Everything you need to know about home insurance
Last update : 2023-05-05 14:14:25
The prospect of having to shop around for home insurance rarely sparks enthusiasm. However, it is of paramount importance to protect your property and the items within it.
Moreover, in the event of a disaster, theft, or any other adverse event, the consequences on your financial health will be substantial. Better to be safe than sorry!
While we all recognize the importance of having this protection, we still need to be able to properly determine the type of coverage needed. To help you with that, here's all you need to know about home insurance.
What does home insurance cover?
In order to determine the type of coverage needed, an insurer will require two main pieces of information:
- The cost of all your material possessions;
- The cost of rebuilding your home.
Inventory of your assets
Obviously, taking stock of everything you own is far from a simple task. Plus, since it is such an extensive task, it can be difficult to work your way around without making mistakes.
For this reason, it is strongly recommended to work strategically, using a form to classify your assets into different categories. Remember that the aim of a comprehensive inventory of all your possessions is not only to establish the type of coverage that suits your needs, but also to make the claims process easier if it should come to this.
Alongside this written list, we recommend that you provide visual references such as videos, photos, or both. These are proof that you actually own the goods on your list.
Finally, we have to emphasize a very important point that your insurer will probably bring to your attention at this stage - for each category of asset, there is a maximum amount that they will pay out, so be sure to check with your insurer to avoid any unpleasant surprises.
When it comes to estimating the cost of rebuilding your home, you have two options: either go to an appraiser or ask your insurer for assistance. Although the first option allows you to take advantage of the expertise of a property valuation specialist, it is unfortunately not suitable for all budgets.
Instead, many individuals decide to seek the help of their insurer in order to get it done for a better price. In this case, the insurer provides their client with a questionnaire regarding the different aspects of the building, which makes it possible to evaluate the reconstruction value for a low cost.
Who does your insurance policy cover?
Apart from yourself, your home insurance also covers:
- Your spouse;
- All young people under the age of 18 who live with you and are, therefore, in your custody;
- All of your adult dependants;
- All student dependents (whether or not they remain under your roof).
Types of protection for your home: the basic plan or the all-risk plan
Now that you have all the important information you need to assess your coverage needs, you will have to choose between two different insurance plans: the basic plan or the all-risk plan. The first of these offers protection against the risks mentioned in the contract and is limited to only these risks.
The basic plan
Most of the time, the basic plan provides protection against:
- Certain types of water damage (due to the malfunction of a water pipe or sanitary installation);
- Broken windows;
- Damage caused by wind, hail or lightning;
- Damage caused by a leak or by smoke;
- Damage resulting from falling objects, crashes, or rioting.
The all-risk plan
As for the second formula, it offers much more comprehensive protection and covers all risks besides the exceptions mentioned in the contract.
In any case, note that some risks are generally excluded from both plans, including:
- Growth of mould and/or mildew;
- Water seepage through the roof;
- Sewer back-ups;
- Careless neglect of the property.
Whatever you opt for, you should be aware that your home insurance also offers you civil liability protection, giving you assurance that accidental damage inflicted on someone else will be covered if necessary.
Not sure which coverage is right for you? Don't hesitate to ask your insurance broker questions to help you out with your decision.
Under special circumstances, you may need to add amendments to your home insurance policy. For example, if you rent out your home through Airbnb, your insurer may suggest more extensive protection. Be sure to inquire about this; otherwise, you may be faced with a nasty surprise in the event of a disaster.
Second, note that if you are self-employed, it is recommended that you make sure your insurer is aware of this. This is all the more important if you store your work materials inside your house.
Third, it is worth pointing out that swimming pools and hot tubs are not covered by a home insurance policy, which is why you need to add an amendment if you require your hot tub or pool to be protected under your policy.
Compensation in the event of a home insurance claim
As for the compensation, you will be entitled to as a result of a claim covered by your insurance, you can choose between two compensation plans. The first of these takes into account the value of the property at the time of purchase. As a result, the compensation will be equal to the amount you paid to acquire this property.
The second option, however, takes into consideration the value of the property at the time of loss. The compensation will therefore be lower than with the first option, as it will take into account the depreciated value of the assets to be replaced.
Regardless of the option you choose, note that your insurer may choose to compensate you in three ways: repaying the cost of your assets, repairing them, or replacing them. In this regard, it is very important to keep receipts for your goods, especially those with significant monetary value. Remember that it is not out of the ordinary for an insurer to ask you for them in the event of a claim.
Paying a high deductible: worth it or not?
Regarding the payment of your homeowner's insurance deductible, you will have the choice of paying a higher or a lower sum. What’s the difference? If you decide to opt for a low deductible (which implies paying less out of your pocket in the event of a claim), you will have to pay a higher premium. If you are in a position to pay a higher premium, this could be a good option.
Conversely, if you are okay with the possibility of having more modest compensation in the event of a claim and bearing a larger share of the losses, you can benefit from a smaller premium. This option is often chosen by people who have a greater tolerance for risk or whose smaller budget makes it difficult to pay a higher premium.
Depending on the insurer with whom you have an agreement, you may be eligible for an exemption from deductible payments in the event of a very high claim. However, not all insurers offer this to their customers.
Discover 10 ways to save on your home insurance.
Home insurance for condominium owners and tenants
Do you own a condo? You probably have a few questions about the type of home insurance you need. The first thing you need to know is that you are covered by the condominium syndicate's property insurance, which provides basic coverage.
However, you must also be covered by insurance specifically designed for resident owners. Keep in mind that the declaration of co-ownership may require that certain additional protections (endorsements) be included in your policy in order to cover various types of risks. In the event of a loss, compensation will be granted from one or both of the policies.
If you are a tenant, you are also required to take out home insurance. In fact, don't make the mistake of thinking that you are covered under the property insurance of the building in which you reside. Unfortunately, this is a mistake made by many tenants and can be very costly in the event of a fire or any other disaster with serious consequences.
Are you looking for a home insurance policy?
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