Mandatory Home Insurance Laws You Must Know About In Canada
Published: February 11, 2019
Updated: February 28, 2019
Author: Luke Jones
CATEGORY: Home Insurance
Owning a home might be your single biggest financial investment. Therefore it is only natural that you’ll want to protect your property and its contents against any unforeseen risks— which can be done with the help of good home insurance.
Here are some of the things you need to understand with regards to home insurance so you can protect yourself and your home.
Is home insurance mandatory?
However, while it isn’t mandatory by law, all homeowners, as well as renters, should consider purchasing home insurance. Most mortgage holders and banks will insist that you get home insurance and show proof thereof before they will lend you money to buy a house in New Street Real Estate. Landlords also require their tenants to carry home insurance.
Why do you need home insurance?
To protect you and your family from any unfortunate events that can cause serious damage to your home.
Regardless of how well-built a property is, it is still vulnerable to disasters such as vandalism and fire.
Homeowners need home insurance to protect their personal possessions and homes. Moreover, your policy should also help you pay for temporary living expenses if you can’t live in your house after an insured loss.
Who is covered?
In general, home insurance covers the property as well as the personal possessions of yourself, your partner and kids. Dependents under 18 years of age are covered by the policy but if your dependents are above 18 and under 21 and still studying, they’re covered as well.
If you have a roommate or rent out a part of your residence, then you must let your insurer know or you will risk negatively impacting the coverage in the event of a loss.
What is a liability?
Renters and homeowners could be held responsible for any unintentional act causing property damage or bodily injury to others on their property.
For example, if someone happens to slip and fall on your icy walkway, you may be held accountable, legally speaking.
If negligence is found, the personal liability part of your home insurance will cover the damage caused by the injury as well as the policy coverage limit.
Injuries sustained by you or any family members are not covered under the policy.
Which personal belongings are covered and how much coverage do you need?
Your policy usually covers items such as electronics, furniture, clothing, and appliances.
Make sure that you know your stuff. It is important to determine how much your possessions are worth. You can create an inventory of all your personal belongings by labeling the model, make or serial numbers of each item as well as the estimated replacement value.
Also, make sure that you regularly update the list. You can even take a video or photo of your prized collection such as books and stamps. Make sure to keep receipts for big purchases. This will simplify the process when claiming in the future.
What is covered in your home?
If you are a homeowner, your policy will most likely cover the building, outbuildings, and its contents.
Keep in mind that if you plan on renovating your home, leasing a part of your house, or setting up a home-based business, notify your insurer before you commence. Otherwise, you will risk noncoverage in the event of a loss.
What is a deductible?
A deductible is an amount that you pay out of pocket when starting a claim with your insurer. In general, a policy with lower deductibles cost you more than one with higher deductibles.
Personal Belongings: Replacement Costs or Actual Cash Value?
You can choose between replacement costs or actual cash value to insure your house and personal belongings.
Replacement cost means that, in the event of any disaster, you will be paid the amount that it would cost to rebuild or repair damages to your home or replace personal belongings with similar items without depreciation deduction.
For instance, your 2-year-old computer will be replaced by a computer of similar quality or type.
Actual cash, on the other hand, refers to the amount that it takes to replace or repair damage to personal belongings after taking into account the depreciation after an insured loss.
For instance, your 2-year old computer purchased for $1,000 might only be worth $500 on the day of the disaster.
Replacement Cost of your home
It is important that the policy insures your home for replacement value. This only means that when an insured loss occurs, you will be compensated for its replacement value which differs from the market value of your home.
There are some policies that even include guaranteed replacement costs which will cover the full replacement value of your home regardless of the insurance amount.