Home Insurance Basics

Start Your Quote

Finding your first starter house, purchasing that dream home, or finally buying the cottage on the lake are all incredible events in a family’s life. Purchasing homeowners’ insurance to protect your new asset on the other hand, can be a bit confusing. The insurance industry is filled with jargon sometimes reading like a foreign language.

At Duliban, we believe the more you know, the better prepared you will if the time comes to file a claim. Read on to see a list of terms you may come across when searching for the best policy along with a few questions our licensed agents are often asked.

Frequently Asked Questions

Homeowner’s insurance covers a plethora of exposures, including damage to property resulting from a covered peril or catastrophic event, as well as loss of personal property due to theft or covered peril. Your policy will also include private liability insurance protecting your from claims of negligence. Added living expenses are often included in case of emergency or displacement. Keep in mind, however, a basic homeowner’s insurance policy does not cover flood, earthquake, or voluntary acts of negligence.

If you happen to live in an area prone to flooding or earthquakes, you will want to add a rider or endorsement to your policy to include damages and loss of property because of these events. Speak with your insurance professional for more information about adding these onto your homeowner’s insurance.

The actual cash value of a personal item or piece of property is the cost of the item sold AS-IS on the current market. If you have owned private property or a structure any amount of time, their value would have depreciated over that time. Actual cash value will factor this into the final cost. However, replacement cost value is the amount of money it will take to replace your property or damaged goods without deducting for depreciation.

With homeowner’s insurance, you may be afforded coverage for their injury. Your policy will cover medical costs resulting from the wound on your property, as well as any legal fees and costs to repair damages that led to the injury or happened during the injury. Coverage assumes you were not voluntarily negligent.

There is quite a lengthy list of perils and situations not covered. Earth movement, water or flooding, nuclear hazards, neglect or failure to repair damaged property, corrosion and deterioration, decay, rust, wear and tear, contamination, fungi, power failures, animals and pests, war, and increases to costs because of law enforcement or government actions are all excluded from a basic homeowner’s policy. Keep in mind, however, many items like flooding, or earthquakes can be added to your policy using endorsements or riders.

Have no fear! Accidental discharge of water due to an issue with your plumbing system is included in your homeowner’s insurance plan. Flood has a specific definition related to the flooding of multiple parcels. If something should happen with your plumbing system and it leaks into your home causing damage, your policy will cover the costs to get your property back in shape. One of the ways you can protect yourself from this kind of hassle and headache is to check your plumbing system at least once a year to make sure it is still in premium condition.

There are many reasons why you should, or could, add to your current homeowner’s insurance policy. For example, if you are adding on to your existing property, you should contact your insurance provider to include this extension and receive guidance on what your plan should now include. You should also consider adding more coverage if you purchase land separate from your current plot, if you are buying another home, or going to rent another structure to others. Another reason you will want to update your homeowner’s insurance policy is if you make a significant purchase, such as expensive jewelry, computer, or new even appliances for your kitchen. Basically, if you add on to your investments in any way, you should immediately document the changes and contact your insurance professional to consult them on the necessary changes needed to keep your insurance program up to date.

Homeowner’s insurance is not lumped into your mortgage payments unless you ask your insurer to open up an escrow account, so you can combine your payments together. Doing this has become a far more common practice as more and more people are buying their first homes. If you do choose this option, you can lump your mortgage payments, insurance costs, and property taxes into a bill together for one secure payment.

If you are serious about protecting your assets and investments, then you will have to take the time to carefully document your property as well as the personal items inside. It is good practice to walk through your home and take detailed pictures or videos of all of your big-ticket items, such as appliances, your jewelry, electronics, any antiques you might own, as well as other items

you feel have value. The final thing you will want to do during this process is to keep a written list of the items as well. You want to go through this checklist to have detailed documentation of your personal property and home, so if something unfortunate were to happen, you have proof of ownership and a decent idea of the condition the property was in before the damage or loss occurred.

