Although most homeowners never need to submit an insurance claim, home insurance is a necessary means of guarding against misfortune. It protects you from financial loss resulting from “sudden and accidental” mishaps. Once you are the legal owner or tenant of your home, you should be covered by insurance. This holds true even if your home is still under construction. If you’re moving to a different home, talk to your insurance representative to see if your current policy covers your belongings at both the old and new locations, and throughout the transportation process as well. Because there is no “standard” homeowners policy, you’re best to shop around for the one most suitable to your needs. Compare quotations, coverage and services. Have your insurance representative talk through the policy with you before you sign it.
A policy is divided into two sections. The first describes the insurance on your property, the second details your liability coverage in case you accidentally cause bodily harm to others or damage their property. Homeowners policies cover the building and its contents for direct loss or damage caused by insured perils. Perils may be stated individually or be described as “all risks”. There are four categories of homeowners insurance policies to choose from.
A comprehensive policy covers the building, its contents, and detached private structures for all risks that are not specifically excluded. It also provides coverage for “Additional Living Expenses”. For example, if you have to move temporarily as a result of damages caused directly by an insured peril, your insurer will cover the increased cost in your living expenses provided you are maintaining your household’s normal standard of living while repairs are made.
The broad policy provides “all risks” coverage on the really big ticket items like buildings, and named perils coverage on the contents. For example, your dwelling may be insured for damages sustained from your roof collapsing under the weight of the winter snow, but the objects in your home may not.
A basic or named perils policy may be appropriate if broader coverage isn’t available to you. With this kind of policy you carry more of the financial risk yourself. The basic policy only covers the perils that are specifically listed. Insured perils commonly covered in basic policies include fire, lightning, theft, water damage and vandalism.
Each of these policies includes many other features. For instance, food spoiled in your freezer during a power outage would be covered as would children’s possessions while they are away at university. Losses from a stolen credit card, or ATM card would also be covered.
If you’re having difficulty meeting an insurer’s underwriting requirements, you may want to consider a very basic policy without the extra features. If, however, the only thing standing between you and more extensive coverage is a few minor physical problems with your home, why not address those problems right away? Fixing up your home in the short run, may allow you to qualify for broader coverage and may even save you money further down the road. You’ll also be making your home a safer place.
Cottagers can either insure their rural hide-aways separately or have them insured in their homeowners policy. In general, cottage coverage will be less extensive than home coverage, given that most people don’t live in them all year around. Because you are away for long periods of time, theft coverage is likely to be limited to where there are signs of forcible entry.