- Home insurance is property insurance that protects your dwelling against losses or damages.
- Depending on which type of home you’re living in (e.g.., house, condo or rental), you’ll need a different type of coverage.
- Most lenders won’t release your mortgage funds until you’ve purchased a home insurance policy.
- Home insurance will cover your personal belongings, living expenses should you need to live somewhere else while your residence is being repaired and your personal liability.
- Home insurance won’t cover damage that was caused by neglect, nor will it completely cover high-value items like jewelry or art. Enhanced options for items like these are available if you need them.
What is home insurance?
If you’re reading this guide, there’s a good chance you’ve just bought a house or condo and you’re looking for your first home insurance policy. But, understanding home insurance can be tricky, so we consulted our experts to create this comprehensive guide. Let’s start at the beginning.
Home insurance is a form of property insurance which protects against any losses or damages against your home. While it’s not mandatory to purchase home insurance in Canada, you’ll be hard pressed to find a lender who’ll give you a mortgage without it. A lender won’t release your mortgage funds until they’ve confirmed that you’ve purchased a home insurance policy.
There are three different types of insurance you can purchase in Canada if your goal is to insure your primary residence; home insurance, condo insurance and renters insurance.
Home insurance: A home insurance policy generally covers your property, the structure of your home and the contents inside. It will also cover your liability for any injuries sustained to other people while they’re on your property or in your home.
Condo insurance: A typical condo insurance policy will generally cover many of the same things as home insurance, except that, it’s a condo. This includes damage done to your unit or your belongings, your liability if someone is injured on your property, etc. A key difference between condo insurance and house insurance is that — as the condo building is insured by the condo corporation— your insurance policy won’t cover the structure of the building, only the interior. Many condo insurance policies also come with something known as guest insurance, which covers the medical expenses of a guest injured while at your condo if you are not at fault.
Renters Insurance: A tenant insurance policy will cover your belongings against a number of common risks such as theft or fire, but will also cover your living expenses if something should deem your unit temporarily unlivable.
If you’re looking into getting homeowners insurance for a rental property that you own, a commercial building or a vacation home, you should speak to your provider about additional or different coverages you may require. Alternatively, filling out a form on LowestRates.ca takes just a few minutes. Regardless of which type of home insurance you’re looking for, we’ve got you covered.
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Square One Insurance
“Home insurance doesn't need to be intimidating. Customers shouldn't be afraid to ask their home insurance provider questions. I think the vast majority of challenges that we see come down to probably just a lack of familiarity and a lack of understanding with how it works and how much the customer can be involved in the process of deciding what's right for them”
Why do you need home insurance?
Home insurance might be the last thing on your mind when you’re searching for a home (whether you’re looking to rent or buy), but it’s actually a very important part of the process. If you’re a home or condo owner, your property is probably the largest asset you own.
Home insurance can protect your house and its contents in the case of a fire, a storm or a burglary. Without a home insurance policy, that’s all up to you to pay for.
What many people don’t know about home or renters insurance, however, is that you’re not just covered for any damage incurred to your home or the valuables inside. You’re also covered for your property and liability when you’re away from your home.
For example, if you knock over a candle during your honeymoon in a hotel room and cause a fire, the hotel will likely demand that you pay them back for damages. However, you can actually use your house, condo or tenant insurance to cover your liability for property damage anywhere in the world. Just another perk of having a great home insurance policy.
“You can actually use either your homeowner, condo [or] tenant policy. An unknown fact about your property policy is that it will pay for that unintentional property damage that you caused anywhere in the world.”
What does home insurance cover?
The answer to this question depends on the type of policy you purchase. We’ll get into that later on. Generally, however, your home insurance policy will cover the following items or expenses; your personal belongings, living expenses should you need to live somewhere else while your residence is being repaired and your personal liability if you happen to be sued for an injury or other damages sustained on your property. A condo insurance policy will also cover unit upgrades.
In addition, home insurance will usually cover the following risks; theft, fire, lightening, broken windows, water damage, wind and hail, explosions, vandalism, electrical current, smoke damages, falling objects.
For example, home insurance will normally cover your hotel stay if you need to relocate temporarily after a fire causes damage to your home. Alternatively, if one of your guests trips over a piece of loose flagstone during a backyard barbeque, breaks their ankle and sues you for damages, you’re covered for that.
By filling out our form, we’ll automatically include all of those things for you. All you have to do is fill out a bit of information about your home. We’ll determine how much insurance you need and how much it might cost.
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There are a number of expenses and risks that are not covered under your home insurance policy, as well as several which are only covered as an add-on to your policy. Keep reading for more information on what these omissions are.
What doesn’t home insurance cover?
While home insurance coverage can cover a wide range of risks and expenses, it’s important to be aware of the things your home insurance policy won’t cover.
Firstly, home insurance won’t cover damages that your provider determines were caused by neglect. For instance, if the roof of your home caves in, but an investigation reveals that it was due to be replaced or upgraded years ago, that’s not covered. You’ll need to prove that you took every reasonable action to keep your home in good condition.
Furthermore, home insurance usually doesn’t cover high-value individual items like jewelry or rare art. You can either take out additional policies for these items or, alternatively, you can choose to add individual items to your home insurance policy — but you may need to buy additional coverage for these.
If you’d like to insure your engagement ring, for example, you’ll need to take out an additional policy or add this item to your home insurance policy for an additional cost. Everyday items like your television, microwave or other furniture however, are covered.
Premiums, deductibles and other home insurance terms you should know.
Before we get into the nitty gritty of choosing your homeowners insurance coverage and making a claim, there are some terms you should be familiar with. These will help improve your general understanding of which homeowners insurance policy might be right for you.
What are premiums?
An insurance premium is the amount you pay for an insurance policy. This can be paid on a monthly or annual basis.
What are actual cash values?
An actual cash value policy means the claims payment is based on the current value of the product in a similar condition that needs to be replaced. For instance, if a 10-year-old dryer is damaged, the payment is based on the current value and not the cost of buying a new dryer. Premiums for this type of policy are lower than a replacement cost value policy.
What is the replacement cost value?
A replacement cost value policy means that the claims payment is based on the value of replacing the product with a brand new one that’s a similar make or model. Premiums for this type of policy are higher than an actual cash values policy.
What are endorsements?
Endorsements are additional types of coverage (such as sewer backup endorsement) that can be added to your insurance policy.
What is a deductible?
This is the amount you have to pay towards damages before the insurer will pay. If, for example, there’s $5,000 in damage to your home and you have a $500 deductible, you will pay the first $500 in damage and the insurance company will pay the rest. A higher deductible will lead to lower premiums.
What is depreciation?
Depreciation is a decline in value of an item over time.
What are perils?
Perils are unexpected or accidental events.
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