Buying a home tends to be the biggest investment in many people’s lives. As a result, protecting it is top of mind for every homeowner, whether it’s your first place or your forever space. But what’s the best approach to making sure you’re protected? Through home insurance, of course. In this post, we’ll explore what home insurance is, what it covers, and how much it might cost you. Let’s get started:
What is Home Insurance?
Home insurance is a form of coverage that protects both the physical structure of your property, such as your house and garage, and your personal possessions within it, such as furniture, appliances, tools, and jewelry. It provides peace of mind that your property is protected in the event of the unexpected, such as natural disasters or human-caused accidents.
This type of insurance combines personal insurance coverage—addressing the loss of the home’s contents or the use of the home—with liability insurance—which provides coverage for accidents occurring on the property.
What Does Home Insurance Cover?
Broadly, home insurance protects against personal loss and property damage. Let’s get into what that means:
-
Property damage. If your home is damaged due to an unforeseeable event, whether that’s extreme weather or a tree falling on your house, property damage coverage can help with the costs of things like roof replacement or fixing water damage. Remember that this coverage can vary depending on location – in areas like Saskatchewan, which are prone to flash floods, the average home insurance plan no longer covers flood damage, you may have to purchase additional coverage for that. Ensure you read your policy and understand what damage is covered before something happens.
-
Loss (or theft) of contents. This will help cover the cost of any stolen items should a break-in happen or items damaged in other ways, like a fire. For more expensive and valuable items, like art or jewellery, you may want to consider getting additional coverage.
-
Personal liability. This will help cover legal or medical costs should someone be injured on your property. It can also help cover any damages you cause by accident to someone else’s property.
-
Additional living expenses. If extensive damage should happen to your property, this will help reimburse any expenses from staying in a hotel or rental while repairs are being done or searching for a new home. It can also help cover the costs of meals relative to your regular grocery expenses.
When setting up your insurance policy, you can choose between replacement cost coverage and actual cash value coverage for claims. Replacement cost coverage ensures that if something is damaged, like a window, the insurance plan will cover the full cost of replacing the damaged item. On the other hand, actual cash value takes depreciation into account, meaning the reimbursement might be lower than the original cost or the cost to replace the item. This is because items like a house may lose value over time.
It’s important to know your home insurance policy inside and out. That way, if you need to make a claim, you know exactly what is covered. Not all home insurance policies look the same, so consider the type of coverage you need to determine what you might not require your policy to cover.
Do You Need Home Insurance?
Most mortgage lenders mandate home insurance as a loan condition. However, purchasing home insurance is advisable even if you’re buying a home without a loan, due to the potentially high costs of repairs and replacements.
If you’ve had tenant’s insurance in the past and never needed to use it, you may wonder if you even need home insurance, but tenant’s insurance only covers your belongings. Any damage to the property would have been handled under the property owner’s insurance, even if it was inside your unit.
It can be difficult to navigate what types of insurance you need, especially if you’re a first-time homeowner, but you can find insurance bundles that include things like car, health or life insurance to help simplify your coverage.
Types of Home Insurance
While researching different insurance providers, you may see they have different names for the types of insurance they provide. Generally, these will fall into three categories:
Basic Form
The only things protected under basic form insurance are those outlined in your policy. This is often used for seasonal properties as it’s more cost-effective, but the financial risk is higher if anything should happen.
Broad Form
As the middle tier, broad form home insurance will cover major damages to the house and property, with more basic coverage for the contents outlined in your policy.
Comprehensive form
This is the most common type of home insurance, also known as ‘all risk’ insurance. Aside from any exceptions outlined in the policy, it will cover your home and belongings from all forms of damage and loss.
How Do You Choose Home Insurance?
Home insurance is far from being ‘one size fits all,’ so you need to figure out what you need from your home insurance before you decide on the right policy. Here are some questions to help you narrow down your choices:
-
What belongings do you need to be covered?
-
Are you a business owner? If so, does the policy you are considering take into account your work needs?
-
Have you thought about adding on life and health insurance?
Working with an insurance broker is a great way to understand what policies are available to you, and customize an option that works best for your needs. When searching for a broker, it’s important to note:
-
How much experience they have,
-
How many insurance companies they work with,
-
Their method for selecting policies to recommend,
-
The additional services they offer,
-
If they have references.
How Much Does Home Insurance Cost?
The cost of your home insurance depends on a few different factors:
-
Location.
-
The replacement cost of your home.
-
Type of coverage (keeping in mind that comprehensive form is more expensive than basic form).
-
Your deductible, which is the amount you will pay if you make a claim.
-
Property usage, meaning if the home is used as a rental or to run a small business.
-
Structures on the property, such as pools or storage sheds.
There are things you can do to reduce the cost of your home insurance without compromising on protection, such as:
-
Finding discounts that you’re applicable for, such as a first-time home buyer or retiree discount.
-
Comparing quotes and shopping around.
-
Using an insurance broker to help you navigate different lenders and policies.
-
Combining coverage like car or life insurance.
At Rowat Insurance, we want to help you find the best home insurance coverage to help protect you and your family. Contact us today to find out how we can help, and our experts will be happy to answer any questions you have.