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Home Insurance Made Simple: Answers to Your Top Questions

Posted Apr 3rd, 2023 in Did You Know?, General, Home Insurance, HOMEINSURANCE, In the News, Insurance Tips, Media, TENANTINSURANCE


As homeowners, we invest a lot of time, effort, and money into making our houses feel like homes. But what if the unexpected happens? How can we protect our property and everything we've worked hard for? That's where home insurance comes in. Whether you're a first-time homeowner or a seasoned pro, it's important to understand the ins and outs of home insurance. In this blog post, we'll be answering some of the most frequently asked questions about home insurance, so you can feel confident and informed when it comes to protecting your home sweet home.

What is Home Insurance and Why Do I Need It?

Home insurance, also known as homeowner's insurance, is a type of insurance policy that provides financial protection for a person's dwelling and personal property in the event of damage, theft, or loss. Home insurance typically covers the physical structure of the home, as well as any personal property located within the home, such as furniture, clothing, and electronics.

Home insurance policies typically provide coverage for a range of perils, including fire, windstorms, hail, lightning, theft, and vandalism. In addition to the coverage for the physical structure and personal property, many home insurance policies also provide liability coverage which can protect homeowners if someone is injured on their property.

Home insurance policies can be customized to meet the needs and budget of the homeowner, and may also include additional coverage options, such as water coverage, which includes overland and sewer backup.

What are the Most Common Home Insurance Claims?

The most common home insurance claims typically involve damage to the dwelling or loss of personal property due to accidents.

Water damage: This can be caused by burst pipes, leaking appliances, or severe weather, and can result in significant damage to the home and personal property. To learn more about how to protect your home from the #1 home insurance claim in Ontario, click here.

Wind and hail damage: High winds and hail can cause damage to roofs, siding, and windows, and can also result in water damage if the home's exterior is compromised.

Fire damage: Fires can be caused by cooking accidents, electrical issues, or natural disasters, and can result in extensive damage to the home and personal property.

Theft and burglary: Homeowners may file claims for stolen personal property or damage caused by a break-in.

Liability claims: These can arise when someone is injured on the homeowner's property, and can include medical bills, legal fees, and damages awarded to the injured party. Liability claims can also arise if you cause damage to someone else’s property.

How are Home Insurance Premiums Calculated?

Home insurance premiums are typically calculated based on a number of factors related to the homeowner and the property. Here are some of the factors that can impact the cost of a home insurance premium:

Location: The location of the home can have a significant impact on the cost of insurance. If vandalism and theft are prevalent in your area, you could pay higher premiums. Whether you live in a detached, semi-detached, or row home is also a factor. The distance between your home and neighbouring properties impacts how much you’ll pay for insurance because less space in between means more exposure to risks such as fire.

Age and condition of the home: Older homes or homes in poor condition may have higher premiums due to a higher risk of damage or maintenance issues.

Deductible: The deductible is the amount a homeowner must pay out of pocket before the insurance coverage kicks in. Choosing a higher deductible can result in a lower premium.

Home features: Certain features of the home, such as a swimming pool or a trampoline, can increase the risk of injury and result in higher premiums.

Credit score: In some cases, a homeowner's credit score may be taken into consideration when calculating insurance premiums.

Claims history: Homeowners who have filed previous insurance claims may be seen as higher risk and may face higher premiums as a result.

Fire protection: The proximity of your home to the nearest fire hydrant and fire station is considered to determine your home insurance rates. This is because the further you are, the longer the response time will be in the event of a fire, putting you and your house at a higher risk.

It's important to note that insurance companies may use different methods and criteria to calculate premiums, so homeowners should consult with their Ontario insurance broker to understand the specific factors that are used to determine their premium.

What is Liability Coverage?

Liability coverage is a part of your home insurance and can help to protect you from legal liability for losses that include injury to others or damage to someone else’s property.

We live in litigious times, where lawsuits have become the norm. If someone is hurt or injured, on your property, or because of your personal actions, a lawsuit can be devastating financially. Home insurance gives you peace of mind, knowing that if the worst-case scenario happens, you can be protected. Click here to learn why your personal insurance liability coverage needs to be $2 million

What is Personal Property Contents Insurance?

