A girl’s guide to homeowner’s insurance

If you’ve bought a home then you know how proud, yet daunting it can be to finally own your own place. Without doubt if your home is where you heart is then you’ve probably considered the importance of protecting it with insurance.

Well, a wide variety of homeowner’s insurance is available to you, and it’s all about what you want to insure and how much coverage you need.

The point of any insurance is to give you the peace of mind that should anything happen — from fire to theft to damage — you have a policy to help cover the costs of repairs or replacement.

What insurance is available for homeowners?

The following are the most common homeowner’s insurance categories. However, it is up to you — the homeowner and insurance policyholder — to check what your policy will cover, as coverage will vary among insurance companies.

Comprehensive

The Insurance Bureau of Canada (IBC), a members’ association for insurance companies, advises that “this is the most inclusive home insurance policy; it covers both the building and its contents for all risks, except for those specifically excluded.”

Although this type of policy is the most comprehensive, “There are two types of insurance risks that are not normally included in any home insurance policy — those for which you can buy insurance (‘optional coverage’) and those for which insurance is not available (‘uninsurable peril’),” explains IBC.

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Basic

This is an insurance option if you want to save money and absorb some of the financial risk (meaning, pay out of pocket) should something happen. This type of insurance will cover only the exact named “perils” in the policy, such as windstorms, fire or theft, for example.

Broad

This kind of insurance is a mid-level policy option if comprehensive insurance is too much but the basic policy doesn’t cover enough. “This policy provides comprehensive coverage on the big-ticket items, like the building, and named perils coverage on the contents,” advises IBC.

No frills

This isn’t usually a readily available option for homeowners but rather a type of insurance that is offered when properties don’t meet normal standards, such as when a home has structural problems and an insurance company cannot offer regular homeowner’s insurance because of it.

How do I know how much coverage is appropriate?

Usually needed coverage can be determined in two ways:

• You can take an inventory of your contents and work out the value of your property. It is then up to you to work with your insurance company to determine how much you want to be covered for.
• Your chosen insurance company will assess your property and determine how likely you will be to make a claim, based on common claims made by homeowners in a similar situation.

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Insurance companies’ common areas of assessment include where you live, replacement costs, fixed amenities (such as plumbing, heating, electricity, stoves, etc.), the presence of fire and smoke alarms, the age of your house, other ways you might use your home (such as for a home-based business) and if your home is near a water source in case of fire.

Is there any way I can reduce the cost of my insurance?

You certainly have the right to shop around for the insurance policy most suitable for your house and financial situation. You can also talk to your chosen insurer about costs and possible discounts. Some potential discounts on your insurance may include:

• If you are over 50 years of age
• If your dwelling is less than 25 years old
• If you are mortgage free
• If a smoke and/or burglar alarm has been installed
• If you complete an inventory of your contents

There’s no harm in asking. Just make sure that at the end of the day, you get a policy that offers you the right kind of safety net in the event of an incident.

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