Understanding home insurance

With two properties, one of which is a rental, Brian and I have to deal with a lot of insurance.  It’s kind of a pain, but a necessary pain.  There was a point in my life where I had ZERO insurance – as a student and a renter just a few years ago, I didn’t see the need for the extra cost of insurance on an already lean budget. Well, an apartment fire and loss of my apartment sure taught me differently.  Now, Brian and I carry a variety of insurance plans for our properties.

Photo Credit via Flickr

Photo Credit via Flickr

Home insurance, sometimes abbreviated HOI (homeowner’s insurance) covers your private residence, including condos, but is different from tenant insurance (which is what I was lacking as a poor student renting a flammable apartment…).   Home insurance is a multiple line insurance policy where you pay a single premium for both insurance on the property and liability insurance.  Right now, Brian and I have home insurance for each of our properties and we insist that our tenants carry renters insurance to cover their belongings.

The property insurance part of home insurance covers the physical building and the contents of the home from things like fire or theft.  The exact coverage may vary depending on your plan.  For example, most plans will cover your belongings but only to a certain amount and you may need to explicitly declare them.  My plan covers my belongings against theft or damage, but for some items, like jewellery, only covers up to a certain value.  (My insurance provider helpfully offered to bump me up for increased jewellery coverage for an additional fee but I declined… haha… sadly, I don’t have a secret stash of precious gems :p)  It’s important to note that most basic plans will not cover damage from floods or earthquakes.  If coverage is offered, it is often for an additional fee.

The liability part of home insurance covers accidents that other people might suffer while in your home and accidents that other people might cause while in your home.  And accidents can happen!  The liability coverage is designed to protect the home owner against third party claims.  For example, our condo insurance pays out if our toilet springs a leak and floods out our neighbors.

Home insurance can often be purchased through your bank, such as with TD home insurance, or through stand alone insurance companies.  Just make sure your policy fits your home and your degree of risk.  We pay more to get earthquake coverage here in Vancouver for example, but we opted out of the “premium” repair/replacement option.

Luckily, we haven’t had to use our home insurance since we’ve gotten it.  Sometimes it can be frustrating when I start thinking about that money as “wasted” money.  But then I remind myself of all the stuff we lost during the apartment fire. In the big picture, the couple hundred we pay per year is worth the piece of mind!

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6 Comments

  1. FI Pilgrim says:

    That’s a good general overview, thanks! I’ve never had to make a claim on my HOI either, but I’d rather not if I can avoid it. :-)

  2. I have insurance and I got to know my coverage a little better after we had an insane storm this Summer resulting in water in our basement. While we did not have enough damage to file a claim, it was nice to know exactly how much our deductible is and how much the insurance company would cover if we did file a claim.

  3. I had rental insurance through TD insurance and it worked out really good. Home insurance is completely necessary !

  4. Jordann says:

    I definitely don’t need home insurance yet, but thanks for the reminder about tenant’s insurance. I really need to get some of that.

  5. I only had to use mine once for a flood and they didn’t pay anything because it was a huge natural disaster that would have bankrupted most companies. So it was a mess to claim with the state and I gave up. Insurance companies will always make it difficult for you to get your claim approved.

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