Home Insurance 101 for New Homeowners
If you are purchasing a home, one of the first things you will want to do is buy home insurance (in fact, it is unlikely that you will be able to get a mortgage without it!). But as a new homeowner, you probably have a few questions about your insurance coverage. In this article, we will cover some of the basics of home insurance.
Why you need home insurance:
Home insurance serves two main purposes – it protects your home and its contents in the event of damage from risks such as fire, windstorms, vandalism, etc.; and it protects you in the event that someone is injured on your property and you are deemed liable. The liability coverage also protects you in the event that someone else’s property is damaged due to your negligence – for example if a fire on your property damaged a neighbour’s home.
What does your home insurance cover?
A typical home insurance policy will cover the dwelling itself and its contents (such as your electronics, furniture, jewelry, etc.). The structure is usually covered up to its replacement value. In other words, the cost of materials and labour to rebuild on your property – which is different than the resale value.
If you want to have more coverage than this (such as coverage of a garden shed), you need to make sure you speak with your broker to get it included.
How is home insurance regulated?
In Canada, auto insurance is very strictly regulated, but this isn’t the case for home insurance. Insurance companies and their policies can vary greatly from one to another, so it is important to do your homework to understand what is covered and what isn’t. Spend some time talking to your broker and don’t be afraid to ask questions. They are there to help you!
Why do I need a property inspection?
Occasionally, a home insurance provider may want to conduct a property inspection of your home. There are a few possible reasons for this including:
To determine if there are any hazards that need to be fixed (such as plumbing or electrical issues).
To ensure coverage is up to date.
To get an accurate assessment of your home value and its contents.
How does contents insurance work?
Your home insurance also covers the value of the contents of your home. It is recommended therefore that you keep a list of your valuables in a safe place where it cannot be damaged by fire or flooding. If you share your list of valuables with your insurance provider, it makes it easier for them to recommend the appropriate policy for you.
How can you save money on home insurance?
There are many ways that you may be able to save money on your home insurance premiums including:
Bundle your home insurance with your auto insurance.
Install an alarm system (some insurers will give you a discount for this).
Do maintenance that makes your home less likely to become damaged or broken into.
Pay your premiums annually instead of monthly.
Don’t get more coverage than you need.
Increase your deductible.
Ask for a discount. (Some insurers offer discounts to mature customers, members of certain professional groups, etc. It never hurts to ask!).
What is not covered by my home insurance?
Finally, it is important to remember that there are a few things that most home insurance policies will not cover including:
Personal liability caused by operating a business out of your home.
Damage caused by indoor plumbing freezing if the home is vacant.
Damage caused by overland flooding or earthquake unless you purchase additional coverage.
Damage caused by constant and repeated water seepage.
Damage caused by criminal activity of the policyholder.
Contact ICD Insurance today!
Are you a new (or soon to be new) homeowner? If so, we’d love to help you with your home insurance policy. Call us today to speak with one of our brokers.