Area of Law: Insurance Law
Answer # 2710
Home insuranceRegion: Ontario Answer # 2710
Home insurance is generally designed to protect you from losses resulting from damage caused by events that are difficult to predict or prevent. Unlike standard automobile insurance policies, there is no standard home insurance policy. Policies can vary widely depending on the insurance company and the type of coverage desired.
However, most policies of home insurance, as well as tenant insurance and condominium insurance, also provide coverage for your legal liability to others because of bodily injury and property damage unintentionally caused by you and other members of your household.
Types of home insurance
There are generally three main types of home insurance available.
1. Comprehensive insurance. This type of insurance will cover your home and its contents for all risks, except for any that are specifically excluded in the policy.
2. Basic or Named Perils insurance. This will cover your home and its contents for only the specific risks that are listed in the policy, and will generally be cheaper than comprehensive coverage.
3. Broad insurance. This type of policy generally provides more coverage than the Basic or Named Perils policy, but less than the Comprehensive policy. With Broad coverage, you obtain Comprehensive coverage for your house and Basic or Named Perils coverage on its contents.
Although home insurance usually covers the contents of your home, you may require extra coverage, or your coverage may be limited if you own special or expensive property such as jewelry, antiques, or art work. Talk to your insurance company or broker for information on whether your expensive or special items are covered in your policy. Without the proper coverage, you may not be compensated in the event of a loss.
If you own a condominium unit, you can purchase condominium insurance to protect you against loss or damage to your unit and its contents. Specifically, a condominium insurance policy typically covers:
- Personal property such as clothing, furniture and appliances, as well as items stored in your locker,
- Additional living expenses, over and above the normal cost of living, in the event of an insured loss,
- Personal liability for any bodily injury or property damage unintentionally caused to others, and
- Upgrades to your unit made by you and previous owners, such as custom flooring or countertops, etc.
It also protects you if you cause damage to common areas of the building. Without condominium insurance, you could be held financially responsible if you cause damage to areas such as the lobby, swimming pool, and parking garage.
Reducing the cost of home insurance
You may be able to reduce the amount of money you are paying for home insurance in several ways.
1. Discounts for installing smoke alarms, sprinkler systems, or home security systems.
2. Discounts for long-time customers who have been loyal to a particular insurance company, or for customers who have both their vehicle insurance and their home insurance with the same insurance company.
3. Increase the amount of your deductible. Your deductible is an amount of money you must pay toward the total cost of the damage or loss. The higher the deductible, the less the insurance company has to pay, so they can offer you lower insurance premiums.
4. Regularly calculate the value of the items you are insuring to avoid paying for more insurance than you actually need. However, in many cases, people are underinsured because they do not properly re-calculate the replacement cost of insured items.
5. Discounts are often available for non-smokers because the risk of fires is reduced.
6. Discounts for seniors are offered by many insurance companies.
If you rent your home, whether it be an apartment, condominium or house, you can buy tenant insurance. For more information about home insurance, contact an insurance broker or refer to the Insurance Bureau of Canada website.
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