There are many ways to prevent loss and damage to your home, and some of these methods can even save you a bit of money on your insurance payment. It seems like a standard for most homeowner’s, but if you do not already have deadbolts on all of your entry doors and locks on your windows, these should be your first investment to safeguard your home.

The next move to make would be to install a security system with an outside signal that will alert the local police department if anything should happen on your property. You can also get a fire alarm system which will immediately inform your local fire department if a fire is detected on your property. Installing and maintaining smoke detectors should be another priority for any homeowner, and if you have the means, a sprinkler system and carbon monoxide detector could help to save from a great deal of damage if you should have a fire break out in your house.

The final tip for safeguarding your property and protecting yourself against liability claims is removing any potential hazards. This means always keeping your walkways and entry points clear of hazardous debris like snow and ice in the winter. Something as simple as salting your sidewalk and shoveling snow could save you a lot of time and hassle if something were to happen to a neighbor or passerby. In addition, restricting all access to “attractive nuances” such as swimming pools and trampolines is a must.

Definitions

Actual Cash Value
The cost of repairing or replacing damaged property with that of a comparable condition and value.
Additional Living Expense or Loss of Use Coverage
Covers the cost of living expenses if you temporarily relocate due to a perilous event that has damaged or destroyed your property. These expenses will cover motel costs, money for food, and any other necessary costs of living.
Catastrophe
An event or series of events, causing insured property damage equal to greater than $25 million. The probability of this level of damage is calculated depending on the province in which you live. Catastrophes include floods, blizzards, tornados, and other large-scale disasters. If you are unsure of the level of catastrophic coverage in your area, seek the help of an insurance professional for more information.
Claim
A claim is a request made by an insured party, or their beneficiary, for payment of policy benefits provided by their insurance. Claims are typically demanded by those who have suffered loss or damages to their property because of a catastrophic event.
Coverage
This describes the amount of protection you are provided within your insurance policy. The amount of coverage one individual carries is dependent on the plan they choose and if they add any endorsements to their insurance plan.
Dwelling Policy
Although similar to a homeowner's insurance policy, a dwelling policy covers personal property and structures, but does not give the option for liability coverage.
Endorsement
Also known as a Rider, endorsements are a policyholder’s option to customize their coverage on homeowner's insurance. For example, homeowner's insurance does not cover damage to property because of an earthquake. Individuals living in an area prone to these events would have the option to add an endorsement to their policy that would cover these kinds of damages to property and personal belongings.
Floater
A kind of property insurance covering items that do not generally stay in one place all of the time. For example, if you have expensive jewelry, fur coats, or other high-end, costly belongings, you will want to purchase a floater so these items can be insured and covered no matter where they are if they become lost or damaged.
Homeowner's Insurance
A policy providing coverage against property damage caused by a covered peril or to protect property owners against liability claims.
Liability
Defines an individual’s responsibility for injuring another person for the destruction of another person's property or injury to a person through negligent behavior.
Liability Insurance
Protects an individual who is liable for the damage to another person's property or injuring another person due to negligence. For example, if you were to neglect to remove snow and ice from your walkway and a neighbor slips and falls, your liability coverage would protect you from legal action.
Market Value
The cost of an item if it were to be sold under current market conditions.
Package Policy
A single policy bundling many individual coverage options usually sold separately.
Peril
A term used by insurers to describe a possible loss due to a specific event like a tornado, fire, windstorm, and other catastrophic events.
Premium
This is the amount of money charged for your insurance protection for a specified amount of time. Typically, homeowner's will pay this charge once a year.
Real Property
Represents land, structures on the land, and any vegetation on the property.
Personal Property
References tangible property not included under the definition of real property which commonly include a property’s contents.
Replacement Value
Pertains to the amount of money used to replace a piece of property without the factoring of depreciation.

Now that you know the basics, choose a product!