Ultimate Guide To Home Insurance: 2023 (How To Get The Best Rates)

Since time immemorial, humans have cherished their homes—caves, nomadic dwellings, sod dugouts, stone houses, log cabins, and steel-beamed complexes alike. Home is where the heart is, and while the methodology may have evolved over the centuries, people have always felt the core need to protect their property.

In modern Canada, we’ve long since left behind stone age tactics and medieval weaponry in favour of a much less violent approach. Nowadays, we simply protect our properties by purchasing home insurance.

Also known as homeowners insurance, home insurance had its origins somewhere around the year 1666, after the  Great Fire of London destroyed almost 90% of that city’s homes. In Canada, however, it wasn’t until 1804 that the first official home insurance company  opened an office in Montreal. Throughout the 1800s and early 1900s, fire was the primary risk for homeowners, but over the decades, policies emerged for other risks as well—each one constituting its own separate purchase.

In the 1950s, the first all-encompassing policy emerged, allowing customers to cover multiple risks rolled into one with a single purchase. Since then, home insurance has only continued to evolve and develop. In Canada today, home insurance is a multi-billion dollar industry that employs thousands of people across the nation. It’s also an ever-present reality for homeowners, the vast majority of whom must maintain coverage in order to receive financing from their mortgage lenders.

If you’re in the market to purchase a home, you undoubtedly have some questions about home insurance. Long-time homeowners may appreciate a refresher as well!

At Nation West Insurance, we believe in empowering our clients to make educated choices about the insurance providers and plans that will best suit their specific needs. In this article, we’ll start right at the beginning and break down the basics of home insurance so that you can ultimately make the best and most informed decision.

We’ll cover the most common questions we receive about affordable home insurance in Winnipeg, plus provide some background information and a glossary of relevant terms. Use the Table of Contents below to skip to particular home insurance topics, or read all the information from beginning to end for a more comprehensive overview.

Table of Contents

1. Understanding Home Insurance
2. Home Insurance Coverage Options
3. Types of Home Insurance
4. Cost Saving Tips
5. Glossary

What Is Home Insurance?

Home insurance is a form of property insurance that protects your home and belongings in the event of unexpected damages or losses. Policies vary widely, but usually cover certain fundamentals such as interior damage, exterior damage, loss or damage of personal assets, and injuries that arise on your property. Many policies also cover the cost of living elsewhere while your home is being repaired as well as personal liability if you’re held legally responsible for damage or injury to someone else.

Insurance companies assess many factors to determine the premium (rate) you’ll pay to insure your home. Among them are the price, age, and construction of your home, its proximity to fire services, history of claims on the property, crime rate in the neighbourhood, your personal credit history, your age, and the coverage type and amount you desire.

Once you purchase a home insurance policy and pay your premium, it goes into a large pool of payments from other policyholders. That large pool is managed by the insurer and becomes the source of pay-outs when policyholders (such as yourself) make claims for losses and damages covered by their policies. In this way, insurance companies maintain enough funds to cover loss and damage costs that could otherwise be financially devastating to individual property owners.

Home insurance is intended to cover unexpected and unpredictable circumstances, not routine home maintenance. It’s not a catch-all solution for covering the costs of upkeep and should never be viewed as such. Before purchasing a home insurance policy, be sure to understand it thoroughly through and through. A professional Nation West specialist will be happy to provide guidance and detailed answers to all of your questions before you make a final decision.

Why Buy Home Insurance?

No one gets excited about the prospect of paying for home insurance and you may even hear people grumble about it from time to time—especially if they’ve been fortunate enough not to have experienced any recent damages or losses. But the truth is that when an unexpected accident, event, or emergency occurs, home insurance will prevent you from being financially overwhelmed. It’s a safety net that provides security and peace of mind.

Your home is almost certainly the largest investment you’ll make in your lifetime, and it makes good sense to protect it.

In addition, home insurance can protect your personal and premises liability. In layperson’s terms, this means that you’ll be covered in the event that someone is injured on your property or that you (along with anyone on your policy, including pets) negligently injures someone anywhere in the world. Once again, the security that home insurance provides can leave you free to go about your daily life with less worries.

