Homeowners Insurance

If you own your own home, then you'll want to protect not only your physical building, but all the things that are in your home too. A standard home insurance policy will ensure that if something like fire, vandalism or theft occurs, then you will be properly looked after and your valuables will be replaced.

You also need to think about protecting any other structures that exist on your property, like a detached garage. And, in the event that your home is damaged, and you need to move out for a while, you may want to consider investing in insurance that will help pay for out-of-pocket expenses like hotel rooms and food.

As a homeowner, it is possible that you may be held liable for accidents that people have while on your property. What's more, you may accidentally damage other people's belongings either in your own home, or somewhere else. A well-structured home insurance plan will make sure that you're covered for any of these unforeseeable events.

Tenant or renter's insurance
If you're moving into your first apartment, you might think you don't have anything of real value. A CD player, computer and some clothes may not look as if it's worth much, but when you have to replace it with something new, it could break your budget. Say you've bought a computer on credit and it's destroyed by fire or stolen. You're still responsible for paying the balance to your creditor, even though you no longer have the item.

As a tenant or renter in someone else's building, it's a wise decision to take out a tenant insurance policy. It protects both your contents and your liability exposure. You see, as a tenant, you're responsible for harm you might cause to any part of the building you live in, or to others who live or visit there. If you forgot to turn off the water in the bathtub while you're talking to your friend, you could flood out your neighbours. You would be responsible to repair any resulting damages.

Other things to consider
Tenant's improvements coverage is also important. If you've made improvements to your rental unit -- like new broadloom, painting or sound systems -- they might not be covered in a standard tenant insurance policy. Improvements coverage would be a smart investment.

There are lots of other insurance options, too. As a tenant, your insurance policy coverage can be either All Risk or Named Perils. There's protection against Sewer Backup and Earthquake. And you may want to add extra coverage for specific contents in your home, such as jewellery, furs, cameras, and bicycles. You'll find more details on all of these options in this home insurance basics section.

Condominium insurance
When you purchase a condominium, you own your "unit" and own a share in the common areas of the condominium -- the roof, basement, elevator, heating room, lobby, swimming pool, parking garage, or garden. As a condominium owner, you may be held responsible for harm you might cause to any part of your building, or to others who live or visit the condominium complex. A condominium insurance policy can remove some of the financial worries of condominium ownership.

You'll need two separate policies to protect your investment.

Your own insurance policy. The insurance policy provides coverage for your personal property, structural improvements to your unit and additional living expenses if you are the victim of fire, theft or other disaster listed in your policy. You will get liability protection to protect you for harm you might cause to any part of the building you live in or to others who live in or visit the condominium complex.
An important feature of your own insurance policy is loss assessment. As a condominium owner, you share responsibility with others in your building for common property. Loss assessment protects you from damage to these common areas. See the Loss Assessment section for more details. A "master policy" purchased and provided by the condominium board. This covers the common areas you share with others in your building like the roof, basement, elevator, heating room, lobby, swimming pool, parking garage, or garden for both liability and physical damage.

Sometimes the condominium corporation is responsible for insuring the individual condominium as it was originally built, including standard fixtures. In this case, you'd only be responsible for insuring your personal property and any alterations you or a previous owner have made to the original structure of the condominium like remodelling the kitchen or bathtub. In other cases, the condominium corporation is responsible for insuring only the bare walls, floor and ceiling. You'd be responsible for insuring your personal property, plus things like the kitchen cabinets, built-in appliances, plumbing, wiring and bathroom fixtures. Take the time to find out what's included in the condominium corporation's policy. You can then decide what to include in your personal insurance policy.

Limitations in property policy coverage
Your standard property policy will have limitations in theft coverage for jewellery and furs, silverware, business property, bicycles, money, boat and motor. If you own any of these special items, it's a good idea to consider adding additional coverage to your policy.

Paying a property insurance deductible
When you make a claim, a small portion of the claim is always paid by you first, then your insurance company pays the rest. The portion you pay is called your deductible. The amount of your deductible affects the price of your insurance policy. The higher your deductible, the less the cost of your insurance premium.

Standard Home Coverages

Building coverage
All risk coverage insures your building for the most common types of losses. When you have All Risk coverage, your building is insured for everything, unless it's specifically excluded from your policy (e.g. intentional damage to your own property would not be covered).

Named-Perils coverage includes a list of the most common types of things covered under your insurance. Named-Perils includes fire, theft and water damage. Everything is listed very clearly in your policy booklet so you have a complete and thorough understanding of what your insurance policy covers.

Named-Perils building coverage is very rare. After all, your home is probably the largest investment you will ever make - why would you not want it fully protected?

