Types of Home Insurance In Canada

Just when you think that you have finally found a kind of insurance that is easy to buy you are faced with the challenge of buying home insurance. Just how complex can this be? It can be complicated simply because coverage is a personalized product, so is the needs of every home when it comes to home insurance.

There are four types of insurance that you are going to have to consider which are;

  • Basic perils ( also called no-frills insurance)
  • Named perils
  • Broad perils
  • Comprehensive Insurance

Perils means a potential event that could possibly happen and is accidental in nature.

Basic Insurance – Basic Perils

As the home insurance shopper, you are going to want to know what you are going to get for what you are paying for. You are paying by way of premiums so what will this cover? A basic home insurance policy in Canada is going to cover basic perils such as,

  • Home damage caused from an explosion
  • Damage caused from objects falling on the home ( with some exclusions)
  • Fire
  • Smoke Damage (with the exclusion of that produced from a fireplace)
  • Theft
  • Electrical Currents
  • Impact damage from an aircraft or vehicle
  • Lightening
  • Vandalism
  • Damage from riots
  • Water damage ( there are strict limitations on what basic insurance will cover when it comes to water damage
  • Wind
  • Hail
  • Transportation of personal items
  • Window Breakage

Named Perils

Whenever an individual is buying home insurance, they are entering into a contract with the insurance company. That contract makes up the insurance policy. It is very detailed. It will outline what is included in the coverage and what is excluded. The contract could state that coverage is provided for the named perils. This means that coverage is only offered for what is actually listed in the policy itself.

Broad Perils Home Insurance

This type of home insurance that is promoted as broad perils is going to cover what is usually listed under the perils for basic insurance.

Comprehensive Home Insurance

For those that are not comfortable with the common forms of home insurance, they can step it up a notch with comprehensive homeowners insurance. This can differ among the various insurance companies, but the coverage is far more detailed and is usually broken down into categories:

Here is an example of comprehensive homeowners insurance offered through Aviva:

  • Dwelling Building
  • Principal dwelling and attached structures
  • Outdoor equipment that is permanently installed
  • Outdoor swimming pool and its attached equipment
  • Construction materials
  • Detached private structures
  • Personal Property
  • Contents of property and personal property
  • Personal property temporarily away from property
  • Student’s personal property
  • Personal property of some family members in a nursing home
  • Personal property of physically or mentally challenged individuals in the care of the insured

Coverage Extensions

  • Temperature change damage
  • Damage to personal property during a home move

Special Limits Insurance Coverage

Meaning that these items are covered, but there are limitations as to the amount of coverage that is provided.

  • Books, tools, and instruments
  • Securities
  • Money
  • Garden items
  • Watercraft
  • Spare auto parts
  • Animal parts
  • The personal property contained in a safe
  • Golf carts
  • Renewable energy equipment
  • Jewelry
  • Numismatic property
  • Bikes
  • Collectibles
  • Golfing Equipment
  • Works of art
  • Wine and Spirits

Additional Living Expenses

  • Additional living expenses
  • Fair rental value
  • Prohibited Access

Special Coverage

  • By law coverage
  • Forgery
  • Debris Removal
  • Fire Department Charges
  • Frozen food protection
  • Inflation guard
  • Lock Replacement
  • Mortgage Rate Protector
  • Data Restoration
  • Property removal
  • Reward coverage

Insured perils coverage is all risks but subjects to the exclusions and conditions of the policy.

Liability Insurance

Then another very important section to this coverage is the liability coverage. This going to financially protect you in the event that someone or their property gets damaged when they are on your property. Look carefully at the amount of coverage that is being provided. Remember expenses can add up quickly with injuries, so you want to make sure that there is enough insurance coverage to cover this.

This is a long list of coverage that is provided by this particular insurance company. But each one these may have conditions attached to them. This is why it is very important to read the entire policy carefully. Along with the list of coverage, there will also be a detailed list of exclusions. Quite often the exclusions provide details on the limitations of what is covered in the policy.

What to Look for In-Home Insurance

The priority that most look for when buying their home insurance is what it is going to cover. But as can be seen by the example, looking at the limitations and exclusions gives a more realistic picture of what the coverage actually is.

There are specifics that you want to look for not only in what your coverage is but important factors about the insurance provider such as;

  • What is their customer service like?
  • Do they offer good options?
  • Do they have a good track record for paying out claims?
  • Are they able to answer all your questions?
  • Do you feel well informed about the insurance product you are going to buy?
  • Have they advised you as to what discounts are available?

What Kind of Home Insurance Do You Need?

You as the homeowner are best qualified to make that decision. You know better than anyone what it would cost to have to replace your home, its contents and personal belongings.  You need to consider the area that you live in and what risks that may present. For example, if you live in an area that is subjected to bad storms, then you need to know that you have plenty of protection in place for these type of perils.

The Best Way to Buy Home Insurance

The best way to buy home insurance is to become an insurance shopper.

  • Don’t just assume that every Canadian Insurance Company is going to offer you the same coverage.
  • Don’t  go just on the price of the premiums.
  • Do comparison home insurance shopping. You can get quotes for the cheapest home insurance then compare what they have to offer.
  • Pay close attention to the discounts as these are just as important as the cost of the premiums.

These are simple tips that will help you to get the best home insurance deal in Canada.

As a homeowner, you basically have three areas of concern when it comes to possible mishaps that could effect you financially. As well as on many other different levels. These are;

  • The structure and integrity of the home you own.
  • The personal belongings that are contained in your home.
  • The possibility that someone or their property could become injured or damaged while on your residential property.

Knowing what the major concerns are means one has a starting point of what to look for in home insurance.

