Home Insurance 101 – The Basics
Home insurance is not a luxury – it is a necessity. Many homeowners/tenants chose to opt out of purchasing insurance as they find it expensive, and end up learning from their mistake the hard way when something goes wrong. Banks and mortgage companies require proof of insurance coverage before they authorize a loan to a prospective client.
Basically there are 2 common types of protection:
1. Named Perils: This type of coverage includes a list of the most common types of things covered under your insurance. It includes fire, theft and water damage. Everything is listed very clearly in your policy booklet so you have a complete and thorough understanding of what your insurance policy covers.
This coverage is usually less expensive, but places more risk to financial loss on you.
2. All Risks: insures your building for the most common types of losses. When you have all risk coverage, your building is insured for everything, unless it’s specifically excluded from your policy (e.g. intentional damage to your own property would not be covered, as wouldn’t terrorism).
There are usually three parts to your homeowner’s policy. (For condominium owners and tenants, just the contents and liability coverage apply):
- Building insurance covers the main dwelling, garage and any out buildings.
- Contents insurance covers the cost of replacing furniture, carpets and personal possessions. Valuables such as art, jewels and furs may require additional coverage. Note that most contents are insured even outside the home, for example, if stolen while you are on a trip.
- Liability policies insure against the costs incurred if, due to negligence, you are held responsible for an act causing injury or property damage to others. For example if someone injures himself/herself on the property you occupy, you may be responsible for damages. If someone slips on your front steps, breaks his/her leg, and can’t go to work, you could be held responsible for the person’s lost wages – under liability insurance you are covered.
To learn more about Virani Real Estate Advisors or to discuss a property, fill in this form, visit one of our offices, or call 604-913-1000.