Even if you’re a risk taker at heart who’s fundamentally unconvinced by the peace of mind arguments, you’ll almost certainly end up purchasing home insurance anyways. Why? Because it’s standard for mortgage lenders in Canada to stipulate that proof of home insurance be provided before approving your mortgage.

Your mortgage lender is essentially investing in your property, so it makes sense for it to want to protect that investment. Home insurance is a built-in safety net that guarantees you’ll continue to pay your mortgage even if your property is seriously damaged or destroyed.

You may be interested to note that home insurance is not actually required by Canadian law. Therefore, if you’re among the rare minority of people who don’t need a mortgage, you can technically avoid home insurance payments. That being said, it’s not recommended. According to Ratehub, the average annual cost of home insurance in Canada is currently $960—which comes to approximately $80 per month. Seriously consider whether it’s really worth opening up yourself and your property to so much risk for that level of savings.

When Do I Need To Buy Home Insurance?

Homeowners insurance isn’t just for people who purchase a detached house to live in. In fact, many different types of homes and properties are covered under the umbrella of home insurance. If you’re buying any type of property with any structure on it for any purpose, chances are that you’ll need some type of home insurance.

In addition to detached house policies, other standard types of homeowners insurance include policies for duplexes, heritage homes, rental properties (short and long term), condominiums, seasonal or vacation homes, log homes, townhouses, homes under construction, vacant homes, and more. Even if you don’t own a property yourself, your landlord may require tenant insurance—a subset of home insurance.

The best time to purchase home insurance is after you’ve signed a contract to purchase a new home, but before you’ve closed the deal (taken possession). It’s standard to arrange coverage to begin immediately upon your date of possession, which ensures that your property will never be left without coverage for even a moment. If home insurance is a condition of your mortgage, then proof of this arrangement will almost certainly be required for closing.

Don’t leave home insurance research to the last minute. There are a lot of choices to understand, and the sooner you begin familiarizing yourself with the options, the more confident you’ll feel as your possession date approaches.

How Much Home Insurance Do I Need?

The amount of home insurance you need depends on the value of your home and possessions. The market value of your home as assessed by an objective, third-party appraiser (often from a bank or mortgage lender) provides a good starting point, but there’s more to consider than just that.

In the event that your home was completely destroyed by a disaster, how much would it actually cost to rebuild in your area? Consider the cost of materials and labour at today’s prices, as well as the possible cost of additional living expenses if you were displaced from your home for a period of time.

In many cases, the price of rebuilding your home will be less than the price you paid for your home and property together—which can translate to a less expensive insurance policy. But be extremely careful not to undervalue your home and end up without enough coverage to rebuild.

Also worth considering is the value of your belongings. Most policies value your personal property as being worth between 50%-70% of your dwelling itself, but if you have a lot of expensive items (like jewellery or artwork), you may want to add on additional coverage.

When determining how much insurance to purchase, carefully consider whether to opt for coverage at actual cash value or replacement cost. Actual cash value coverage is less expensive, but it deducts depreciation from the cost to replace items (e.g., a two-year-old laptop that’s deemed to have a five-year lifespan will be valued at 60% of the price of a new laptop). Replacement cost coverage, on the other hand, is pricier but covers the cost of replacing damaged items up to the original price you paid.

Lastly, you’ll want to consider how much liability coverage you need. Liability coverage is crucial in the event that you injure someone or someone is injured on your property.

As you can see, there are many factors that go into determining how much home insurance you need. At Nation West Insurance, our advice is to be organized and methodical in calculating the costs and values associated with your home and possessions (don’t just pull estimates off the top of your head).

Keep clear records for yourself. This will help you easily reassess the numbers when you renew your home insurance policy each year; it will also allow you to access clear documentation in case of loss or damage to your home.

If you have further questions, one of our insurance specialists will be happy to offer guidance.

