A Canadian home owner insurance policy has many parts to it. Aside from the form of coverage (Comprehensive, named perils, etc.), there are different parts of the policy to learn about. They are outlined below
NOTE: If you do not find what you are looking for here, you can ask a question about home insurance in Canada at House Insurance Questions and Answers
1. Coverage for the Dwelling Building
If the home is damaged or destroyed by an insured peril listed in your policy (i.e. fire, lightning, wind, etc), the insurer will rebuild or repair up to the limits of the policy. Paying attention to the policy type and the exclusions at time of purchase is critical here. Of the common exclusions, the two most important ones in Canada are flood and earthquake.
While purchasing a home owner insurance policy it is also important to get the rebuilding value right. This is not the same as your purchase price. You should get advice on how much coverage to get from your broker or agent. Also, look for guaranteed building replacement cost coverage in case costs to rebuild escalate.
2. Detached Structures
Detached structures include detached garages, tool sheds, pool houses, and the like. Most policies automatically include these with a limit of 10-20% of the building value. This limit can be increased if necessary.
3. Personal Property
This is coverage for all of the contents of your home. If the contents are damaged or destroyed due to an insured peril the insurer will cover the loss. Again, small claims should be avoided.
Personal Property in a Canada Home Insurance policy usually has a limit based on the building value. This number can be 50 – 100% of the building value. So if the building is insured to $200,000 (for easy math), the contents could be insured for an additional $100,000- $200,000.
Always look for Replacement Cost coverage on personal property.
Some personal property will have limits within the policy. This usually includes valuables like jewelry, art, collectibles, bicycles, business use items and more. This is yet another reason to buy through a broker or agent who can talk about your specific needs and fill any gaps in your coverage.
Personal Property is also covered while it is away from the home – when you are on vacation for example.
Want more information on personal property insurance coverage in Canada? Read: Home Contents Insurance
4. Personal Liability Coverage
Your Home Owner Insurance Policy offers you and your family coverage for lawsuits arising from bodily injury or property damage (to others – you can’t sue yourself!) Limits start at $500,000 but $2,000,000 is the standard recommendation.
Most policies in Canada have voluntary medical and voluntary property coverage in nominal amounts of around $6000 and $2000 respectively.
Another liability option is an Umbrella Liability Insurance policy which gives further protection above the liability coverage.
It is important to disclose any home based business as additional liability coverage is required. For more information about home business insurance in Canada, visit Home Business Insurance
5. Additional Living Expenses
After a claim you may not be able to live in your home while it is being repaired or rebuilt. Additional living expenses coverage provides money for shelter and related expenses for temporary accommodations.
That concludes the 5 key parts of a home owners insurance policy. Want more information on Canada home insurance? Go to Canada Home Insurance for more on Home Insurance Policies.
Note: Always speak with a licensed insurance professional about your specific situation. This insurance information is general in nature and the policy wordings always take precedence. It is possible that there are errors and omissions in this website and www.canada-insurance-source.com, or its authors, take no responsibility.
Keep in mind that insurance licensing, legislation, and policies often vary by province and most certainly by country. Canada Insurance Source is a free information source. So use this site to gain a general understanding of insurance with your own area and situation in mind. Make sure you review the "please read" page. Always speak with a licensed insurance professional about your specific situation.
Always speak with a licensed insurance representative about your specific situation.
This site is general in nature and there may be errors or ommissions