What you need to know about homeowner insurance
One of the biggest purchases you will ever make in your life is your home. As a result, it’s important to make sure that this purchase is covered. You don’t want to be on the hook for the full replacement cost if something unexpected and catastrophic happens. Homeowner insurance is designed to help you protect your largest asset. Here’s what you need to know about homeowner insurance in Canada:
You might be required to buy it
Homeowner insurance isn’t required by law in Canada the same way car insurance is. However, just because the government doesn’t make you buy it, it doesn’t mean it isn’t required. If you are buying a home with a mortgage, you lender might require you to buy homeowner insurance as a condition of the loan.
Because the lender is on the hook for the money, they want to know that you can keep making payments or pay off the whole mortgage if something happens to the house. At the very least, you need to be able to get it repaired or rebuilt without paying anything new (beyond the deductible) so that you can afford to keep repaying the mortgage.
Check for exclusions
Your homeowner policy doesn’t cover everything that happens to your home. There might be exclusions. Most basic policies don’t cover things like flooding. Also, very valuable items probably aren’t covered in your contents insurance, and you may need extra coverage for additional structures on your property. Once you dig into your policy, you might be surprised to discover what kinds of exclusions exist.
If you think you need more coverage, ask a knowledgeable professional about how to add it to your policy, and get a quote on it.
You might need more coverage later
Many people just get the homeowner insurance policy and forget about it. However, the reality is that you might need to adjust your coverage over the years. Do you have a policy that will replace your home for its current value? Or is it capped at a set value? You need to know this information because if your home has increased in value, you might need more coverage to ensure that you are fully covered and protected.
When you make additions to the home, you might need to boost your coverage. Upgrades, remodeling, adding a liability hazard like a pool, building a guest house on the back of the property, or converting a room into a home office are all things that can require you to add more coverage to your policy.
Make sure that you stay on top of your homeowner insurance situation. Review your coverage at least once a year to make sure you have what you need. You don’t want to be caught without the right insurance coverage.