Information Needed for a Home Insurance Quote

While every insurance company will require slightly different information to provide you with a home insurance quote, much of it will be the same every single time. Broadly speaking, these are the six main categories of information you’ll usually need to provide:

Location

You’ll be asked to provide the location of the home you want to insure. This will allow the insurance company to determine:

• The fire protection level
• Crime rate in the area
• Risk of natural disasters (e.g., earthquakes, floods)
• History of claims in the area and on the property itself

Occupancy

The purpose of your home directly impacts your premium. Your insurance company will want to know what your home’s usage will be, including:

• Primary residence
• Primary residence with tenants
• Second home
• Long-term rental
• Short-term rental
• Home under construction
• Vacant home

Home Details

Every insurance company will be interested to know about details of your home that may impact future claims. These may include:

• Roof (age and type)
• Hot water tank (age)
• Plumbing (type of system)
• Electrical (type of system)
• Drainage (roof, sewer, and perimeter)

Personal Information

Providing your legal name, date of birth, and address allows insurance companies to check your insurance history. Often, credit history is also a consideration. On the plus side, providing personal information to your insurance provider can also help it determine your eligibility for potential discounts.

Coverage and Deductible Details

In order to provide an accurate quote, your insurance company will need to know what type of coverage you’re hoping for. Read the options carefully and select the core and optional coverages that you want to be included in your policy. Also consider the deductible amounts you’re comfortable with, and whether or not you’ll be wanting any specific deductibles for events such as inland floods or earthquakes.

Can I Opt-out of Home Insurance?

Technically, yes—home insurance is not a legal obligation in Canada. But you can only opt-out if you’ve paid off your mortgage and aren’t required to maintain coverage for any other reasons (e.g., you rent the property through an agency that requires insurance).

As mentioned earlier, opting out of home insurance is not recommended and opens you up to a veritable tsunami of risks, liabilities, and financial hardships. At Nation West, we firmly believe that purchasing home insurance is the best way to guarantee the security of the places and people you cherish most.

What Does Home Insurance Cover?

While every insurance policy is unique, there are six types of coverage that are generally included in most standard policies. They are:

• Dwelling Coverage – Dwelling coverage covers damage to your home and any attached structure(s), such as a porch or attached garage.
• Other Structures – Other structures coverage typically covers stand-alone structures on your property such as a fence, shed, or detached garage.
• Personal Property – Personal property coverage covers the cost of repairing or replacing stolen or damaged belongings.
• Loss of Use – Loss of use coverage covers part or all of the living costs associated with having to be out of your home during repairs.
• Personal Liability – Personal liability coverage covers circumstances where you injure someone or cause property damage unintentionally or through neglect.
• Medical Payments – This type of coverage pays to treat someone injured on your property or if someone in your household (including a pet) injures someone while away from home.

Not all policies will include all six of these elements, and even amongst those that do, the exclusions and coverage limits will vary widely. To put these variables in context, let’s take a look at the three types of home insurance policies that are available in Canada today—Basic Coverage (Named Perils), Broad Coverage, and Comprehensive Coverage:

Basic Coverage (Named Perils)

Named perils coverage is the most limited type of home insurance policy available in Canada. That being said, it’s also the most affordable. Named perils coverage gets its name from the fact that it only covers specific perils (causes of loss or damage). If a peril isn’t listed (or named) in your basic coverage policy, your home won’t be covered for it.

Typical named perils policies offer coverage for loss or damage resulting from fire, wind, aircraft or vehicle impact, hail, theft, smoke, and some forms of liability.

Broad Coverage

Broad coverage policies are like deluxe named perils policies. They provide named perils coverage with some extras (which can sometimes include more comprehensive coverage for your home and structures). Broad coverage is more expensive than basic coverage but doesn’t offer the same level of security as comprehensive coverage.

Comprehensive Coverage (All-Risk)

Comprehensive policies are the most secure home insurance option. Unlike named perils policies, comprehensive policies cover any and all types of damage or loss, with just a small list of exclusions (perils that are not covered under the policy). If a peril isn’t on the exclusions list, you can safely assume it is covered by your comprehensive, all-risk coverage.

Comprehensive coverage represents the most expensive type of home insurance in Canada, but at Nation West we believe it’s a well justified expense that you won’t regret in the end.

What Is Not Covered?

If you opt for named perils coverage, your home won’t be covered for any perils that are not named in your policy. With comprehensive coverage there will be a clear list of perils that aren’t covered under your policy (known as exclusions).

