Unfortunately, most people won't be able to rebuild their homes if a disaster strikes. This is why you must have a proper home Insurance policy in place so that even if your home is completely demolished in an accident, your insurance policy can help you reconstruct it.
If you are purchasing your first home, you must understand the different nuances of insurance policies. Today’s article will discuss everything you need to know about homeowner insurance policies.
Click here to learn more about the different types of home insurance you can get in Alberta.
Home insurance policy for home: what is home insurance?
This insurance policy will pay for any damages to your home or belongings if the event is covered in the policy. The policy will also pay for the medical bills of any person injured on your property. Home Insurance policy has the following functions:
- Pay you for reconstructing your house and other structures after an accident
- Pay or replace personal belongings
- Pay additional living expenses while your home is being prepared
- Offer personal liability if you are responsible for damage or someone is injured on your property
Is home Insurance essential?
Home Insurance is not mandatory. However, if you have a mortgage on your house, your money lender or the financial institution will require you to insure the property to protect the investment.
But you must remember that a homeowner insurance policy differs significantly from mortgage insurance. Mortgage insurance will help you pay your money lender if you default on your loan. In simple words, mortgage insurance protects the lender; on the other hand, homeowner insurance protects the policyholder.
But even if you do not have a mortgage, Home Insurance is always advised. After all, it makes sense to protect your most significant investment.
Perils covered by home insurance policy
A standard Home Insurance policy usually includes six types of coverage.
This home insurance coverage protects your property's structure, including the doors, floors, walls, windows and roof. All the built-in appliances are also included. Additional structures such as a storehouse garage or a garden attached to your home are also protected by dwelling coverage.
Most Home Insurance policies protect your dwelling from common threats like freezing, wind, hail storms, fire, smoke and lightning.
For example, a huge tree falls on your house due to a thunderstorm, destroying a part of it. In this case, this type of home insurance policy coverage will kick in. All you have to do is pay a share of the repair cost, known as the deductible, and the insurance company will cover the rest.
In simple words, all the other structures on your property which are not attached to the main building, like sheds, gardens and garages, will be covered. This means that the insurance company will also pay to repair these external structures.
For example, the policy will pay to repair if the fence collapses due to unexpected heavy snowfall. Then, all you have to pay is the deductible amount.
Medical payments coverage
This will pay for all the medical expenses of a person injured on your property due to your mistake. For example, if you have an aggressive pet that bites a guest, the insurance company will pay the medical expenses for the stitches and injections.
Personal property coverage
Personal property coverage will pay for your personal belongings like furniture, clothes, appliances, and gadgets that are not built-in. Almost all the standard home insurance policies protect these items worldwide. So if someone breaks in and steals valuables, the insurance policy will pay for it.
This coverage works a bit differently than your dwelling coverage. Instead of paying for all your stuff, this coverage will only be valid if the disasters are in the following list:
- Falling objects
- Volcanic eruption
- Wind storm
- Hail storm
- Sudden damage to appliances due to a power surge
- Damage from aircrafts
- Damage from vehicles
- HVAC system failure
- Water flow from pipes damaging appliances
For example, let us consider that a pipe in your kitchen bursts and damages the walls and other appliances. The dwelling coverage will cover all the built-in items like the cabinet, and the personal property coverage will pay for the damaged furniture and appliances.
If a third party or a person sues you for injury or damage to their property, personal liability coverage will pay for all the expenses. However, you must remember that this policy will not pay for any criminal acts or harm you intentionally do.
For example, if a delivery executive trips and falls on your slippery porch, this insurance policy will pay for all the medical expenses.
Loss of use coverage
Alternatively called additional living expenses, loss of use coverage comes to play if your home is uninhabitable and needs repairs. This coverage will pay for all the hotel stays, restaurant bills, and other expenses when temporarily living elsewhere. The Home Insurance policy will pay for all the costs as long as your home is being repaired.
However, the insurance company will not pay for any costs if your home is damaged due to an earthquake or flood, which is not covered by an insurance policy.
For example, if your house burns down due to a kitchen fire and your home is unsafe, your insurance company will pay for you and your family to rent a same-sized home temporarily.
What will your home insurance not cover?
Your insurance policy for your home will not pay for the following causes:
- Nuclear hazard
- Flooding due to heavy rainfall
- Earthquake or landslides
- Power failure
- Government action or war
Typically a home insurance policy in Canada costs roughly $1784. However, this is a small amount compared to the loss you would have to bear in case of an accident that damages your property. Thus, getting Home Insurance is wise as it will help you reconstruct your beloved home and protect you from draining your bank account.
Reach out to professionals at an online insurance brokerage that can help you choose the right insurance policy for your home according to your needs.