If you understand what to look for when buying home insurance, you’ll be able to get the policy that’s right for you.
Why?
Because while there is some conformity among the different companies, they aren’t identical in the coverage they offer.
That’s why it’s important to have a basic understanding of the terminology; so you can compare apples to apples when you call around for quotes.
Purpose of home insurance:
Essentially, a homeowner’s insurance coverage is meant to provide a safety net for events that can have a significant effect on your life.
Property coverage
Covers damages to your home and the personal property within it if it becomes destroyed or damaged.
Liability coverage
This provides coverage for damages someone suffers while they or their property is damaged or destroyed while on your property.
It also includes coverage for situations where your property (e.g. a tree in your yard) damages others’ property, such as a car parked in the street adjacent to your property.
Mortgage requirement
Lenders require that as long as they hold a mortgage on your home that you maintain homeowner’s insurance coverage and list the lender as the mortgagee on the policy.
Miscellaneous expenses
Homeowner’s policies will also include coverage for living expenses you incur in the event you need to move out of the home while it’s being repaired or rebuilt after a claim.
What’s covered
A good homeowner’s insurance policy should cover all perils, with the exception of items named specifically not covered.
Most policies cover the following:
- ⬥ Fire
- ⬥ Smoke
- ⬥ Wind
- ⬥ Hail
- ⬥ Lightning
- ⬥ Explosions
- ⬥ Theft or vandalism
- ⬥ Trees and/or falling objects
- ⬥ Damage resulting from snow and ice
- ⬥ Water damages from a busted pipe
- ⬥ Damage caused by a vehicle or aircraft
What’s Not Covered
Issues that aren’t usually covered – or that need to be added on through an endorsement include:
- ⬥ Flooding or sewers backing up
- ⬥ Earthquakes, mudflows and landslides
- ⬥ Insect, rodent and pet damage
- ⬥ Damage from pollution
- ⬥ Deliberate destruction of property
- ⬥ Wear and tear
Note that maintaining your home is important if you expect to be covered.
Insurance companies will not cover damage from a clear lack of maintenance – for example, a rusty pipe bursting wouldn’t be covered, however one that is new or well maintained that burst unexpectedly would likely be covered.
Use this checklist when shopping for a homeowner’s policy
- ⬥ What kinds of claims, if any, have previous homeowners made against the come we’re considering buying?
- ⬥ How will a claim impact my premium when it comes time for renewal? Would it be cheaper to not file a claim?
- ⬥ What impact does my credit history have on the premium I’m paying?
- ⬥ Ask what limits are in the policy?
- ⬥ Is the coverage based on replacement costs or the actual value?
- ⬥ What do I need to consider when deciding on personal property coverage?
- ⬥ Do I need more liability coverage than the standard? If so, how much?
Do I need to buy flood or earthquake coverage? - ⬥ What kinds of water damage isn’t covered?
- ⬥ Will the policy cover mold damages?
Things that could impact your premiums
- ⬥ The construction of your home. Wood homes will usually have higher premiums than those built with brick or masonry.
- ⬥ Your home’s proximity to a fire hydrant and/or fire department as well as the quality of the fire protection services available in your area.
- ⬥ Know your home’s age and condition. Insuring an older home and/or one in poor condition will result in a higher premium than younger homes in good shape.
- ⬥ Neighborhood’s history of claims and its location play a role in the premiums you pay.
- ⬥ Having a wood stove in the home will increase how much you pay for homeowner’s insurance.
Other factors include:
- ⬥ Swimming pool
- ⬥ Trampoline
- ⬥ Play ground
- ⬥ Dog breeds more prone to biting