Some events that are routinely left out of standard policies include:

• Overland flooding
• Sewage backup
• Landslides
• Avalanches
• Earthquakes
• Tsunamis
• Nuclear hazard
• Damage due to power failure (e.g., lost freezer food)
• Lock replacement
• Damage caused to vacant properties (if your home is unattended for 30 days or more, it’s generally considered vacant)
• Infestations (including mould and fungus)
• Damage due to standard wear and tear, poor maintenance, or neglect
• Home equipment breakdowns
• Loss of valuables (over a certain limit—often $10,000)
• Identity theft
• Government action, including acts of war

Coverage Options

Often, you can purchase optional add-on coverage (known as endorsements) for risks that aren’t covered under your base policy. Endorsements run the gamut from natural disaster coverage to coverage for identity fraud.

Below are a few of the most common types of home insurance endorsements. Keep in mind that the availability and specifics of endorsements can vary from one insurance provider to another (and even from one policy to another):

• Natural Disasters – If you live in an area that’s prone to specific natural disasters (e.g., earthquakes or flooding), you’ll likely want to consider an endorsement that can help to cover damages from these types of risks.
• Scheduled Personal Property – This type of endorsement covers specific valuable items in your home—such as a ring, piece of art, antique, or instrument. Your insurance provider may require an appraisal to determine the item’s value before insuring it.
• Ordinance or Law Coverage – This type of endorsement pays to bring your home up to building codes during repairs.
• Water Backup Coverage – This type of coverage pays for damages due to backed up drains, sewers, or sump pumps.
• Equipment Breakdown Coverage – This type of endorsement pays for repairs to major appliances and/or HVAC systems—but keep in mind that the issue must be due to something other than normal wear and tear.
• Service Line Protection – This type of endorsement pays for repairs to utility lines on your property (water, electric, or other utilities).
• Identity Fraud Coverage – This type of endorsement pays for costs associated with identity theft, such as lost wages or legal fees.
• Mass Evacuation – This type of endorsement pays for living expenses incurred as a result of being mandated to leave your premises due to great risk or danger (e.g., a wildfire or flood).
• Lock Replacement – This type of endorsement covers the costs associated with replacing locks in your home after burglary.
• Freezer Food – This type of endorsement covers food that may have thawed in a freezer due to a power failure.

No matter what type of insurance policy you opt for, and whether you include endorsements in your policy or not, you’ll also have to consider the level of coverage you want. In Canada, there are three main levels of coverage available:

Actual Cash Value

Actual cash value coverage refers to coverage that calculates the cost of your house and belongings after taking depreciation into account. In simple terms, actual cash value (ACV) covers what your house and belongings are currently worth—not what you paid for them. Subtract depreciation from original value and you’ve got actual cash value.

Example: Your laptop has been stolen. You bought it for $1000 two years ago. Your insurance provider considers the laptop to have a 5-year life span. Therefore, they consider that it has depreciated 40% in value and offer you $600 toward replacing it.

Replacement Cost

Replacement cost coverage refers to coverage that calculates the actual cash value of losses without deducting depreciation.

Example: Your laptop has been stolen. You bought it for $1000 two years ago, so your insurance provider offers you $1000 toward replacing it.

Guaranteed Replacement Cost

Also known as extended replacement cost coverage, this type of coverage calculates the actual cash value of losses without deducting depreciation. In addition, it takes inflation into account and covers the current cost of replacing whatever has been lost or damaged—even if it exceeds your policy limit.

Example: Your laptop has been stolen. You bought it for $1000 two years ago. Today, the same laptop costs $1250 new, so your insurance provider offers you $1250 toward replacing it.

Guaranteed Replacement Cost coverage is the gold standard coverage level, but it’s also the priciest. Consider carefully before selecting the level of coverage you’re comfortable with.

House Insurance Vs. Condo Insurance

The main difference between house insurance and condo insurance is that house insurance covers your home and entire property, while condo insurance only covers your condo unit.

Specifically, house insurance covers: Your home, its contents, your property and everything on it, and additional living expenses if you can’t stay in your home due to an insurable loss. It typically also includes coverage for premises and personal liability.

Condo insurance covers: Your unit and its contents along with additional living expenses if you can’t stay in your unit due to an insurable loss. It typically also includes liability coverage and covers you in the event that damages to other units or common spaces result from an accident within your unit. The condo building itself and its common elements (e.g., hallways, elevators, walkways) are covered through condo fees.

