Home insurance protects your building, your belongings and your legal responsibility to others. Homeowners, condo owners and tenants each need a different kind of policy.
What a policy usually covers
- The building (owners). The cost to repair or rebuild after covered damage such as fire, wind or theft.
- Your belongings. Furniture, clothing, electronics and other contents, wherever they are, subject to limits.
- Personal liability. Covers your legal responsibility if someone is injured at your home or you accidentally damage someone else's property.
- Extra living costs. Pays for temporary housing and added costs if a covered loss makes your home unlivable.
Condo owners and tenants
Condo corporations insure the building and shared areas, but you are responsible for your unit's improvements, your belongings and your liability. Tenants need contents and liability cover. A landlord's insurance does not protect a tenant's belongings.
Replacement cost and actual cash value
Replacement cost pays to replace an item with a new one. Actual cash value subtracts depreciation, so the payout is usually lower. Ask which basis applies to the building and to your contents.
What is often optional or limited
Water damage is the one to look at closely. Sewer backup and overland flooding are often optional add-ons, and not every address can get them. Coverage for valuable items such as jewellery, art or collectibles is often capped unless you list them. Running a business from home, renting out a suite or a short-term rental usually needs to be disclosed and may need separate cover.
Questions to ask an advisor
- Is the building insured for what it would cost to rebuild today?
- Does my policy cover sewer backup and overland water?
- What are the limits on valuables, and the deductibles?
- Does it cover my home office, or a rented room or suite?
Common mistakes
- Insuring for the market value of the property rather than the rebuilding cost.
- Not updating the insurer after a renovation.
- Assuming flood and water damage are included.