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Home Insurance Guide

Published by My Rate Compass Team | Updated May 22, 2020
Home Insurance Guide

Home Insurance Guide:What you need to know



Overview



Home insurance is something that most people will or at least should get at some point in time, though the type of home insurance they need may vary. Insurance can often be a confusing subject, which prevents some people from getting the right insurance. Below you will find all the information that you need to understand home insurance and get your property insured. This guide will explain the different types of insurance, how the cost is calculated, what home insurance covers, and how to find home insurance.

 

What Is Home Insurance?



Everyone hopes that nothing will ever happen to their home or the things in their home, but unfortunately, sometimes things happen, and when they do, it can be rather expensive. Home insurance protects you for the times that losses and damages happen and are out of your control, such as theft, a fire, or a flood. Of course, what each policy covers depends a lot on the provider and what you are in need of. When a person has home insurance, and a loss or damage covered under their policy happens, they do not have to pay for the entirety of the problem, though there may still be a deductible. Because home insurance is not legally required in Canada, some people decide not to get it because it is an added bill that they have to pay, but it is generally not recommended that someone go without. While the monthly fee can be annoying, the bill you get when any major damage is done to your home can be too large for you to pay, and then you may end up in some serious trouble.



Types of Home Insurance



Home insurance is an umbrella term, and there are several different types of insurance included in this category. It is important to know the different kinds of insurance so that you get the right one for what you need. Below you will find an explanation of the different types of home insurance.



Homeowner Insurance



Homeowner insurance is what most people think of when they think of home insurance, and also what most people need to buy. This policy is to protect people who own a home. Each policy is different, but most policies cover structural damage and theft. The monthly fee you have to pay will depend on the provider you use and a couple of aspects about your home, such as where it is located, the value of your belongings, and the materials used to build your home. You will also probably need to pay a deductible when or if something does happen. Again, the deductible will depend on your provider and what your situation is, but it is important that you ask your provider what you should expect your deductible to be.



In Canada, most providers offer four main policy types: basic, comprehensive, broad, and no-frills. While the names are mostly universal, each provider will have their own definition for the terms, so it is important to read the fine print and ask questions about each type. While an agent can recommend a policy type to you, in the end, you will have to make the decision about what you need from your policy.



Condo Insurance



Condo insurance is for people who own condos. Unlike an apartment, a condo is usually independently owned. Therefore, any damage that is done to the condo must also be individually covered, which can be rather expensive if the person does not have insurance. Just like with homeowner insurance, the cost of condo insurance depends on a variety of factors such as location, building materials, age, and the value of the things that you have in your condo. Some condominium corporations will require you to have condo insurance, while others will leave it up to the individual. Either way, it is a good idea to get it. Condo insurance usually will cover you in case of any damage to your condo, damage and theft of your belongings, and liability in case of damage to other condos around yours.



Tenant Insurance



Tenant insurance, also known as rental insurance, is for anyone who is renting an apartment or house. They do not actually own the home, so they need a different kind of policy than that offered by homeowner insurance. Renters insurance is generally less expensive than some other types. What renter’s insurance typically covers is your personal property, liability in case a guest gets injured, and any damage that you are responsible for. Make sure that you ask your provider exactly what you are covered for and how much you are covered for. Some providers will only cover you up to a certain amount. Many landlords require their tenants to get rental insurance.



Rental Property Insurance



Rental property insurance is for the people who are renting out their apartment or house. While they own the property, they need a different plan than homeowners' insurance or condo insurance for property and liability coverage. The property coverage applies to specific risks called specified perils or all perils for anything that destroys or damages your home.

Also known as landlord insurance, rental property insurance covers any structural damage to your property and any belongings that you have inside of the rental space, such as furniture or art. Policies can also cover you for the income you receive and the loss thereof.



Vacation Property Insurance



Vacation property insurance is what you need if you own a vacation property. Also known as cottage insurance, this type of insurance covers a property that is not your main place of residency. This type of insurance will most likely cover your property and your belongings inside of it. It will also cover you in case someone gets hurts while on your property.



What Does Home Insurance Cover?



