Life insurance, car insurance, health insurance. It seems like our insurance options are nearly endless. Some types of insurance are mandatory in British Columbia (car insurance) while others are not. When it comes to home insurance, the team at Building Pro Inspections Inc highly recommends that you consider this protection for your home, even though it is not mandatory in most cases.
Not Just For Homeowners
Investing in a detached home is typically one of, if not the biggest purchase residents of the Okanagan Valley will make in their lifetime. These individuals have a lot on the line to lose if their home was destroyed and typically have some sort of home insurance, although they often don’t have enough coverage- don’t worry we will get to that.
Even if you are only renting an apartment or you have invested in a condo, there are insurance policies designed for those specific situations. These specialized insurance policies typically cover the loss of your personal items that are inside your residence. If you don’t think you need insurance, do a quick inventory of all your possessions, then look up the cost to replace all these items brand new. If you own a condo, your insurance could be a little more complex as the actual building insurance is often including in your condo fees– best to consult your insurance agent here to ensure that you are covered.
Most individuals are shocked when they discover the true value of their possessions when they start to consider items such as their electronics, clothing, kitchen equipment etc. A situation such as a building fire could decimate all your belongings in a single day and leave you with the task of replacing goods that will amount to tens of thousands of dollars.
Types of Home Insurance
As a homeowner, you have many different options or levels of coverage to choose from when you start considering insurance. Below is a quick summarization of the different policy options, although you should keep in mind that an insurance provider may refer to these options by unique, trademarked product names.
Comprehensive– offers the most protection and support as it covers the physical structure of the building and its contents from all risks. Usually with a comprehensive policy, there will be one or two exclusions such as coverage for earthquakes. It is important to go through your policy carefully and request additional coverage where you think it will be required.
|Building Pro Tip -> A J.D. Power and Associates’ Canadian Home Insurance Study found that only 56 per cent of home insurance policy owners in B.C. have earthquake insurance, while only 37 per cent of Canadians purchase flood insurance. Due to the location of the fault lines in B.C and our recent troubles with flooding in the Okanagan, it would be smart to add some extra insurance for these potential natural disasters.|
Basic or Named Perils
This is a mid-range option that will provide coverage on your expensive items, such as the building itself, as well as any coverage required for possession from the named perils on the policy.
This is an extremely basic coverage for homes that do not meet the requirements of the insurance standards. This could be for a variety of reasons, including physical issues with the home. Typically, this is not a suitable long term solution. If you are a homeowner in this situations you should have a goal of updating your residence to fit the requirements of home insurance.
Aside from protecting your home from damages, a homeowner or renter must also protect themselves from any potential liabilities that could occur on property. The personal liability portion of your home insurance policy will provide coverage in the event that you are found negligent in a situation where someone else has incurred damages or a loss.
A quick example could involve someone delivering a package to your home, who then slips and hits their head on your icy walkway. If it is proven that you could have cleared the ice from your pathway and prevented the situation, you could be on the line for the damages the delivery worker has incurred- unless your home insurance includes personal liability. Keep in mind that this coverage will not cover injuries sustained to you or any members of your family.
How Much Coverage is Required?
Now that you have a basic understanding of the different policies an insurance company may be able to offer to you, the question then becomes, how much coverage do you require? There are three questions you need to consider when determining your coverage amount.
- How much would you need to cover the damages incurred from a personal liability incident?
- What would be the cost if you have to re-purchase all your personal belongings?
- What would be the cost to rebuild your home (hint: this is not the same as the market value)
The amount of personal liability coverage you will require is unique to every situation. Do you have a dog? A large amount of liability claims stem from dog bites. Do you throw parties at home? If you serve someone alcohol to the point of intoxication, you are now partially responsible for their actions. Pool, hot tub, trampoline? Any item that increases the risk of injury or death should be an indicator that you need more coverage. A base level of coverage should be around $300,000, but the best bet is to find an insurance broker that you trust and get them to estimate what level of liability coverage is best for your situation.
When it comes to your belongings, you should make an inventory of all the possessions that you find valuable. Keep any receipts or relevant serial numbers and take pictures of everything. Once you have compiled a master list you can look up the value of purchasing these items new to get a solid understanding of how much coverage you need for personal materials.
|Building Pro Tip -> Keep this master list and collection of pictures/receipts in a different location, preferably a safety deposit box at your bank. If all your possessions, including this list go up in flames in a fire, the ashes left behind won’t do much good to prove their worth later on.|
Then there is the most important coverage to consider, which would cover the cost of replacing your entire home should the worst case scenario happen. Many homeowners believe that this is the same as the market value of their home, which is not correct in most cases. It is very common for individuals to purchase a policy for their home that cannot fully cover the cost of building a new structure. In the past 20 years, building materials and labour costs have drastically risen and there are many hidden costs to consider when rebuilding.
There are a few checklists and online calculators that can assist in determining your true home-replacement cost, however it is best to consult with an expert. Some insurance companies will conduct this estimate for free, but the Building Pro Inspections team would recommend obtaining several quotes to ensure that the figure is accurate.
There you have it! You are now educated on home insurance and ready to obtain the coverage you may require for your home in Kelowna. Perhaps after reviewing the state of your home you are looking to upgrade or downsize. If that is the case, give us a call at Building Pro Inspections when it comes time to have a home inspection completed!