A Guide to Home Insurance Policies

Finding a home insurance policy after just purchasing a home usually boils down to which premium is the least expensive. It's easy to feel completely tapped out after paying a hefty down payment plus closing costs. But homeowners who opt for minimum coverage may eventually find themselves losing a lot of money on what was supposed to be a long-term investment. Here are a few tips to ensure that homeowners enter an agreement with both eyes open.

For informational purposes only. Always consult with a licensed real estate professional or insurance agent before proceeding with any real estate transaction.

Calculating the Premium

How much a person pays is relative to where they live, the condition of the home, their financial standing, and their lifestyle. A home that will be rented for half the year in a high-crime neighborhood will have a far more expensive premium than a single owner in a relatively stable neighborhood. Homeowners should always give the insurance company the full truth of their circumstances. If they don't, an investigation into a future claim may reveal the lie of omission (resulting in a denial of financial compensation).

Coverage Levels

Homeowners have four major types of coverage to choose from:

• Comprehensive: This is typically considered the gold standard of home insurance. This policy will typically name the events that aren't covered as opposed to the ones that are. Homeowners can rely on this policy to cover everything that isn't specifically excluded.
• Standard: A standard policy will name the parts of the property that are covered versus the ones that aren't. For example, a standard policy may cover any damage to the physical structure but not the resulting loss of personal property. Saanich West homeowners are fully responsible for anything that falls outside their standard policy.
• Broad: A broad policy is a combination of a standard and comprehensive policy, and it can be very complicated to decipher. For example, it may cover certain contents within the home under different events but not others. An insurance broker or real estate agent can make it easier to understand the policy's ramifications.
• No-frills: This policy is the minimum an owner needs to stay legal, and it boasts a very attractive price tag. However, not all properties are eligible for a no-frills insurance policy because it covers so little, so homeowners will need to do some research if they want to go this route.

Event Types

There are two major types of events that may result in damage to the home or injury to its residents and guests. Dubbed 'unexpected' or 'predictable', the designations are important when it comes to filing a claim. Unexpected events are those where an owner has no advanced knowledge of the occurrence. A fire or criminal activity would qualify as unexpected because homeowners can't prepare for their damages before they happen. However, not all unexpected events are covered. Flooding or earthquakes typically require additional coverage, which is another reason why homeowners need to understand their policy before signing.

A predictable event is defined as an occurrence where the homeowner had the advance knowledge and time to prepare for any damage that occurred. So if icicles accidentally fall on top of a resident and cause injuries, the insurance company could argue that the homeowner should have cleaned their gutters or improved their venting to prevent this from happening.

There are no standard rules of home insurance, which is part of why it remains a mystery to even the most seasoned of homeowners. The plus side is that homeowners have plenty of options when it comes to picking a policy that works for them.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.