Rental Property Insurance

If you plan to receive income from rental properties, you’ll want to consider rental property insurance. This type of home insurance takes into account specific perils associated with being a landlord and protects your buildings, liability, and property.

In addition to standard inclusions, rental property insurance policies usually also cover landlords property, which is defined as property that’s owned by you but provided for use by your tenants (e.g., appliances, large furniture, etc.). In some cases, you’ll even be able to recover lost income if a tenant is forced to evacuate.

Long-term rentals (usually defined as properties with leases that are six months or longer) are typically regarded as less risky than short-term rentals, which means they generally cost less to insure.

In addition to the standard information required for a home insurance quote, insurance providers may also request additional information for rental property policies, such as:

• Who is managing the property
• How far away you live from the property
• If the tenants will be required to hold their own insurance

Seasonal or Vacation Home Insurance

Sometimes also referred to as cottage insurance, vacation or seasonal home insurance protects a home or property that is not your primary residence. You can generally opt to include your secondary property within your primary insurance policy but can also take out a separate policy if you prefer. That being said, most insurance providers don’t allow you to only insure a vacation property, so you’ll likely need to insure your primary and secondary properties through the same company.

In general, most vacation home policies offer named peril coverage instead of comprehensive coverage. This is because you will be away from your secondary residence for long periods of time and damages can be compounded if not dealt with in a timely manner (e.g., sewage backup, wind damage). The risk of theft also increases when your vacation home sits empty for a large portion of the year. Not surprisingly, the reality of increased risks, such as these, often results in higher premiums.

When purchasing seasonal or vacation home insurance, be sure to include any detached structures (e.g., boat house, guest house, studio). Also, consider whether or not you may rent out the property in the future, as this can impact the type of coverage you’ll require.

How To Save Money on Home Insurance Premiums

Home insurance is a private industry that is neither federally nor provincially standardized. So, home insurance rates can vary dramatically. No matter which provider or plan you go with, here are some tips for keeping your premiums as low as possible:

1. Increase Your Deductible
   A deductible is the portion of an insurance claim that the policy owners pays for themselves. Imagine a wind storm causes $5,000 worth of damage to your roof and you have a $1,000 deductible. You’ll be responsible for paying $1,000 upfront before your insurance covers the remaining $4,000.
   If you’re willing to shoulder a higher deductible in the event of an emergency, you can often reduce your annual insurance premium.
2. Keep the True Cost of Rebuilding in Mind
   When selecting a home insurance plan, keep in mind that the amount you’re insured for doesn’t need to reflect the price you paid for your home.
   To get a more accurate picture of the amount of coverage you actually need, don’t consider the resale value of your home; instead, consider what it would truly cost to rebuild your house in the event that it was completely destroyed. Also, keep in mind that the lot your home is built on doesn’t need to be insured to the same extent as your home itself.
   As mentioned earlier, the calculated cost of rebuilding is very often less than the price you paid for your home and property combined. Taking this difference into consideration can substantially lower your home insurance premium.
3. Seek Out Specific Discounts
   Insurance companies sometimes offer discounts to categories of people they believe are less likely to file major claims. Seniors who are at home more than average, non-smokers who are less likely to start house fires, and individuals with strong credit ratings may all be eligible for such discounts.  Take the time to ask your insurance provider which discount(s) you may be eligible for.
4. Review the Value of Possessions
   If you have expensive items that you’ve insured by purchasing additional endorsements, consider canceling these endorsements as the items depreciate in value.  After a long enough period of time has passed, it may be most economical to simply include them under your standard home insurance policy.
5. Improve Home Security
   Improving your home security can be a win-win–keeping you safe while also saving you money.  Consider  your doors, locks, fire alarm, security system, and sprinklers.  Making safety upgrades can demonstrate to your insurance provider that you are less likely to file claims.  Speak to your broker for more information.

Importance of Creating a Home Inventory System

If the time comes when you need to make a home insurance claim, you’ll want to have a clear record of all the items in your home. Known as a home inventory list, this type of record is often categorized by rooms in the house, types of items, collections, or other relevant criteria.

