Home Insurance Questions for First-time Buyers
Home insurance is part of the process of buying a home for the first time. Where to start?
Here are answers to your top questions about home insurance as a first-time buyer.
What does home insurance cover?
Basic home insurance policies typically cover fire, vandalism, third-party injury (guest at your home) and damage to their property, vandalism, theft, hail, wildfire, windstorm, lightning, smoke, and explosion.
Do I need extra coverage?
Before buying your home insurance policy, understand what it covers and what coverage you need. For example, you may need extra insurance for your home-based business, or you may want to add sewer backup, overland flood insurance, or earthquake coverage if you live in a high-risk area.
Did you know that damage caused by sewer backup and overland floods are not typically covered by a standard home insurance policy.
Is home insurance mandatory in Canada?
No, but if you have a mortgage on your home your lender will likely require you to have a home insurance policy.
What is a deductible?
Your deductible is the amount you pay when you make a home insurance claim. The rest is covered by your insurance company up to the policy limits. You can pay a lower premium by having a higher deductible, but you need to make sure your deductible is affordable for you.
As a homeowner, you need to consider your risk tolerance and financial situation when choosing home insurance. If you choose minimum home insurance at the cheapest price, would you have enough money to replace everything you own in the event of a fire?
Should I get the cheapest home insurance?
You need to consider risk tolerance and your finances when you choose home insurance. If you choose the minimum home insurance at the cheapest price, would you have enough money to replace everything you own in the event of a fire or severe weather event?
Is all my personal property covered?
Your home insurance policy will cover the structure of your home and provides personal property coverage, but there are limits on coverage for your personal items. You may need a personal articles floater for high-value items like jewelry and electronics so that they are covered for their full value.
What is liability insurance in my home insurance policy?
Home insurance protects you from personal liability if someone is injured in an accident in your home. For example, if someone fell on your icy driveway, your home insurance would cover their medical bills and your legal costs if they filed a lawsuit against you. This type of coverage is called third-party liability insurance and is included with basic home insurance policies.
How is my home insurance rate determined?
The cost of your home insurance is determined by how risky your home is to insure. Your insurer will consider many factors, like where you live, how old your home is, its replacement cost, how your home is heated, the type of electrical wiring it has, and the distance to the nearest fire hydrant and fire station.
How can I reduce my home insurance rate?
Ask your home insurance provider about discounts that may apply to your situation. You may qualify for a discount when you bundle your car and home insurance or if you install a security system. Being claims-free for over a year, installing flood protection devices, or not having a mortgage may also help you get a discount.
What’s the difference between market value and replacement cost?
Market value is the amount for which your home would sell in today’s market in its current condition. But market values fluctuate and can be difficult to predict. If your home is destroyed by fire or another disaster years later, there is no guarantee that the home’s market value (assessed at the time your policy was taken out) will cover the cost of rebuilding.
Replacement cost is how much it would cost to rebuild your home if it were completely destroyed at today’s prices. Usually, the replacement cost covers plans and permits, labour and materials, and fees and taxes.
In general, insuring your home for its replacement cost - not its market value, is the best way to go.
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Western Coast Insurance Services Ltd. is a wholly owned division of Western Financial Group Ltd. Insurance products are underwritten by certain licensed insurance companies and are only available throughout British Columbia, Canada.