Buying a House: What Insurance Do You Need

Buying a home could be the biggest investment you’ll ever make, so it makes sense to protect that investment with the right insurance.
This post is the first of a three-part series that will outline the insurance you’ll need when buying property (parts 2 and 3 will cover buying a condo and a cottage).

Getting started

Once you’ve found your dream home and have your mortgage lined up, the next step is homeowner’s insurance. There are three main categories of policies available to you: standard, broad and comprehensive, depending on your needs and budget.

To prepare your policy, you’ll need to submit a letter or report from a certified inspector confirming the age of your home and the condition of structural elements like the roof, electrical system and plumbing.

If you’ve bought a fixer-upper and plan on upgrading the roof and replacing knob and tube wiring, for example, you’ll probably be looking at a standard policy with limitations – a time limit. So, let’s say you purchase your fixer-upper on February 14th, you might have 60 or 90 days or so to complete the renovations so that your home meets local building codes. Again, a written inspection report will then be required.


What insurance covers:

1) Building(s). This includes the house itself and any other buildings on the property (garage, shed, workshop).
New homeowners are often surprised that the insured amount and the market value of a home are different amounts. That’s because market value depends on what the current market dictates at the time of sale whereas for insurance purposes, age, size, materials and other factors are taken into consideration to determine the approximate cost necessary to replace or rebuild your home in case of damage or destruction.

2) Contents. This covers the cost of replacing your belongings.
Policies typically cover your belongings for up to 70% of the insurance you put on the building (i.e. if you insure your house for $200,000, your policy will cover 70% of that, or up to $140,000 to replace everything inside it).

3) Liability. This covers any claims against you if someone is hurt or killed while on your property. There’s a misconception that if you are covered against liability for an amount of $2 million, for example, that if you don’t salt your driveway in the winter and a neighbour slips and falls, they will sue for that amount. It’s important to remember that no one else will have that information so it’s wise to make sure you’re adequately covered.

Available discounts
And while you should protect your investment with the best coverage you can afford, there are discounts available, such as:
Alarm discount (for a monitored security system)
New home discount
Multiple policies
Solid history (even a tenants’ policy counts)
Claims-free discount
Mature age (some start as low as age35)
Location (living close to a fire hall or near a fire hydrant)
Long-term client discount.

Your broker can outline any discounts you may be eligible for and let you know how they can affect your premiums.

I hope I’ve answered all your questions. If not, please let me know.

Una Roy,
Account Executive,
P.A. Roy Insurance Brokers Inc.,
Excalibur Insurance Group,
Clinton, Ontario

Insurance - Things You Should Know

It recently came to my attention that people do not know enough about their policy options when it comes to having a high risk operator within their household . I recently heard a story about a family who had a 17 year old son who had an accident and a couple of tickets . There insurance company decided that they were not going to offer a renewal to the entire family based on the son being in the household .

A possible option that the family could of considered would be to "exclude" the son as an operator under their insurance policy . Yes this would mean that the son can't drive their vehicles but this may be the preferred option rather than moving the entire family policy to a high risk insurance provider .

Under the current insurance rules in Ontario this option must be available to an insured, BUT the policy holder must request the option . In the case of an insured dealing with a direct writer or insurance agent , this option would not be disclosed to them because they work directly for the insurance company . As an insurance broker we work on behalf of the client, not the insurance company, and would discuss all options with the client .