The best time to create a home inventory list is now—before you really need it. Your system for documenting items should include the following elements (as applicable):

• Description of item
• Make, model, and serial number
• Appraisal or cost at the time of purchase
• Date and location of purchase
• Receipts and/or photographs of the item
• Estimated replacement cost at today’s value

Tips on Understanding the Value of What You Own

We already covered some tips for evaluating the worth of your home and personal property in the “How Much Home Insurance Do I Need?” section of this article. Below, we’ll provide a few more tips focusing on your home’s contents:

• Consider the value of all items, not just the expensive ones.
• Consider what you would take with you if you moved—everything that isn’t physically attached to your home.
• Get an appraisal of high-value items.
• Make a thorough list of each room’s contents.
• Calculate the value of each item and add them up for a final total.

Is Your Home Insured for Its Replacement Cost?

As mentioned earlier, the price you paid for your home and property, and/or its current resale value, very rarely represent the true cost of rebuilding it. Be sure to re-evaluate the current cost of labour and materials each year before renewing your home insurance policy.

Can Home Insurance Be Written Off on Taxes?

In general, no—but in some cases, yes.

Unfortunately, you cannot write off home insurance expenses for your primary (or even secondary) residence.

That being said, there are some scenarios where you may be able to deduct part of your home insurance costs. If you work from home, run a business out of your home, or receive rental income from an insured property, you may be eligible for tax savings on your home insurance.

At Nation West we can offer some guidance in this area, but always recommend double-checking with a trusted financial advisor that knows your specific circumstances.

How Are Home Insurance Rates Determined?

You’ve probably realized by now that there are many factors that go into determining insurance rates. On top of that, rates vary from provider to provider. The insurance company which offers the least expensive policy that meets your needs may represent your best option. But this isn’t always the case.

As in any industry, quality matters in the world of home insurance. So, before committing to an insurance provider, be sure to consider its reputation. Among other things, consider its financial health, claims response time, and the satisfaction of current policyholders (online reviews are an excellent starting point in this regard). Weigh your options carefully, and don’t hesitate to get multiple quotes before making a decision.

While insurance rates will vary from provider to provider, some standard factors that influence premiums are (not an exhaustive list):

• History of claims on the property to be insured
• History of claims made by you personally
• Neighbourhood and crime rate
• Building materials
• Proximity to fire services
• Age and condition of the home
• Home features (e.g., fireplace, swimming pool)
• Type of coverage desired

At Nation West, we pride ourselves on helping our clients source high-quality insurance options that will perfectly suit their financial and coverage requirements. Don’t hesitate to request multiple quotes or ask one of our insurance specialists to go over the pros and cons of various policies with you. That’s what we’re here for.

How Does the Claims Process Work?

Generally speaking, the claims process begins with a phone call to your insurance provider. (If required, phone calls should always be placed to emergency services before contacting your insurance company.)

After providing your name, your policy number, the location and details of your loss, and a phone number where you can be reached, you’ll be connected with an adjuster. Your adjuster will help you document and evaluate your losses, at which point you’ll receive payment. For major claims, this process will take longer and may involve a more detailed analysis of damages and losses.

Conclusion

Above, we’ve covered the basics of home insurance—what it is, how it works, and why you should do careful research before purchasing a policy.

The team at Nation West Insurance is always ready and available to meet with you personally and help you discover the insurer and policy that will best suit your needs. Along the way, we’re prepared to answer any questions you may have and to ultimately support your dreams as you move forward toward a home and property that you and your family will cherish forever.

For more information about home insurance, contact us today!

Glossary

Actual Cash Value

Actual cash value refers to coverage that calculates the cost of your house and belongings after taking depreciation into account. In simple terms, actual cash value (ACV) covers what your house and belongings are currently worth—not what you paid for them. Subtract depreciation from the original value, and you’ve got the actual cash value.

Actuary

An actuary is a professional who computes statistics relating to insurance. Actuaries are responsible for estimating loss reserves and developing premium rates, among other things.

Advisor

An insurance advisor is a professional who provides financial advice to policyholders (or potential policyholders) to help them find the best insurance options for their particular needs and circumstances. Insurance advisors can represent many different insurance companies and are not attached to any particular provider.

Appraisal

An insurance appraisal is a documented assessment of a property’s replacement value by a qualified professional. When you make a home insurance claim, an appraisal will likely be conducted to accurately assess the cost of repairs.

