as cherished as much as yours? Well, the answer is almost anything, and the fuel for you to attain homeowner’s insurance is the love you have for your home.
WHY DO YOU NEED HOME INSURANCE?
Getting home insurance allows you to protect the investment you have worked so hard to build. Moreover, it protects the contents within the home as well. Without proper homeowner’s insurance, one natural disaster, or one home break-in, can saddle you with debt, stress, and a lack of resources to help you get out from a tragedy.
Insurance allows you to spend more time building other aspects of your life and less time worrying about things outside your control.
WHAT TYPES OF COVERAGE ARE AVAILABLE?
COMPREHENSIVE POLICY
This is the top tier of home insurance policies, covering almost everything conceivable, including all contents and personal liability. It is important to remember that even a comprehensive policy most likely does not cover things like floods or earthquakes. Those types of natural disasters require a policy specific to those causes.
BROAD POLICY
This second-tier coverage will protect homeowners from loss or damage by covering the costs to repair damages or to rebuild sections of the home if the damage was caused by named perils inside your policy.
FIRE POLICY
A fire policy covers damage and losses incurred by fire. Exclusions include perils such as warfare and nuclear risks.
WHAT ABOUT SPECIALTY INSURANCE?
Specialty insurance, a type of coverage meant for unusual or higher-risk accounts, often involves unusual items, one-off events, or commercial property. Most people do not secure this type of coverage unless they have very specific needs that cannot be met under the other three standard types of home insurance.
TOP 5 FREQUENTLY ASKED QUESTIONS
1 – WHAT HAPPENS WHEN I MAKE A CLAIM?
It is important to research the type of policy options that exist so that in the event you have to make a claim, you understand the ramifications of said claim. Most often, making a claim results in losing a claims-free discount you may have negotiated, or perhaps you have calculated that in the long term, a claim will result in losing more money than any loss items or damage could incur.
2 – SHOULD RENTERS GET HOME INSURANCE?
Mostly referred to as contents insurance, renters have a decent incentive to purchase insurance in order to make sure their possessions can be replaced in the event of a burglary or disaster. This type of insurance can also prevent expensive lawsuits should someone injure themselves while inside your home.
3 – ARE POLICIES NEGOTIABLE?
As a general rule, brokers are there to negotiate with, and home insurance is no different. Ultimately they just want your business, so if you try to reasonably barter, you might find some savings or discounts.
4 – MY HOME IS OLD. WILL THIS IMPACT ME NEGATIVELY?
Insurance companies will keep in mind the age of your home when it comes to certain obvious considerations, such as wiring or how old the roof might be. A full inspection might be in order for you to obtain the type of policy that is right for you.
5 – WHAT IS OPTIONAL COVERAGE?
Optional coverages are additional types of coverage you can sometimes add to an existing policy. Things like earthquakes or sewer back-ups often get left out of these three main policies. That said, there are many brokers out there willing to help you navigate the waters until you can find what is right for you.
PITFALLS TO WATCH OUT FOR
First and foremost, don’t forget to shop around. Some brokers rely on customer ignorance to make sales, often saddling unsuspecting clients with policies that are not a good fit, to say the least. Next, make sure you choose the right amount of coverage for your situation. For example, let’s say you are looking for home insurance in Ontario.
Let’s also say that your contents coverage is set between 50-70%, so if you are covered for $100, 000 for your dwelling, your contents coverage will be between $50, 000 – $70, 000. It’s a good idea to create a home inventory before you start looking for insurance, and go in with the information readily available.
And don’t forget to update your policy when needed. Life can change rapidly, and being stuck with a policy that no longer suits your needs can spell disaster if something tragic happens.
