What to Know about Insurance as a First-Time Homeowner
You’ve just bought your first home and it’s time to get it insured. What do you know about getting home insurance?
Here are some answers to common home insurance questions to get you started.
What to know about insurance as a first-time homeowner
What is home insurance?
Home insurance is a type of property insurance that protects your home and the personal property in it. It pays to repair or replace your home and/or belongings if your home is damaged by fire, for example, and other named events in your home insurance policy.
What does home insurance cover?
Basic home insurance policies typically cover fire, hail, windstorm, smoke, explosion, lightning, vandalism, and theft.
Do I need additional insurance coverage?
Before purchasing your home insurance policy, understand what it covers and assess your needs. For example, you may need extra insurance for your home-based business, or you may want to add sewer backup or earthquake coverage if you live in a high-risk area. You may have an art collection that requires additional coverage.
What is a deductible?
Your deductible is the amount you pay when you make a home insurance claim. The rest is covered by your insurance company up to the policy limits. You can pay a lower premium by having a higher deductible, but you need to make sure your deductible is affordable.
Is all my personal property covered?
Your home insurance policy will cover the structure of your home and provides personal property coverage, but there are limits on coverage for your personal items. You may need a personal articles floater for high-value items like jewelry and electronics so that they are covered for their full value.
What is liability insurance and does home insurance provide it?
Home insurance protects not only your physical assets but also protects you from personal liability if someone is injured in an accident in your home. For example, if someone fell on your icy walkway, your home insurance would cover their medical bills and your legal costs if they filed a liability claim against you. This type of coverage is called third-party liability insurance and is included with basic home insurance policies.
How is my home insurance rate determined?
The cost of your home insurance is determined by how risky your home is to insure as well as the cost to rebuild or replace it. Your insurer will also consider many factors, like where you live, how old your home is, its replacement cost, how your home is heated, the type of electrical wiring it has, and the distance to the nearest fire hydrant and fire station.
Do I need to have home insurance?
You are not legally required to have home insurance in Canada, but you will be required to have it if you get a mortgage. This protects you and your lender if your home is damaged. If you are renting your home, your landlord may require you to have tenant, or renters, insurance. Like home insurance, renters’ insurance covers your belongings and provides liability coverage in case someone is injured in your home.
Does home insurance cover all disasters?
Though home insurance covers many risks you face as a homeowner, it does not cover everything. It generally does not cover war, nuclear explosion, sewer backup, overland floods, or power failure. You may be able to purchase additional coverage, known as an endorsement, for some of these risks such as sewer backup.
How can I save on my home insurance?
There are a few ways to reduce home insurance premiums. You may qualify for a discount when you buy and bundle your car and home insurance from the same insurer, or if you install a security system.
Being claims-free for over a year, installing flood protection devices, or not having a mortgage can also help.