Contents
All-risk contents coverage insures your belongings inside your home for the most common types of losses. When you have All Risk coverage, your contents are insured for everything, unless it's specifically excluded from your policy. Named-Perils coverage includes a list of the most common types of things covered under your insurance. Named-Perils includes fire, theft and water damage. Everything is listed very clearly in your policy booklet so you have a complete and thorough understanding of what your insurance policy covers.

A standard home policy provides for the Actual Cash Value (ACV) replacement of your belongings. This means you only receive the value of the item, less depreciation. For example, if you purchased a TV 5 years ago for $500, you might only get $100 for it if it were destroyed in a fire. Even though it may cost you $600 to replace that same TV today, your insurance would still only give you $100. Many people choose to add the Replacement Value option to their contents coverage. Replacement value coverage means that the contents of your home are insured for the amount it costs to replace them. When you replace the item(s) with a similar kind and quality, within a specified time, the insurer will pay you what it cost you to replace the item(s) not what they were actually worth in their used state. This means if your 5 year-old TV was lost in a fire, you would get the full amount it would cost to replace it, even if that is more than you paid for the TV in the first place.

Detached private structure
This type of coverage applies to structures that exist on your property, but that are not connected to your primary residence. For instance, a detached garage could be included under this coverage. There is usually a certain limit assigned to this kind of coverage, but you can always increase that limit by purchasing additional coverage options.

Additional living expenses
If you are forced to leave your home because of a loss, this coverage pays for your reasonable and necessary expenses to temporarily live away from home. Hotel and food costs are the type of expenses that would be covered under such circumstances. There is usually a limit on this kind of coverage.

Personal liability
Liability is a legal responsibility. Liability insurance protects you from having to pay damages to people, if you've been found responsible for unintentionally injuring them or damaging their property.
Here are some examples:
If someone injures himself/herself on the property you occupy, you may be responsible for damages. For example, if someone slips on your front steps, breaks his/her leg, and can't go to work, you could be held responsible for the person's lost wages.

If you or a member of your family damages another person's property, you may be held liable. So if your son accidentally throws a baseball through the neighbour's window, and breaks an expensive antique, you may have to pay.

The beauty of liability insurance is that it protects you anywhere in the world. Say for example, if your golf club accidentally flies out of your grip on a Florida golf course, strikes and injures another player. Liability insurance would cover this accident.

Homeowners and renters insurance can vary tremendously both in coverage and in price. Select a company based not on price alone, but on service quality. Each company is unique. But, there are a few ways to ensure you get the most for your insurance dollar.


1.  Consider homeowner's insurance before you purchase a home to save between 5 and 15 percent. Some insurance providers discount property coverage if your home is close to a fire hydrant or in a professional rather than volunteer fire district. If the electrical, heating and plumbing systems are less than 10 years old, your coverage could be less. If you live in a brick home (for those on the East coast), you're less prone to wind damage. If you live in a wood-framed home (if you live near earthquake faults), you are less prone to quake damage. Flood and earthquake damage protection is not covered in standard homeowner's insurance and could run up to $500 per year depending on the location of your home.

2.  Your deductible is the out of pocket expense you pay toward a loss before the insurance company begins coverage. The higher your deductible, the more you are responsible for. Most companies recommend at least a $500 deductible. If you increase your deductible to $500, you may reduce your premium up to 12 percent. Increase it to $1,000, and save up to 25 percent. Ultimately, you could increase your deductible to $5,000 and save up to 37 percent depending on which insurance company you use. This is a chance, obviously, as you will have to pay this fee out of pocket should anything occur.

3.  Group Homeowners or Renters with Auto Insurance. Some companies offer discounts fo 5 to 15 percent if you buy two or more insurance policies with them. If your auto insurance company offers home insurance, you could benefit from using the same company for both. But be sure the combined price is lower than it would be if you used separate insurance companies for each.

4.  Some alumni, business associations or employers negotiate discounts on insurance for member. Look into the organizations you're a member of to see if you would benefit from this perk.

5.  Secure Your Home. A smoke detector, burglar alarm or dead bolt lock can usually reap discounts of at least 5 percent. If you install a high-tech sprinkler system, fire and burglar alarm that rings the police, fire or monitoring station, you may obtain a discount of up to 20 percent. Before you buy a system solely for this reason, check with your insurance company to make sure the system aligns with their discount policies.

6.  Don't automatically renew the same coverage year to year. Reevaluate new purchases and remove discarded property from your policy. Some items may drop in value as time passes, also. So reduce or cancel your floater, or the extra insurance you purchase for non-covered items.