You have home insurance, but do you know what it covers?
When it comes to owning a home, there are many different necessities that need to be covered. It starts with finding the right home, obtaining financing, and finally moving into your new home.
An important step in the financing process is obtaining home insurance, and if your mortgage is insured, mortgage insurance!
Lenders require proof of home insurance prior to closing any mortgage, whether that be a purchase, refinance, or Equity take out. This is because the loan is secured against the property, and they want to ensure that the property is properly protected. I have connected with a Local Insurance professional, Todd Boyer at Billyard Insurance Group, to help share insight on home insurance and different options for mortgage insurance.
Home Insurance: Don't Make This Mistake When Choosing a Policy
A lot of people shop for home insurance the same way they shop for internet or cell phone plans, they compare the monthly price and pick the cheapest option.
The problem? Home insurance isn't something you truly appreciate until you have to make a claim.
As someone who works in insurance, I've seen people save $15 a month on premiums, only to find out later that the coverage they thought they had... wasn't actually included.
So if you're buying a home, renewing your policy, or just haven't looked at your insurance in years, here are a few things worth checking.
1. Don't Buy Based on Price Alone
Everyone wants to save money, and that's completely understandable. But insurance policies aren't all built the same and you have to keep in mind you’re protecting your biggest asset.
One company may include sewer backup coverage automatically, while others may not offer it at all. One policy might provide guaranteed replacement cost for your home, while another offers a set rebuild amount.
Comparing price without comparing coverage is like buying a vehicle without checking what's under the hood.
2. Know What You're Actually Insuring
One of the biggest misconceptions is that your home is insured for what it's worth on the real estate market.
In reality, insurance is generally based on what it would cost to rebuild your home after a total loss, not what someone would pay to buy it.
With construction costs changing so quickly, it's worth reviewing your policy every few years.
3. Water Damage Isn't Always Covered
This one surprises a lot of homeowners.
Many people assume that if water gets into their house, insurance will automatically cover it. Unfortunately, that's not always the case.
Depending on your policy, things like:
- Sewer backup
- Overland flooding
- Above ground water
- Ground water seepage
may require additional coverage or endorsements.
Considering water damage is one of the most common insurance claims and debatably one of the most important protection, it's definitely worth asking your broker or agent exactly what's included.
Take the recent Niagara Area floods that occurred this year, the differences in coverage mentioned above is something that should be taken into consideration, especially depending on the area you reside in.
4. Liability Coverage Is More Important Than You Think
Imagine someone slips on your icy walkway.
Or your dog accidentally injures someone.
Or your child damages a neighbours property.
Personal liability coverage can help protect you from legal expenses and damages that could otherwise become incredibly expensive.
It's one of those coverages you hope you never need, but you're glad it's there if you do.
5. Tell Your Insurance Company When Things Change
Finished your basement?
Built a detached garage?
Installed a pool or hot tub?
Started running a business from home?
These changes can affect your insurance, and if your insurer doesn't know about them, it could impact a future claim.
A quick phone call today could prevent a major headache later.
6. Expensive Stuff May Need Extra Coverage
Jewelry, collectibles, high-end bicycles, cameras, musical instruments, and other valuable items often have coverage limits under a standard home policy.
If replacing one of those items would hurt financially, it's worth asking whether it should be specifically insured.
The Bottom Line
Home insurance isn't exciting... until you need it.
The goal isn't to buy the cheapest policy. It's to understand what you're paying for and make sure it would actually protect you if something unexpected happened.
If it's been a few years since you've reviewed your policy, or you've made changes to your home recently, now is probably a good time to ask a few questions.
You might find you're already well protected, or you might discover a few gaps that are easy to fix before they become expensive problems.
Mortgage Insurance
Many homeowners are surprised to learn that there are different options when it comes to mortgage insurance. While insurance offered through your lender may seem convenient, it's not the only choice. Individual mortgage life and disability insurance policies are also available through insurance providers and may offer benefits such as portable coverage, premiums based on your age and health at the time of application, and a benefit that doesn't decrease as your mortgage balance declines. Since everyone's financial situation is different, it's worth exploring the available options to determine which type of coverage best fits your needs and provides the right level of protection for your family.
More on the topic of Mortgage Insurance coming soon!
Insight from:
Todd Boyer
Billyard Insurance Group
Phone: 548-489-1990
https://www.thebig.ca/todd
