If you’re looking for the best home insurance coverage, there are lots of options. Find out what’s right for you in this helpful article with information on when or if homeowners should get earthquake coverage, the different types of coverage available in BC and the rest of Canada, and how to annualize your insurance.
Different Types of Home Insurance Coverage
When it comes to home insurance, there are a few different types of coverage that you’ll want to know about.
1. Basic coverage
This is the type of coverage that most people have. It’s not like a travel insurance policy, where you have to pay a higher premium to cover the additional cost of paying out more when something happens. Basic coverage will safeguard you against losses from fire and theft. Keep in mind that if your home has been damaged by fire, it gets rebuilt. Unless you are covered for rebuilding, basic coverage will not cover this loss and only provides liability protection. The good news is that since it is only liability protection, it’s usually affordable.
Benefits:
• Unauthorized entry to your house as a result of fire or theft
• Damage to the property
• Loss of property
Drawbacks:
• Does not cover against an indirect loss like loss of use, additional living expense, shortfall and depreciation in value, temporary housing, etc.
2. Extended coverage
This is additional coverage that is usually not necessary unless you have expensive belongings like antiques and jewellery. Just remember that if your home is destroyed and you are covered for reconstruction, extended coverage will help with the additional cost.
Benefits:
• Covers the additional cost of rebuilding your home after it has been damaged by fire or theft
Drawbacks:
• Does not cover against an indirect loss like loss of use, additional living expense, shortfall and depreciation in value, temporary housing, etc
3. Special coverage Extended coverage
This is basically liability protection on top of basic and extended coverage. Special coverage will protect you if someone gets injured while at your home and can also cover you for damage caused to your property by others. It’s essential for those who want a little extra protection.
Benefits:
• Liability protection during the time of your policy
• The cost of medical care or any other expenses if someone gets injured or damages your property as a result of something that happened to your home.
Drawbacks:
Again, like basic and extended coverage, it is not meant for indirect losses. There are also limitations on how much it will cover you.
4. Condominium coverage
Condominiums and homeowners associations have different types of coverage available to them by law. The one benefit that all policies will have is liability coverage. The insurance company will be liable for any damages caused by the negligence of anyone who is not a part of the association.
Benefits:
• Liability Protection to compensate you for your loss if something happens to your home due to someone who is not part of the condominium or homeowner association
Drawbacks:
• Limits on what it covers and what it will pay for. Some policies might only cover you against burglary, and some may only cover property damage if there is a theft in your condo building. For example, every condo will have a set limit on how much liability coverage they are allowed to have each year. If the value of the building is so high that it exceeds that limit, it’s not covered by liability.
5. Earthquake coverage
Where there are fault lines, there are earthquakes. The biggest earthquake insurance claim in Canada was $1 billion in 1949 and was caused by a 7.3 magnitude earthquake in BC, near Hope! Most policies will have a minimum deductible, but you may want to consider adding additional coverage if your home is older or it’s at a high risk of experiencing an earthquake.
Clues for when you should get earthquake coverage?
• You live in an area that has a history of earthquakes
• Fault lines run through your area
• There is evidence of more frequent small earthquakes
Benefits:
Any earthquake damage caused to your home will be covered.
Drawbacks:
Again, most policies will have a minimum deductible and sometimes a maximum deductible as well if you have an older home or one that was built in an area that is high-risk you may want to consider paying more for the additional coverage.
In conclusion, there are lots of different policy types for home insurance, and it’s important to know what other people think about each one and how much it costs. Good luck with your home insurance coverage!