- There are four key components to a home insurance policy.
- Optional coverages such as earthquake insurance, overland flood coverage, and sewer backup insurance are not included in a basic policy.
- Read the details of your existing policy to know what your coverage provides.
How much do you know about your home insurance policy? Do you know what your policy covers?
You may expect home insurance to cover you in the event of a fire or theft (and it does), but that protection extends in ways that might surprise you. Sometimes, strange or unexpected things happen that may leave you wondering whether or not your policy covers the related damage. Life, after all, is unpredictable at times.
Nevertheless, home insurance covers your home and the contents within it. It also covers your personal liability if you’re sued for damages or injury that you may inadvertently cause. In general, there are four key components to a home insurance policy:
- Your property. Protects the actual structure of the home from perils such as fire and burglary. Coverage is based on the replacement value of your home, not the market value.
- Your contents. Protects your personal property when it's at home and when you carry it with you, such as a laptop you bring to and from school, the bicycle you ride to work with, and the camera you bring on vacation, subject to limits.
- Personal liability. Protects you (as well as your spouse and children) in the event someone is injured on your property, or your property causes them damages, and you are sued.
- Additional living expenses. Covers you in the event you are temporarily displaced from your home due to a claim. For example, if fire damages your dwelling and you need to live elsewhere while repairs are underway.
Optional coverages such as earthquake insurance, overland flood coverage, and sewer backup insurance are not included in a basic policy. Talk to your broker about adding these additional coverages to your policy if you need them.
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In the meantime, let's take a look at nine other ways home insurance protects you from damage or loss if you have full coverage:
1. Spoiled food
In a blackout, there's no electricity to power your refrigerator and freezer. If the outage lasts for an extended period, your refrigerated and frozen food may thaw and spoil. Many home insurance policies provide coverage for spoiled food, allowing you to file a claim and restock the freezer once the power returns. However, filing this type of claim likely means you need to pay a deductible upfront, so you’ll need to weigh if it’s worth your while to do so.
2. Identity theft
Although basic coverage for identity theft and online fraud is widely available as part of a home insurance policy and has been for about a decade, condo dwellers and homeowners may not be aware of them. Many policies provide coverage for legal fees, mail costs, and lost wages if you miss work as a result of identity theft.
3. Theft while on vacation
In the unfortunate event your home is burglarized while you're away, and thieves make off with your possessions such as your electronics and other valuables, your home insurance will cover the losses. Moreover, it will cover any belongings stolen from your car that's parked in the garage as well as the items you have with you while away from home. If you want additional coverage to protect yourself while on vacation, that's when a travel insurance policy will help.
4. Your parents' and kids' belongings
If your parents live in an assisted living facility and depend on your financial support, your home insurance may cover their belongings. Similarly, many home insurance policies cover your kids' belongings when they're off at university. Of course, students might want to purchase their own tenant insurance to ensure they have complete protection.
5. Stolen or damaged bikes
If someone stole or damaged your bike, your home insurance may cover your loss (up to a certain limit) — even if your bike wasn't at home at the time.
6. New door locks
Home insurance may reimburse you for replacing your door locks after someone steals your keys or breaks into your home.
7. Liability coverage
You may be liable if someone injures themselves while on your property. Home insurance can help cover the cost of defending yourself in a lawsuit and paying out claims. Liability coverage can also cover your kids and pets. If your daughter throws a baseball and breaks your neighbour's window or your dog (certain breeds may be excluded) bites the mail delivery person, you can submit a claim to your home insurance company.
Your home insurance covers more than just your physical house. Any detached garages, sheds, or gazebos may also fall under your insurance's protection. Plus, home insurance usually covers trees, hedges, lawns, fountains, and other landscaping features up to a limit stated on your policy.
Bet you didn't know gravestones and urns are often covered by home insurance, even if they're not on your property. Whether the headstone is stolen, vandalized, or damaged, your home insurance may cover the cost of replacing one if it happens.
Are you and your family covered?
Home insurance protects you, your family, and your house from the expected and unexpected circumstances. Read the details of your existing policy to know what you are and are not covered for, and then compare it to other policies and premiums to ensure you have the coverage your family needs.