Most plans will cover any structural damage that is done to your property, along with damage to your belongings or theft. As far as structural damage, you will probably be covered if it is done due to something out of your control like a fire, flood, earthquake, or tornado, but may not cover any damage that you cause or is deemed not to be an accident. The specifics of what kind of damage your home insurance covers will depend a lot on the policy you get and your provider. It is important to read all the fine print so that you know precisely what is covered and what you are entitled to if anything does end up happening.



How Much Coverage Is Enough?



This really depends on your situation. If you are in an area that is known to have regular floods, you should make sure that flood insurance is included under your coverage. On the other hand, if you are nowhere near a floodplain, there is no point in paying to have your house protected from floods. You need to make sure that any realistically possible damage to your property and your belongings are covered. You may want to ask a third party (who is knowledgeable about home insurance) to look at your property and tell you what coverage you need because an insurance provider may try to upsell you.



What Factors Affect the Cost of Home Insurance?



The first thing that will decide how much your home insurance costs is how much it will cost to replace your home. The bigger the property, the more it will cost the insurance company to replace, and therefore the more you will have to pay to have it insured. The same is true about what your home is made of. If your home is more expertly crafted and made from more expensive materials, it will cost the insurance company more to repair it, and therefore you will have to pay a higher monthly premium. On the other hand, if the plumbing and electricity in your house are older or cheaper, they may consider you to be more at risk, and you may also have a higher monthly premium.



The contents in your home also affect the cost. The more you own, and the more expensive the things are, the more you will have to pay to have them protected because they cost more to replace. The location of your house, how you use it, previous claims, and how high of a deductible you agree to pay will all contribute to how much your home insurance policy costs.



What is a Deductible?



A deductible is an amount that you have to pay when you make a claim. You will agree on an amount or percentage before you sign the policy agreement. If something then happens to your property, you will be able to file a claim to get it repaired and the costs covered. First, you will have to pay the amount that you agreed to, and then you, when you file a claim, pay it, and then the insurance provider will cover the rest. Also, be aware that some insurance providers also put a cap on what they are willing to pay for, so past a certain amount, you may end up paying for more.



Cost-Cutting Insurance Tips



  • First, compare policies and providers as the first one that you look at may not be the best or most affordable. There are websites such as Kanetix that you can use to compare various providers at one time.
  • Also, consider bundling, some providers offer insurance for many different things. If you get your home insurance, auto insurance, health insurance, etc. all covered by one provider as a bundle, sometimes you can save money.
  • If you are willing to take on a higher deductible, that will often lower your monthly premium. You will have to pay more if something happens, but because your insurance provider will have to pay less, your monthly premium will be lower.
  • If there are things you may not need to replace or repair if they get damaged, do not have them covered. If you cover less, it will naturally cost less.
  • Add more safety measures to your house. If you decrease the chances of something happening that will cause you to file a claim, your provider may lower your monthly premium. It is worth asking your provider if this is true before you make any changes, as it is not guaranteed that your provider will lower your bill.



How Do You Choose Your Home Insurance Policy?



The first thing you need to do is decide what you need out of a home insurance policy. What type do you need, what kind of damage is realistically possible, and what of your belongings do you need to be covered. Once you figure out what you need, you can begin to shop around. It can be tempting to look for the cheapest policy there is, but before that, you need to find a policy that actually will give you what you need, then you can look for the most affordable quote given by those providers.



How to Get Home Insurance Quotes



There are a couple of ways you can get a home insurance quote. The first is by looking online. There are lots of third-party services(Kanetix etc.) that will allow you to look up quotes for various insurance providers. Usually, they will also allow you to compare various quotes relatively easily. The second way you can receive a quote is by calling up individual providers and asking for a quote. Some insurance providers will be able to do this by simply asking you some questions (make sure that you answer honestly or else they will not be able to give you an accurate quote.) Other providers will want to come out and see your property before giving you a quote.



Conclusion



Home insurance is extremely important, though it can seem complicated at first glance, but do not allow that to deter you. With the information that you have read in this guide, you now have everything you need to insure home no matter which type you need: homeowners insurance, condo insurance, renters insurance, landlord insurance, or cottage insurance.