Personal property contents insurance, also known as contents insurance, is a type of insurance policy that provides coverage for a person's personal belongings or contents within their home. This type of insurance is typically included as part of a homeowner's insurance policy.

Contents insurance can provide coverage for a wide range of personal belongings, including furniture, clothing, electronics, and other household items. This coverage typically protects against damage or loss caused by perils such as fire, theft, or wind. Depending on the policy, contents insurance may also cover damage or loss of personal belongings outside of the home, such as items stolen from a car or while travelling.

When purchasing contents insurance, it's important to ensure that the coverage limits are adequate to protect all of your personal belongings. Homeowners should also carefully review the policy to understand any exclusions or limitations on coverage, such as high-value items that may require additional coverage or restrictions on coverage for certain types of damage.

What is Other Structures' Coverage?

Other structures coverage is a type of insurance coverage that is typically included as part of a homeowner's insurance policy. This coverage provides protection for structures on the homeowner's property that are not attached to the main dwelling, such as a detached garage, shed, fence, or gazebo.

Other structures coverage is designed to provide financial protection for damage or loss caused by covered perils, such as fire, theft, vandalism, or natural disasters. Depending on the policy, other structures coverage may also provide coverage for additional expenses, such as debris removal or temporary repairs, in the event of damage to one of the structures.

The amount of other structures coverage included in a homeowner's insurance policy can vary based on the policy and the insurance company. Typically, other structures coverage is calculated as a percentage of the total coverage amount for the main dwelling. For example, if a homeowner has a policy with $300,000 in coverage for the main dwelling and a 10% other structures coverage limit, they would have $30,000 in coverage for other structures on their property.

It's important for homeowners to carefully review their insurance policy to ensure that they have adequate other structures coverage for their property. If the homeowner has additional structures on their property beyond what is covered by the policy, they may need to purchase additional coverage to protect their property fully.

What is Dwelling Insurance?

Dwelling insurance is a type of insurance policy that provides coverage for the structure of a home, including the walls, roof, floors, and foundation. This type of insurance is typically included as part of a homeowner's insurance policy, but can also be purchased as a standalone policy for owners of rental or investment properties.

Dwelling insurance is designed to provide financial protection for damage or loss caused by covered perils, such as fire, wind, hail, lightning, or other natural disasters. The coverage typically includes the cost of repairing or rebuilding the home, up to the policy limits. Depending on the policy, dwelling insurance may also cover additional expenses, such as temporary housing or debris removal, in the event of a covered loss.

When purchasing dwelling insurance, homeowners need to ensure that the policy limits are adequate to cover the full replacement cost of the home. The replacement cost is the cost to rebuild the home using similar materials and construction methods. Homeowners should also carefully review the policy to understand any exclusions or limitations on coverage, such as damage caused by flooding, which may require additional coverage.

How Does My Credit Score Impact My Home Insurance Premium?

Your credit score can impact your home insurance premium in several ways. Some insurance companies consider a homeowner's credit score when determining the cost of their insurance premium. This is because studies have shown that there is a correlation between credit scores and the likelihood of filing an insurance claim. Some insurance companies offer discounts to homeowners with higher credit scores. If you have a good credit score, you may be eligible for lower premiums or other discounts. If you have a lower credit score, you may be seen as a higher risk to insurance companies, which can result in higher insurance premiums.

How Can You Reduce Your Home Insurance Premium?

A few ways you can reduce your homeowner’s insurance premium are:

  • Bundle your home and auto policies  
  • Pay your premiums annually
  • Invest in a monitored home security system
  • Install an automatic water shut-off system

To learn more ways you can save on your home insurance, click here.

How Long Do Insurance Claims Stay on Your Record?

In Ontario, insurance claims generally stay on your record for five years from the date of the incident. This includes both claims that are paid out and those that are denied.

Insurance companies use claims history as a factor when determining premiums and eligibility for coverage. If you have a history of multiple claims, it may result in higher premiums or difficulty obtaining coverage.

