Being a homeowner can be tough to pay off and maintain a property to increase valuation and this is only made more difficult when you add an investment property to your assets. Regardless of the type of property you have, one of the first things that every homeowner should get is property insurance.
There may be some who feel they do not need to pay for expensive insurance, while others prefer to have the protection and coverage for more peace of mind. Before choosing any standard insurance policy or dismissing it altogether, take a moment to better understand what home insurance is all about.
Why Being Covered is Important
Home insurance covers a wide range of things from the inside to the outside of the property and often the contents within it as well. The policies can cover damage, theft, injuries, and even coverage for bills should you ever get into a position where the loss of your income makes payments difficult.
Depending on the policy you choose, different unexpected events can be covered but to be sure of what your policy does and does not cover, make sure to read through the fine print with your agent.
Some examples of what home insurance might cover:
- Your home is partially damaged by strong winds or lightning strikes
- A fire starts in your home and spreads to neighbouring properties
- Other structures like a shed or outdoor patio are damaged from tree branches
- Someone breaks into your home and steals personal property
- A person who was on your property is accidentally injured
Don’t Assume Everything Will Be Covered
There are virtually hundreds of different insurance policies that are designed for different issues that may occur over time. While it would be great to have a policy that covers every single event, this is generally not the case. Always check the fine print to see what is not covered in your policy.
“Acts of God” (also known as a force majeure) are often exempt from home insurance since they are considered to be a naturally occurring hazard that is out of human control. These devastating events often leave many homeowners with a huge loss when they occur because they assumed such incidences would have been covered in their insurance policy or they did not even consider such events in the first place.
An Act of God is commonly considered to be the following:
- Forest fires
- Volcano Eruptions
Every country and insurance company will have different definitions of the “Acts of God”, which is why homeowners should take measures to fully understand what the definition is where they are and what is covered in their policy.
Condo Insurance is Different
House insurance tends to be comprehensive coverage for the structure inside and out, but condos are generally owned by one corporation and the condo owner is responsible for the inside of the unit only. Condo insurance is unique in that it will often cover the inside of the unit and any storage lockers or parking spots that are connected to that unit. Anything to the outside structure and common areas will be covered by the condo corporation.
Like home insurance, condo policies will often cover damage to the inside of the unit, theft of personal items, and accidents that occur within the unit. Some condo policies will also cover payments due to loss of income from unforeseen circumstances.
A condo is an investment, and though owners are not liable to have coverage outside their units, they should take the time to read over the condo corporation’s insurance coverage to see how they might be affected by different situations like structural damage to the building or surrounding grounds.
Types of Home Insurance Policies
There are tons of insurance companies out there that offer different types of coverage for homeowners. Each policy is designed to offer levels of coverage from the basics to fully comprehensive policies. Before choosing the cheapest or most expensive policy your broker offers, take the time to look through each policy to see which one is worth getting for your home and lifestyle. Most companies will have a basic, standard, broad, and all-inclusive policy that will provide different coverage and security, so it pays to read all of the details and fine print before signing up to one.
Who Does Home Insurance Cover?
Home insurance covers the homeowner and their family, who live in the dwelling with them. If a homeowner lives in their home with a roommate, that’s when the policy coverage gets a little muddy, and different insurance companies will have their reservations about covering non-family members.
As mentioned earlier, visitors (guests, service/technicians) who are on or in the property are covered by home insurance if they happen to have an accident that results in an injury. For more detailed information about who and what is covered in a policy, make sure to read the fine print and discuss with insurance brokers to see which policy will work best in your circumstances.
If a homeowner has an investment property that has tenants occupying the home, the home insurance will cover structural issues, theft, and damage, but it generally will not cover the tenants. When shopping around for policies, clearly explain your living situation with insurance providers to get you the right coverage for your needs.
Tenants Should Have Their Own Insurance
Although home insurance will cover everything a landlord owns in and around their property, the policy rarely covers any items that tenants own, even if they are within the residence. In this case, landlords should check to see if their current home insurance cover is the same when the property is being rented out or if they will require to change their policy to cover a rental.
To keep tenants and their personal belongings safe, tenants should have their own renter’s insurance to cover injury, theft, or damage to their belongings. In general, renter’s insurance is designed to cover the most common issues, such as:
- Damage to personal possessions (furniture, electronics, appliances…)
- Theft from rental or vehicle when parked on the property
- Accidents and damage to the building (indoors and out)
- Injuries to renters or visitors while they were in or on the property
- Loss of income due to unforeseen circumstances