Why and how to insure your home?
“A man’s house is his castle,” says an English proverb. Regardless of its size, a house provides shelter for family members and becomes home to memories and dreams. Its emotional value is difficult to estimate, but the market value of such real estate is easily assessed.
In February 2017, in Canada, the average home value was over half a million dollars. In Quebec, we spent an average of $ 280,333 to stay in a house (1). There is no more precious material good that one can own in a lifetime, and all the others very often fall within its four walls. What is more, this property is generally associated with a large mortgage loan… However, in the event of a disaster, the debt does not disappear with the house.
Why buy home insurance
Theft, water damage, fire, vandalism ... unfortunate events are numerous, and they do not just happen to others. Ask the neighbor!
Taking out home insurance to protect your home in the event of a disaster also comes with liability coverage. Whether you are careful or not, you yourself can be responsible for many more or less serious incidents.
Home insurance does not protect against all of these risks, but against the dire financial consequences that would result. Suffering a theft is quite painful as well; why have to worry about your finances any more?
How to choose your home insurance
The Autorité des marchés financiers first suggests that you properly assess your protection needs in order to select the right home insurance coverage. This is done by an exhaustive inventory of its goods and their value. Exercise: We tend to underestimate everything we have! The insurance professional will help you find out the rebuilding value of the property, which generally differs from its market value. In the event of a claim, this ensures that you have sufficient coverage to rebuild your home, regardless of the state of the real estate market.
Once the needs have been identified, each of the clauses of the proposed coverage is checked against them. Do you have a stable of high-end bikes? Please note that home insurance contracts have limitations for certain categories of property. Is your water heater really less than 10 years old as required by the insurer to cover the risk of water damage in the basement? Most importantly, be sure to include your dog or the many annual trips when estimating liability coverage needs. You have to check everything to protect yourself against unpleasant surprises.
Finally, insurance needs vary depending on whether you are a homeowner, condominium owner, tenant or owner of an income property.
What about the franchise?
The deductible is the amount that the insured must pay in the event of a claim.
In general, the higher the deductible, the lower the premium (that is, the amount you pay annually for coverage). An insured will choose a higher or lower deductible according to his risk tolerance. Its financial situation may also direct it towards coverage with a more affordable annual premium, even if it means not considering its high deductible in the event of a problem.
Home insurance contracts sometimes include exemption clauses from paying the deductible, especially in the case of a very large claim.
What home insurance covers and does not cover
The Insurance Bureau of Canada lists these risks as usually covered by home insurance policies: damage related to wind, hail, lightning, fire, explosion, smoke, leak or the overflow of a sanitary installation, theft, vandalism, impact of objects, a collision or a riot. But beware! The risks covered differ from one contract to another and may even be different from one company to another!
The risks related to pollution, war, nuclear risk, flooding from water overflows and landslides are generally not covered, but can sometimes be covered with the help of an option. Neither are insured any damage resulting from negligence of the premises on the part of the insured, for example damage related to the ignored wear and tear of the exterior envelope of the house. Mold and vermin are also excluded.
Note that standard coverage generally does not cover damage caused by water infiltration through the roof or sewer backup.
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