Important Things To Know About Home Insurance In Canada

Home insurance is a necessity for keeping you covered from any number of challenges and setbacks you could face including natural disasters, burglary, and other unforeseen events. However, not every home insurance policy is the same or covers the same components. It is important for you to know what your policy covers, why you should get one and what type you should be looking for, before getting yourself committed to anything. So read through this article for a list of important points to keep in mind when taking out a home insurance policy.

#1. It’s required for a mortgage

Under Canadian law, you are not required to take out an insurance policy for your home. However, most banks and other financial institutions will likely insist on it when you’re trying to take out a mortgage. Also, if you’re renting out a property, it is also a good idea to have some insurance to keep you protected in case your tenants leave your property damaged.

#2. Coverage

Insurance policies will have different coverage areas and you should determine the coverage area you think is appropriate before you go shopping for insurance. Some policies will cover only your dwelling where you can expect coverage for losses or damages incurred within and to the structure of your home itself. You might decide you want a more comprehensive policy that includes cover for additional items such as your garage or lawn.

You can also choose to have an insurance policy with limited comprehensiveness. What this means is that you could choose to take out insurance to protect yourself and your property from specific hazards such as theft or natural disaster instead of taking out a comprehensive policy to cover everything. This kind of insurance is called a perils policy.

#3. Replacement cost vs. Cash value

You can choose an insurance policy that offers full protection against loss, in the form of a replacement cost based policy. With a replacement cost policy, you get full cover and you are provided with funding to cover the full cost of repairs. With a cash value policy, on the other hand, you will be repaid the current cash value of your house, with depreciation taken into consideration.

#4. Review different policies

This sounds rather straight forward and perhaps even intuitive but you would be surprised the number of people who have not make the best possible choices when it comes to home insurance, simply because they did not read their policy well enough, or they failed to compare it with others.

It’s a smart idea to have an insurance broker or agent, examine the terms of your agreement and take a look at your real estate policy before you sign it.