Binder

When you purchase insurance, there may be a short period of delay before a policy can actually be issued. To ensure that your property is covered in the meantime, your agent or insurer may issue you temporary evidence of insurance known as a binder. A binder should state the details of your policy in writing and be clearly timebound.

Claim

Used in reference to insurance, a claim is a demand by a policyholder to recover losses that are covered by a specific policy. Insurance claims may be made in writing, by phone, or in person, depending on the circumstances.

Coverage

Coverage is a general term that describes the amount of protection afforded by insurance, including home insurance. Coverage amounts vary depending on the specifics of the insurance plans in question.

Deductible

A deductible is the amount you’re personally responsible for paying on any claim before insurance kicks in. For example: Your home has sustained $5,000 worth of wind damage and you have a $1,000 deductible for wind damage. In that case, you’ll be responsible for paying $1,000 out of pocket before your insurance provider covers the remaining $4,000. Deductible amounts should be clearly laid out when you purchase home insurance but will vary depending on your policy and the type of coverage in question.

Declarations

The declarations page of your insurance policy (also known as the dec page) summarizes the essentials of your home insurance coverage all in one place. Often the declarations page is the first page of your policy and includes information such as the name of the policyholder(s), address, the policy period, location of premises, policy limits, discounts, coverages, agent contact information, and more.

Discounts

Home insurance discounts describe specific situations that may be factored into reduced home insurance payments. Discounts may be policy-related (claim-free discount, loyalty discount, multi-policy discount, etc.), related to your home and area (upgrades discount, safety and security discount, new home discount, etc.), or based on your personal profile as a homeowner (seniors discount, non-smokers discount, etc.).

Endorsement

An endorsement is an insurance policy form that’s used to change or add provisions to your policy. Instances where an endorsement could be used might include broadening the scope of coverage, adding locations to the policy, adding additional names to the policy, and many more.

Exclusions

Exclusions refer to damages, property, or circumstances that are not covered by a home insurance policy. They should be clearly laid out in your policy and commonly include overland flooding, earthquakes, neglect, war, infestations, and more. Sometimes you can make additions to your policy to cover specific exclusions.

Fair Rental Value

Fair rental value coverage is a type of home insurance that can cover your lost rental income in case a covered claim makes your property uninhabitable for a period of time. Fair rental value is calculated by determining reasonable rent for the property and the variable renting costs.

Fire Protection Levels

Fire protection levels consider the risk of fire damage to your home based on access to fire services. The cost of your insurance premium will take into account your proximity to a fire department and water supply, the training and availability of firefighters, and the quality of fire trucks and equipment.

Guaranteed Building Replacement Coverage (GBRC)

Guaranteed building replacement coverage (GBRC) is coverage that guarantees replacement of your home for one of similar kind and quality, even if the total cost of replacement exceeds your insurance limit. It applies to damages as well as total loss scenarios. GBRC takes the cost of rebuilding your home into account when determining your payments and premiums.

Perils

In the world of home insurance, perils refer to causes of loss. Put simply, a peril is the specific reason why you’d need to file an insurance claim in the first place. Perils such as hail, water, and theft are common to most home insurance policies, while others may be less standard.

The types of perils covered by a policy fall into 3 categories:

• Basic “named perils”

  A named peril policy protects you against a specific list of perils. If a peril isn’t listed on the policy, you’re not covered for it. This is the most basic type of home insurance policy available in Canada.

• Broad “named perils”

  A broad named perils policy includes basic coverage but with some additional inclusions. Often these extras relate to your belongings and the structure of your home.

• Special “all risk”

  Also known as comprehensive coverage, all-risk policies are frequently required by mortgage lenders. This type of policy protects against everything, with the exception of a list of exclusions. Unless a peril is specifically excluded, you can safely assume it’s covered. This is the most robust type of home insurance available in Canada.

Premium

Your premium is the amount that you pay to maintain your home insurance. Many factors go into determining the cost of your premium and can include your claims history, neighbourhood, the condition of your home, and the coverage amount desired, plus more. Home insurance premiums are calculated annually and can usually be paid monthly or in a lump sum.

Subrogation

Subrogation refers to your insurance company’s right to request reimbursement from an at-fault party. Though subrogation most often occurs once your insurance company has already paid you for the cost of your covered claim, it can technically take place at any point throughout the claim process.