Insurance is a form of asset protection. Whether you own or rent your home, you have valuables you want to protect. That’s why it’s important to budget for home insurance as part of your financial plan.
On this page you’ll find
Why should you have home insurance?
If you own property or other items of value, insurance can protect you from costs related to damage or loss, either to yourself or to your property. This includes things like theft, fire, lightning, hail and some types of water damage. Your insurance policy may cover part or all or the damage and replacement.
If you’re a homeowner, a home insurance policy may be a requirement of your mortgage lender or condo association. If you rent your home, tenant’s insurance may be a requirement of your lease. The cost of insuring your home can reduce further expenses if damage does occur.
Four good reasons to insure your property
- Cover cost of stolen or damaged property.
- Protect you if someone gets hurt at your home.
- Cover costs if you damage someone else’s property by accident.
- Pay any extra costs if your home or car gets damaged.
How do you decide what to insure?
It’s important to know what you want to insure. This affects the type of policy you will want to purchase and how much it will cost.
When you purchase an insurance policy, you’ll need to give your insurance broker information about what you want to insure. Consider if you want insurance to cover any of the following:
Your property
You’ll need to provide details on the home you would like insured. This could include the date it was built, size, any recent renovations or damages, and the location.
Property insurance typically covers:
- Damages or losses if something happens to your possessions.
- Damages if something happens to any buildings that you own.
- Claims if you cause damage to someone else’s property.
- Claims if someone gets hurt or killed while on your property.
Your business
If you run a business from home, your home insurance may not cover your equipment and supplies. You may need to buy extra coverage.
Business insurance covers:
- Damages or losses if something happens to contents like equipment and furniture,
- Claims if someone gets hurt or killed while on the property.
- Damages if something happens to the building (if you own it). This includes any loss of business income while you make repairs.
Undeveloped land
If you own a piece of land that is not developed, you can insure it even if there’s no home on the property yet. This insurance covers claims if someone gets hurt while on the property.
Other personal items
Basic home insurance may not protect everything in your home. Or it may not cover the full value of your things. You may want insurance to cover special items in your home such as:
- books, software, or tools
- money and coins
- bikes, boats, riding mowers, snowblowers, tractors and farm equipment
- jewelry, silverware, artwork or furs
- collector’s items like baseball cards, comics, manuscripts or stamps
- guns and ammunition
If you’re not sure how much your belongings are worth, take the time to make an estimate before purchasing your policy. Even a list of your top ten most valuable items (such as a computer, camera, wedding rings, collectible items) is a good place to start.
Keep the list in a safe place along with receipts, serial numbers, photos, collector’s certificates, or any other information that can confirm ownership. You can even keep photos of these in your cell phone’s photo library. These details will help if you need to file a claim later.
How do you buy home insurance?
Your first step is to contact an insurance broker or financial institution that offers insurance. They can give you a quote for a policy based on the coverage you. A quote is provided to you before you commit. You can compare quotes from different insurance providers before deciding which policy to buy.
Basic home insurance packages for homeowners, tenants and condo owners typically cover three things:
- Buildings – Covers your house and other buildings on the property.
- Contents – Covers replacement of your belongings, usually up to 70% of the amount you insure your house for.
- Liability – Covers any claims against you if someone is hurt or killed while on your property.
If you have broader insurance coverage needs, make sure your broker includes this information in the quote.
Keep in mind your basic home insurance policy may not cover you for everything you want. Learn about what is usually excluded and talk to an insurance expert.
Choose which damages to protect against
Some types of damages are typically covered in a basic home insurance policy. This usually includes fire and smoke damage. More comprehensive coverage will depend on what you need to insure.
Some types of damage are typically not covered by home insurance in Canada, including:
- Flood damage
- Sewage backup
- Avalanches
- Landslides
If you require coverage for unexpected events and disasters, you may need to purchase special add-on coverage for such risks.
Extra contents insurance
You may want to consider extra insurance to cover your personal possessions. The amount of coverage you’ll need depends on their value. Your personal inventory of valuable items will be used by your insurance broker or agent to determine your contents insurance.
Review your policy annually
Your insurance policy will renew annually. This is a good opportunity to make any changes based on your living situation.
You should also advise your insurance company as soon as possible about any major changes, so your policy can be updated. For example, if you move from a rental property to owning your own home, you’ll need to start a new homeowners’ insurance policy and cancel your tenants’ insurance.
Summary
Insurance protects you from financial problems resulting from damage or loss, either to yourself or to your property. Keep in mind:
- You still need insurance even if you rent.
- Property insurance can also protect you if someone gets hurt at your home.
- Your basic home insurance may not protect everything in your home.
- The cost of your policy will depend on how much coverage you need, and what type.