It's important to note that insurance companies may have different policies regarding how far back they look at your claims history. Some companies may only consider claims within the past three years, while others may look back further.

Does Home Insurance Cover Jewellery and Artwork?

Home insurance policies typically include coverage for personal property, which can include jewelry, artwork and collectibles. However, the coverage limits for these items may be lower than the total value of the items, and some policies may have specific exclusions or limitations on coverage.

For example, most home insurance policies will have a limit on the amount of coverage for jewelry and other valuable items, typically between $1,000 and $5,000. If you have jewelry or artwork that is worth more than this limit, you may need to purchase additional coverage, such as a rider or floater, to ensure you have adequate protection.

It's also important to note that home insurance policies may have specific exclusions or limitations on coverage for certain types of jewelry or artwork. For example, some policies may not cover damage or loss caused by wear and tear or may exclude coverage for certain types of valuable items, such as fine art or collectibles.

If you have valuable jewelry or collectibles, it's important to review your home insurance policy carefully and speak with your insurance broker to understand your coverage and identify any potential gaps in coverage. You may also want to consider getting a professional appraisal of your items to ensure you have accurate documentation of their value in the event of a claim. To learn more read our Mind-Blowing Reasons Why You Must Insure Your Collectables blog.

What Kind of Insurance Do I Need If I Rent Out My Basement?

If you rent out your basement or a room in your house you are considered a landlord and the best way to stay protected is to have Ontario Landlord Insurance. This is a type of insurance specifically designed for rental properties. It typically includes coverage for property damage, liability claims, and loss of rental income. Landlord insurance can also provide coverage for legal expenses if you're sued by a tenant.

Not all insurance policies will cover rental activities, so you'll want to check with your insurance broker to ensure you have the coverage you need. 

Are Relatives that Live with You Covered in Your Home Insurance Policy?

Your homeowner’s insurance covers your home, you, and those who reside within the household. Home insurance does extend to family members within the home.

Does Home Insurance Cover Infestations?

Likely, your homeowner’s insurance policy won’t cover infestations or pests as pest control is considered routine maintenance. This is similar to how home insurance doesn’t cover regular wear and tear of your home either. It is important to take action as soon as you notice any signs of pests in your home, including droppings or bite marks.

Does Home Insurance Cover Your Home Business?

If you have a home-based business, you have two main coverage options. You can either add home-based workers onto your home insurance policy if it qualifies or you can separate your home and business coverage. The first option is usually the lower-cost option. The second option gives you more coverage. Speak with your insurance broker to determine which option is best for your home-based business.

What is Replacement Cost Value?

Replacement cost, or single limit amount, is the amount of insurance you have to rebuild your home from scratch if there was an event that destroyed it. This value is different from the market value of your home. Here are some of the common factors that affect your home’s replacement cost:

  • Size or square footage
  • Finished basement
  • Finished garage
  • Age
  • Custom features
  • Renovations

Why is Keeping an Inventory of Your Items So Important?

Being aware of the value of the items within your home can help you to determine the best amount of coverage you should have within your policy. It is also a way to have proof of the items you owned in the event of an insurance claim. It is one of the best ways to be prepared before an event of loss occurs. It is important to have the inventory list done electronically so it is accessible anywhere, or if done on paper, to be stored in a safety deposit box or with a trusted relative, in case of fire in your dwelling. You can learn more, and download a printable Home Inventory Checklist here.

In conclusion, home insurance is an essential investment for protecting your property and personal belongings. By understanding the basics of home insurance and working with an insurance broker, you can rest easy knowing that you're covered in case of unexpected events like theft, fire, or natural disasters. Remember to review your policy regularly and update it as needed, and don't hesitate to reach out to your insurance broker with any questions that come up.  

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Disclaimer: The information provided on this blog is for educational purposes only and is not intended as professional insurance advice. The coverage, terms, and conditions of each insurance policy are unique and subject to individual circumstances. The information provided does not guarantee the availability or suitability of any insurance policy for your specific needs. You should not rely on the information in the blog as an alternative to professional advice from your insurance broker or insurance company. If you have any specific questions about any insurance matter, please consult a licensed insurance broker for personalized advice and guidance.

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