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Your Home Insurance Explained by your Home Insurance provider Guild/HMS Insurance

Your Home Insurance Explained by Guild Insurance Brokers & HMS Insurance Agencies

Home Sweet Home: What Home Insurance Do I Need?

 

If you have bought or are buying a home, you will need home insurance. Mortgage lenders throughout Canada require homeowners to insure their homes. However, just because this requirement is there doesn’t mean home insurance is an open and shut case. On the contrary, there are lots of little subtleties that will affect how much you pay for home insurance and how the coverage works for you. Below, we have attempted to answer a few of the most frequently asked home insurance questions.

 

How does home insurance work?

Home insurance can work in a few ways, depending on the situation and the type of coverage you have. If your home was damaged or destroyed in a fire, the policy would kick in to help you rebuild or repair the home. It would also pay for the replacement of possessions in the house damaged by the fire, such as furniture, appliances, and electronics.

Home insurance can also provide liability coverage. If a guest in your home slips on the kitchen floor and breaks his arm, he could sue you for liability. Since home insurance policies include personal liability, your policy would help cover legal costs, medical costs, or settlement expenses.

As with other types of insurance, your home insurance coverage comes with a deductible. The deductible represents your out-of-pocket expenses, which can vary from one policy to the next. Policies with higher deductibles generally have lower premiums.

 

What is the best type of home insurance coverage?

Before you start asking specifically about what things are or are not covered by home insurance in Manitoba. It’s a good idea to understand the different types of insurance coverage that are available. Most insurance providers offer homeowners a variety of different coverage plans from which to choose. The most common of these are comprehensive home insurance and broad home insurance.

A comprehensive insurance policy is the most extensive type of coverage you can buy.

Comprehensive Home Insurance

A comprehensive insurance policy is the most extensive type of coverage you can buy. Comprehensive coverage protects you from most types of risks, including fire, lightning strike, theft, vandalism, and vehicular impact. The coverage applies to both the building itself and all (or most) of the contents. In a comprehensive home insurance policy, the insurer must specify the types of risks or perils the insurance does not cover. The policy must cover any perils not explicitly mentioned as uninsurable.

 

Broad Home Insurance

Broad insurance is considered a basic home insurance product. Typically, a broad policy will provide comprehensive coverage on the dwelling itself, but only named perils coverage on your belongings. With named perils insurance, the coverage only protects your belongings against perils expressly mentioned in the policy. If a peril is not mentioned, you can’t claim it on your insurance. With broad home insurance coverage, you shoulder more of the risk, but you also pay less money annually.

 

What’s the best home insurance for me?

Which policy is best for you will depend on your financial situation, the location of your home, the value of your home’s contents, and more. Comprehensive insurance is technically the “best” coverage, due to its far-reaching protections.

 

Which perils are not covered by comprehensive home insurance?

As mentioned above, comprehensive home insurance protects your home and its contents from most perils. Typically, perils that are thought to be “predictable” are not covered. If your home is on a floodplain, then flooding is seen as predictable and isn’t covered. If your pipes freeze, burst, and cause damage to the home, insurance likely won’t cover it because the loss was preventable. You should review any home insurance policy before buying, to see exactly which perils are considered predictable or preventable.

In other situations, you might have the option to buy additional insurance coverage to protect against specific perils. For instance, overland water or flood coverage is not included in the average comprehensive home insurance policy, but you can buy it if you live in an overland water or flood-prone area. You can also buy extra insurance to protect yourself against sewer backup, to cover detached structures (such as sheds), or to insure particularly valuable possessions (such as jewellery, books, tools or instruments).

 

Which factors can affect home insurance premiums?

Simply choosing between comprehensive, named perils, and broad insurance coverage is not the only way to change how much you are paying in premiums. On the contrary, there are a range of other factors that can impact the cost of your home insurance policy. These include:

Payout terminology: How are payouts described in your insurance policy? A policy that pays out actual cash value for your home and contents only considers what those things are worth today—not what it would cost to replace them. A policy that pays out full replacement cost, meanwhile, must pay for you to rebuild the property and replace the contents regardless of value depreciation. Naturally, the latter option costs more.

Location: A home located more than 13km’s away from a fire hall or in a riskier area (a neighbourhood with high crime levels, an overland water or flood zone) always costs more to insure.

Age of components: How old is your home’s roof, plumbing, or wiring? The older each of these components is, the riskier the home is to insure.

Swimming pools: Swimming pools are huge liability risks. Homes that have them always have higher insurance premiums.

Security and protection: Does your home have a modern security system? How about a monitored fire alarm? These inclusions can help reduce your home’s insurance costs.

Some of these items are out of your control. If you’ve bought a house already, you can’t very well move it to a less dangerous location. However, you can replace pipes, plumbing, roofing, security systems, or fire alarms to reduce your property’s risk profile.

 

What deductible is best?

As mentioned previously, home insurance policies with higher deductibles tend to have lower premiums. As for what deductible is “best,” it depends on what you are comfortable having as an out-of-pocket expense when you have a claim. Taking on a high deductible is a good way to save money without specifically choosing not to cover things. However, if you can afford a policy with a lower deductible, you may thank yourself later if or when something happens.

 

To Sum It Up

There are a lot of different factors to consider when shopping for home insurance. You need to think about the location of your home, the risks you are undertaking, the value of your possessions and your budget—just to name a few things. Your bank may also require you to have certain types of coverage, in which case the choice ends up being out of your hands. Educating yourself about how home insurance works, what you can do to lower your premiums and other topics discussed above will help you find the coverage that is best for you and your family.

Questions?

Our team of insurance professionals are always here to help find the right insurance for you. Send us an email, check out “The Blog”, or give us a call to chat with one of our professionals.


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