Protecting Your Abode: 6 Homeowners Insurance Tips You Need To Know

By: Thomas Sigsworth on June 24, 2013

There are so many questions surrounding homeowners insurance. Even the term itself poses a quandary: does it have an apostrophe, or not? Homeowners/Homeowner’s/Homeowners’? Most insurers leave out the pesky apostrophe, so at that’s how we roll.

Spelling aside, many Canadian homeowners simply don’t have the insurance protection they think they do, and most probably overpay for their policy.

A recent poll commissioned by the Insurance Bureau of Canada (IBC) found that Canadians don’t know much about homeowners insurance. For example, only 36 percent of respondents correctly answered that overland flooding isn’t covered by a typical policy, and even less – 10 percent – knew that sewer backups don’t qualify for coverage under most house insurance plans. Worse still, many owners bought the first policy they set their eyes on.

At we want Canadians to be well-informed about their insurance plans.  Below are some tips to keep in mind if you’re currently shopping for homeowners insurance or are looking at renewing your policy.


Tip #1: Compare Rates!

Yes, a comparison site is advising you to compare insurance rates – shocker. But whether it’s using an online site or making old-fashioned phone calls to different insurance agents, the fact is, comparing offers is really important. How else will you know if you’re getting a great deal? Studies show that similar insurance policies can vary in cost by more than 30 percent. Why pay more for the same coverage?


Tip #2: Choose a Replacement Cost Plan.

Insurance agents may try to steer you toward an “actual cash value” plan, but replacement cost plans are usually the smarter choice. Replacement cost plans pay the actual dollar amount required to repair or replace your home and the contents inside it.  Actual cash value plans, on the other hand, factor in depreciation and only pay out the amount that the materials and possessions were worth at the time they were damaged. With an actual cash value plan, the end result is that you’ll need to make up the difference out-of-pocket if you want to replace your damaged items.


Tip #3: Read the Policy’s Coverage – Carefully.

Canadians are often surprised to learn that some relatively common perils are not covered by standard homeowners plans. Flooding, storms and earthquakes are excluded from many plain vanilla homeowners policies, even though they occur quite frequently. That’s why the importance of going over your plan’s coverage with a fine-toothed comb can’t be overstated – you don’t want any surprises.

You should also note what kinds of liability claims are covered in the policy, and whether or not you have coverage for medical or other types of expenses arising from an accident in your home.

So-called “comprehensive” homeowners policies cover the broadest spectrum of perils, while “basic” plans usually only cover named perils – that is, only perils actually stated in the policy.


Tip #4: Buy Extra Coverage.

This tip particularly applies to liability coverage. Many policies only cover a maximum of $100,000, which isn’t enough to pay a serious liability claim.


Tip #5: Document Valuable Items and Home Improvements.

Take an inventory of your belongings and make sure you list all high value items, like collectibles, jewelry and antiques. If the items are exceptionally valuable, you may want to get an endorsement from your insurer, where a qualified appraiser determines the dollar value of the items and submits a report that is confirmed by the insurance company in writing.

Also, if you bought your policy a while ago and have made updates or improvements to your home like, say, a kitchen renovation, make sure your policy’s coverage reflects the current value and replacement cost of your updated dwelling. You’ll want enough coverage to pay the cost of replacing your improved home!


Tip #6: Ask Your Insurer About Discounts.

House insurers offer all kinds of quirky discounts. Take full advantage of them by asking your provider how you can lower your annual premiums. Many insurers give discounts of 5 percent or more if your dwelling simply has an alarm system. Close proximity to a fire hydrant could also bring you savings on your policy, as could having your mortgage paid off. Always make sure your insurer is giving you all the discounts you are eligible for.

Having a good homeowners policy isn’t just a luxury, it’s a necessity, and keeping these tips in mind will help you find insurance that gives you broad protection at a price you can afford.