Customizing the most appropriate home insurance policy in Canada can be a challenging pursuit. Of course, you would and should celebrate the big moment when you purchase your property.
However, make a strict note that you need to purchase your property insurance policy sooner rather than later.
As soon as the bid for your new property gets accepted, you should start looking into building and home insurance policies in your area.
In this post, the experts at Surex have come up with a detailed outline, answering the most common questions homeowners have.
Key Takeaways on Home and Building Insurance Policies
- It’s imperative to secure your property against possible damages or losses with an affordable home insurance policy.
- The type of coverage largely depends on the nature of the property you are residing in. This might be a house, rental property, or condo.
- Some of the lenders would require you to purchase property insurance before releasing the funds.
- Through home insurance, you can also purchase adequate coverage that can protect your personal belongings.
- The policy won’t cover any damages arising out of your negligence. You also need enhanced limits to cover high-value assets and jewelry.
What Are The Different Types Of Building Insurance?
Canadians can purchase different types of insurance coverages to secure their primary residence.
There are three primary types of insurance you can choose from: home insurance, condo insurance, and renters’ insurance.
1. Home Insurance
Generally, a home insurance policy would provide coverage for the structure of your property, along with its contents. You’d also get liability coverage, which encompasses the expenses you may incur if any person within your property gets injured.
2. Condo Insurance
Condo insurance is typically the same as home insurance in terms of coverage. However, in the latter case, you would be securing a condo. Therefore, you’d get compensation from the coverage if any of your belongings or your unit sustains damage. Note that this type of policy also includes liability insurance.
However, there is a key difference between condo insurance and home insurance. Condo insurance fetches you coverage for the interior of the building only. Therefore, the overall building structure won’t fall under the purview of the insurance policy.
On the other hand, home insurance covers the entire structure of the building. In some condo insurance schemes, you can enjoy the guest insurance feature as well. This includes medical expenses–in case any of your guests at a condo sustain injuries.
3. Renters Insurance
A renter’s insurance policy provides coverage to tenants against risks like fire, theft, vandalism, and other perils.
Remember — a homeowner’s insurance does not cover tenants. Therefore, if you rent out your property, your tenants must purchase a separate policy.
Things to Consider When You Purchase Home Insurance
Here’s what you should look at before you close the deal on a home insurance policy:
1. Get Additional Coverage for Your Valuables
A typical home insurance policy would cover your home’s contents, thus offering maximum value. These plans suit most families.
You may have expensive jewelry or other valuables in your home, including electronic equipment. Talk to your insurer regarding the extra premium you need to shell out to get them covered since a general home insurance policy likely won’t cover these valuables.
2. Do You Need Flood Insurance?
As a homeowner, you must be aware of water damage. Your furniture may get soiled even if you have a small leak. This water might lead to mold growth, seeping under your mats and carpets, and messing up your walls.
Depending on the location you live in, consider purchasing flood insurance along with your home insurance.
Some home insurance policies may even cover flooding resulting from a water leak or burst pipe. However, they won’t cover damages occurring from cracks in the foundation or natural calamities. Consult an expert if you’re not sure about shelling out this extra amount.
3. Consider The Weather
With climate change affecting various parts of Canada, weather events are increasingly affecting premiums. In case you reside in an area susceptible to hailstorms, wildfires, or windstorms, it’s wise to get comprehensive coverage.
Remember, standard policies don’t cover natural disasters, catastrophic weather, and anything that insurers deem as ‘acts of God’.
Without adequate coverage, you might end up draining all your financial resources trying to repair your home. Based on your location, you can purchase specific types of coverage to secure yourself against weather damage.
4. Insure For Replacement Value
Well, the expenses you need to incur to get your home replaced are not the same as the current price or what you purchased it for. Once you get the difference, you can control your monthly premium.
Take a look at these terms:
ACV (Actual Cash Value)
This is the market or resale value of your property. Actual cash value can be influenced positively or negatively by the real estate market. It also encompasses factors like demand for homes, location, and land.
This is the monetary value that you’d need to completely rebuild your property after a serious event. However, it does not consider any depreciation, and replacement value is also considered to be a blanket amount. Therefore, the price includes the availability of workforce, price, cost of obtaining the building permit, and construction materials.
Homeowners need to be prudent enough to insure their properties, considering the replacement value and not the actual cash value.
Things That Are Excluded From a Home Insurance Coverage
As mentioned earlier, your insurer will not compensate for losses arising due to your negligence. For instance, if you do not replace or upgrade your roof on time, it may cave-in after a few years.
In case the investigation reveals your negligence, the policy won’t cover the repair expenses.
Whatsmore, you need to cover rare art, engagement rings, or other high-value items with additional coverage.
However, it would be best to look for coverage that also protects everyday items like your furniture, kitchen appliances and electronics.
At times, purchasing the best policy for home insurance that offers foolproof financial security turns out to be a tricky job. This explains why most homeowners consult experienced insurance advisors.
Professional guidance pays off in the long run by securing you against all sorts of vulnerabilities.
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