Homeowners Insurance
Homeowner's Insurance
Homeowner's insurance (also called Property Insurance) is required by your mortgage holder to protect you against property damage repair and replacement costs associated with the specified perils included in your coverage. Should your home suffer from some type of calamity your homeowner’s insurance policy will provide the money to have your home repaired or rebuilt.

Homeowner’s insurance as discussed here relates to single dwelling property types. Condo and strata residences, mobile homes and tenant insurance coverage questions should be directed to a qualified insurance agent.

 
What Your Homeowner’s Insurance May Cover

Your property insurance policy generally protects you in the case of these types of events:
  • Fire
  • Theft
  • Vandalism
  • Certain types of water, wind and storm damage
There are additional considerations you should take into account as you compare different insurance companies and the insurance policies that they quote on because not all policies are the same and the specific types of coverage can vary greatly because of the policy type and even the wording used in the policy.

 
What Your Homeowner’s Insurance May Not Cover

It’s important to understand what your insurance policy may not cover so you can get the right policy for your requirements; common exclusions to insurance coverage include:
  • Normal wear and tear and some types of unintentional damage
  • Gradual deterioration
  • Mechanical failure
  • Sewer backup
  • Earthquake
  • Personal liability
Policy coverage will also vary according to the use of the residential property, such as if it is not your primary residence and you rent out the house, or if you have a tenant living with you. It’s important to discuss your insurance needs completely with your insurance agent.

 
Different Types of Homeowners Insurance Policies

There are several different types of available insurance policies for homeowners and each provides for different levels of coverage and premiums. It’s important to understand what your policy covers you for so you can properly compare the different options and prices as you contact different insurance companies for quotes.
  • Comprehensive: Coverage may include both the building and contents for many risks that are not specifically excluded in the policy.
  • Named Perils: Coverage includes only the perils that are specifically mentioned in the policy
  • Broad: Coverage is “All Risk” coverage for the building and specified named perils
  • No-frills: Coverage is “bare bones” for properties that do not meet the requirements of normal insurance policies and underwriting standards
  • Personal Liability: Usually purchased as additional coverage to the above policy types to protect you against bodily injury and unintentional property damage claims by a third party on your property; this coverage does not generally apply to members of your household making a personal injury or damage insurance claim
Many homeowners prefer a “Broad” or “All Risk” insurance policy that includes protection against such things as spilling paint on carpet and needing to have the carpet replaced, for example.

Repair and replacement values that your coverage will pay for can vary greatly, if covered at all by your insurance policy. It’s important to note that your policy cost is based on the repair and replacement values the insurance company estimates what it would cost them in case of a claim. It is not based on the price you paid for the home or the current market value of your property.

 
How Can I Reduce My Insurance Premium?

Homeowners insurance, and most types of insurance policies, have a deductible amount. This is the portion of any costs of a claim that you must pay before the insurance policy pays for the damage to be repaired or replaced.

As an example, if a tree falls on your roof and the repair cost is $4,000.00 and you have a $1,000.00 deductible, you will pay $1,000.00 and your insurance company will pay $3,000.00.

The higher your deductible amount the lower your annual insurance premium will be, with the risk being that you will have to pay a higher amount of the cost of repair or replacement if you make an insurance claim.

There are more ways to lower your insurance premium, including:
  • Having your auto and homeowner’s insurance policies from the same company
  • Adding a security/alarm system to your property
  • Seek out an “Affinity Discount” based on your union, alumni, occupational or other organization memberships
  • Ask for a “Loyalty Discount” if you’ve been with the same insurance company for several years
  • If you’re retired, ask for the “Retired Person’s Discount”
  • If your home is non-smoking, ask for the discount
You should also review your coverage to be certain that your policy has the right amount of coverage for certain specified purchases you have made and be certain that you adjust those coverages accordingly. As an example, let’s say you purchased a $4,500.00 mountain bike and you added extra coverage for the bike, the bike’s value depreciates over time so you’ll need to make that value change in your policy or you are over-paying for insurance.

 
Additional Resources

It’s important to be informed about your coverage and how you are protected against unexpected losses. Always speak with a qualified insurance agent about your coverage, and more importantly, what is not covered by your homeowner’s policy.

Learn more about homeowner’s insurance from these websites:

 

This information is meant as a guide only. Although deemed reliable, information may not be accurate for your specific market or property type. Please consult a REALTOR® professional or qualified insurance agent for more information on home insurance policies.