Structure and Integrity of Your Home

There are many different incidences that can take place that could affect the structure and integrity of your home. When this happens it can come with huge financial costs. For those who have the proper home insurance in place at least the financial burden should be lifted from them.

Home Replacement Insurance

Insurance shoppers have to be very clear as to what the home replacement segment of their insurance is going to cover.  When it comes to home replacement. There are a few things that have to be studied carefully with each homeowner’s insurance.

You need to know if the coverage is replacement based on or without depreciation value of the home.

Guaranteed Replacement

This particular type of coverage means that coverage can include the cost that occurs to replace the house without taking into account depreciation. It is a type of coverage that insureds should discuss with their insurance company.

Common Occurrences that Could Require Home Replacement

fire

  • Fire

Statistics for Ontario show that out of all the fires occurring between2012 and 2016 49% occurred in residences. It is generally accepted that there are some common causes for residential fires, such as;

  • Cooking
  • Heating
  • Smoking
  • Electrical Equipment
  • Candles
  • Children Playing with Fire
  • Unsafe Wiring
  • Flammable liquids
  • Christmas Trees and/or faulty decorations
  • Barbecues

These are applicable to anyone no matter where they live in Canada as being common occurrences of fire starters. But, in some regions there can be extra threats.

  • Wildfires

One of the hardest hit provinces, when it came to wildfires, was BC. In 2017 it was estimated that over 300 buildings were destroyed that included residential homes.

  • Natural Disasters

flood

There are times where homes are destroyed by natural disasters to the point where they are beyond repair. The following is a list of natural disasters that created havoc on many homes during each occurrence.

  • Calgary Hailstorm September 1991
  • Toronto Flood August 2008
  • Slave Lake Fire 2011
  • Eastern Ice Storm  January 1998
  • Calgary Storm 2010
  • Calgary Storm August 2012
  • Southern Alberta Floods June 2013
  • Toronto Flood July 2013
  • Alberta Hailstorm August 2014
  • Fort McMurray Wildfires May 2016

Fire and natural disasters are two major concerns when it comes to homeownership. Therefore they automatically become two of the most important issues when it comes to perils coverage for home insurance.

All of these occurrences may not necessarily cause enough damage for a housing replacement. But they can enough damage that creates a need for repairs.

Canadian Insurance Limitations When it Comes to Fire and Natural Causes

It should never be assumes that the perils insurance is going to cover absolutely everything that can happen to a home.

Flood Coverage

There are different causes of flooding.  It can be as a result of a storm. Which in many cases this type of damage may be covered. Then it could be caused from overland flooding which most likely will not be covered. Unless extra insurance is purchased. It also includes water flooding from other mishaps like backup in pipes, or pipes bursting. Again, there are several insurance companies that will offer extra insurance coverage for these issues.

Personal Property

Moving on from damage that can occur to the structure of the home there needs to be insurance coverage for personal belongings.

Basic Personal Belongings Coverage

belongings

In general insurance companies will ask insurance shoppers to estimate the value of their personal belongings. These belongings usually encompass common items like clothing and furniture. It is a mistake to think that the home insurance will cover every item within the home. Most insurance companies will offer add-ons to the home insurance policy. To cover items like high-end electronics, photography equipment, art, jewelry and expensive furs.

Every insurance company is different. Many will place a 50% value on the contents. The 50% being based on the value they have placed on the home for insurance purposes.

Personal Insurance Beyond Damage Coverage

One of the important factors about personal content insurance is its additional protection for theft and vandalism. It will usually cover personal belongings that are damaged or stolen in the vehicles as well.

Liability Coverage in Homeowner’s Insurance

Many homeowners don’t realize the additional responsibility they have concerning others. Homeowners have the responsibility for the safety of anyone who is on their property in most cases. If they become injured or their property becomes damaged they can sue the homeowner. The best protection that can be put in place for this is liability insurance. The insurance company will then cover the costs that can be incurred on behalf of the injured party or their property. There will be some limitations to this. Also, the amount of coverage will vary according to the terms of the insurance policy itself.

Every Homeowner Is Different

Everyone has their own wants and needs when it comes to homeowners insurance in Canada. Therefore it is important that each insurance shopper take the time to determine what their specific needs are. This will be the starting point for buying the homeowners insurance in Canada. Then they can look and see if they want any additional coverage in these basic areas. Or, do they want coverage or additional situations that are not normally covered in the standard homeowner’s insurance?

For these reasons, it is important to shop properly for homeowners insurance. One should not just take the first type of coverage they have reviewed. Keeping in mind that premiums that come with value is the most important aspect of this type of insurance.

Resources

http://www.readersdigest.ca/home-garden/cleaning/top-10-causes-house-fires/view-all/
http://www.cbc.ca/news/canada/saskatchewan/what-to-know-wildfire-insurance-claims-1.3571952
https://en.wikipedia.org/wiki/2017_British_Columbia_wildfires
http://www.cbc.ca/news/canada/saskatchewan/what-to-know-wildfire-insurance-claims-1.3571952
https://globalnews.ca/news/2810070/top-10-most-costly-disasters-in-canadian-history-for-insurers/
http://www.ibc.ca/nt/home/risk-management/update-your-insurance/replacement-cost
http://www.ibc.ca/nt/insurance-101/critters/home-insurance-spring-thaw-hood-damage-covered-by-home-insurance
https://www.statefarm.ca/insurance/home-and-property/personal-articles-policy
http://www.enhancedinsurance.com/faq/how-can-i-estimate-the-cost-of-replacing-my-belongings/
http://assets.ibc.ca/Documents/Brochures/All-about-Home-Insurance.pdf
https://www.superbrokers.ca/library/glossary/terms/named_perils_insurance_policy.php
http://affinityis.ca/ckfinder/userfiles/files/Aviva%20Comprehensive_Homeowners_Policy.pdf