Types of Coverage
Homeowner’s Insurance
Homeowner’s insurance is going to replace or rebuild your home in the event of a loss. For example, if a fire caused a total loss to your house, this insurance would rebuild the house from the ground up. The value we insure your home for is the estimated cost of entirely rebuilding your house.
Outbuildings Insurance
A package policy will generally extend to cover outbuildings on your property. This would include buildings like shops or sheds. Outbuilding coverage is normally a percentage of the limit on your home.
Personal Property Insurance
The personal contents of your home are also normally covered on a package policy. Coverage extends to insure your personal property that is temporarily removed from your home. You should know that the primary difference between the comprehensive and broad forms (noted under Policy Type) is the coverage provided for your personal property.
Additional Living Expenses Insurance
This portion of the policy provides coverage for expenses you incur were you to suffer a major loss and no longer be able to reside in your home. Costs of temporary lodging, such as a hotel, as well as other additional expenses you incur as a result of your loss would be covered under this section.
Policy Type
The two main forms of homeowners insurance are:
Comprehensive – This is an ‘all risk’ policy. It insures your house and contents against all risk, and then specifically excludes various other perils.
Broad – Broad homeowners insurance differs in the way that your house and your contents are insured. Essentially, your house is insured for ‘all risks’ coverage, as on the comprehensive form, but your contents are insured under what’s called ‘named perils’. Named perils are very specific perils such as fire, explosion, and windstorm that are covered by the policy. Clients wishing to lower the cost of their insurance may choose broad coverage over comprehensive.
Deductible
Your deductible is the amount you are required to pay should you have a loss claimed under your policy. Altering your deductible, depending on your personal tolerance for additional risk is a good way of managing the cost of your insurance. Standard deductibles on a homeowner’s policy are $500. Increasing your deductible to $1,000 or $2,500 can provide further discounts on your policy. On the other hand, lowering your deductible to $200, typically the lowest deductible available, will cost you more in premium dollars, but will reduce your share of future losses.
Discounts
A good broker understands the discounts that are available to you and when they can be applied. Typical discounts available on a homeowner’s policy are:
Claims Free Discount: If you have had a policy in force and have not made a claim for three (or five years depending on the insurance company) you are eligible for this discount.
What you should know about your claims free discount: When you make a claim, you lose your claims free discount i.e. you are no longer claims free. What you should keep in mind before proceeding with a claim is the total cost to you for doing so. The cost you incur when you have a claim is your deductible plus the loss of your claims free discount. Compare this amount to the amount you are claiming and decide if it is worth while proceeding with the claim.
Mortgage Free Discount: If you don’t carry a mortgage on your house this discount is available. Note that if you have a line-of-credit and your bank or credit union requires that they are an additional insured on your policy, the discount is not available.
Age Discount: Depending on your insurance company, and your age, discounts are available on most policies. Discounts usually begin for insured 45-50 years and older.
New Home Discount: Homes less than 15 (or 10 years old) depending on the insurance company are eligible for this discount.
Other Discounts: Discounts may be available for homes with sprinklers, block watch programs in the neighbourhood, or monitored alarms. These are insurance company dependent.
Personal Liability Insurance
Personal liability is one of the most important coverages included on a typical homeowner’s policy. Personal liability coverage protects you if you are found to be legally liable for an unintentional accident or occurrence resulting any where in the world and which results in bodily injury or property damage. Although these claims are not common, when they do occur they can be severe in terms of the dollars awarded.
Special Limits of Insurance on your Personal Property:
Almost all homeowner’s policies have special limits of insurance for certain types of personal property. These special limits usually apply to items like business property, jewellery, and tools. If these limits are not adequate for you, the property in question can be scheduled for an additional premium. This raises the limit of insurance for the property to meet your needs and also waives any applicable deductible.
Personal Property Inventory:
We recommend that you take an inventory of all of your personal property and contents, and provide us a copy for your file. In the event of a major loss, the benefit of an inventory listing cannot be overstated. As an alternative we recommend that you video tape the contents of your house and store the tape off your premises.