How to buy homeowners insurance in 2022
Home insurance buying guide
If you’re reading this, there’s a good chance you’ve just bought a house or condo and are looking for your first home insurance policy. We consulted our experts to create this comprehensive guide.
February 11, 2022
Homeowners insurance: introduction
So you’ve purchased your new home and you’re on the hunt for a great homeowners insurance policy. This is a big moment for you and you should be proud of yourself! Don’t spend too long celebrating, though. One of the biggest questions about purchasing home insurance is when to purchase a policy.
When buying a house, homeowners should think to get insurance when their bid on their new home has been accepted. Once that happens, you have until your move-in date to secure a home insurance policy. Not to worry, though. This guide will tell you what you need to know about homeowners insurance, what to look for in a home insurance policy and will walk you through the process of finding — and purchasing — the best one.
That’s not all. If you’re ready to buy, LowestRates.ca also compares the best home insurance rates from the most reputable providers in Canada. All you have to do is fill out a form, and we can help you get a quote to buy home insurance online. How? We partner with 15+ providers across Canada and make them compete for your business. For now though, this homeowners insurance guide is here to walk you through the process, step by step. Sit back, relax, and let us lead the way.
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What you need to know about home insurance
Key takeaways
- Home insurance is property insurance that protects your dwelling against losses or damages.
- Depending on which type of home you’re living in (e.g.., house, condo or rental), you’ll need a different type of coverage.
- Most lenders won’t release your mortgage funds until you’ve purchased a home insurance policy.
- Home insurance will cover your personal belongings, living expenses should you need to live somewhere else while your residence is being repaired and your personal liability.
- Home insurance won’t cover damage that was caused by neglect, nor will it completely cover high-value items like jewelry or art. Enhanced options for items like these are available if you need them.
What is home insurance?
If you’re reading this guide, there’s a good chance you’ve just bought a house or condo and you’re looking for your first home insurance policy. But, understanding home insurance can be tricky, so we consulted our experts to create this comprehensive guide. Let’s start at the beginning.
Home insurance is a form of property insurance which protects against any losses or damages against your home. While it’s not mandatory to purchase home insurance in Canada, you’ll be hard pressed to find a lender who’ll give you a mortgage without it. A lender won’t release your mortgage funds until they’ve confirmed that you’ve purchased a home insurance policy.
There are three different types of insurance you can purchase in Canada if your goal is to insure your primary residence; home insurance, condo insurance and renters insurance.
Home insurance: A home insurance policy generally covers your property, the structure of your home and the contents inside. It will also cover your liability for any injuries sustained to other people while they’re on your property or in your home.
Condo insurance: A typical condo insurance policy will generally cover many of the same things as home insurance, except that, it’s a condo. This includes damage done to your unit or your belongings, your liability if someone is injured on your property, etc. A key difference between condo insurance and house insurance is that — as the condo building is insured by the condo corporation— your insurance policy won’t cover the structure of the building, only the interior. Many condo insurance policies also come with something known as guest insurance, which covers the medical expenses of a guest injured while at your condo if you are not at fault.
Renters Insurance: A tenant insurance policy will cover your belongings against a number of common risks such as theft or fire, but will also cover your living expenses if something should deem your unit temporarily unlivable.
If you’re looking into getting homeowners insurance for a rental property that you own, a commercial building or a vacation home, you should speak to your provider about additional or different coverages you may require. Alternatively, filling out a form on LowestRates.ca takes just a few minutes. Regardless of which type of home insurance you’re looking for, we’ve got you covered.
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Stefan Tirschler
“Home insurance doesn't need to be intimidating. Customers shouldn't be afraid to ask their home insurance provider questions. I think the vast majority of challenges that we see come down to probably just a lack of familiarity and a lack of understanding with how it works and how much the customer can be involved in the process of deciding what's right for them”
Why do you need home insurance?
Home insurance might be the last thing on your mind when you’re searching for a home (whether you’re looking to rent or buy), but it’s actually a very important part of the process. If you’re a home or condo owner, your property is probably the largest asset you own.
Home insurance can protect your house and its contents in the case of a fire, a storm or a burglary. Without a home insurance policy, that’s all up to you to pay for.
What many people don’t know about home or renters insurance, however, is that you’re not just covered for any damage incurred to your home or the valuables inside. You’re also covered for your property and liability when you’re away from your home.
For example, if you knock over a candle during your honeymoon in a hotel room and cause a fire, the hotel will likely demand that you pay them back for damages. However, you can actually use your house, condo or tenant insurance to cover your liability for property damage anywhere in the world. Just another perk of having a great home insurance policy.
Andrew Foster
HUB International
“You can actually use either your homeowner, condo [or] tenant policy. An unknown fact about your property policy is that it will pay for that unintentional property damage that you caused anywhere in the world.”
What does home insurance cover?
The answer to this question depends on the type of policy you purchase. We’ll get into that later on. Generally, however, your home insurance policy will cover the following items or expenses; your personal belongings, living expenses should you need to live somewhere else while your residence is being repaired and your personal liability if you happen to be sued for an injury or other damages sustained on your property. A condo insurance policy will also cover unit upgrades.
In addition, home insurance will usually cover the following risks; theft, fire, lightening, broken windows, water damage, wind and hail, explosions, vandalism, electrical current, smoke damages, falling objects.
For example, home insurance will normally cover your hotel stay if you need to relocate temporarily after a fire causes damage to your home. Alternatively, if one of your guests trips over a piece of loose flagstone during a backyard barbeque, breaks their ankle and sues you for damages, you’re covered for that.
By filling out our form, we’ll automatically include all of those things for you. All you have to do is fill out a bit of information about your home. We’ll determine how much insurance you need and how much it might cost.
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There are a number of expenses and risks that are not covered under your home insurance policy, as well as several which are only covered as an add-on to your policy. Keep reading for more information on what these omissions are.
What doesn’t home insurance cover?
While home insurance coverage can cover a wide range of risks and expenses, it’s important to be aware of the things your home insurance policy won’t cover.
Firstly, home insurance won’t cover damages that your provider determines were caused by neglect. For instance, if the roof of your home caves in, but an investigation reveals that it was due to be replaced or upgraded years ago, that’s not covered. You’ll need to prove that you took every reasonable action to keep your home in good condition.
Furthermore, home insurance usually doesn’t cover high-value individual items like jewelry or rare art. You can either take out additional policies for these items or, alternatively, you can choose to add individual items to your home insurance policy — but you may need to buy additional coverage for these.
If you’d like to insure your engagement ring, for example, you’ll need to take out an additional policy or add this item to your home insurance policy for an additional cost. Everyday items like your television, microwave or other furniture however, are covered.
Premiums, deductibles and other home insurance terms you should know
Before we get into the nitty gritty of choosing your homeowners insurance coverage and making a claim, there are some terms you should be familiar with. These will help improve your general understanding of which homeowners insurance policy might be right for you.
What are premiums?
An insurance premium is the amount you pay for an insurance policy. This can be paid on a monthly or annual basis.
What are actual cash values?
An actual cash value policy means the claims payment is based on the current value of the product in a similar condition that needs to be replaced. For instance, if a 10-year-old dryer is damaged, the payment is based on the current value and not the cost of buying a new dryer. Premiums for this type of policy are lower than a replacement cost value policy.
What is the replacement cost value?
A replacement cost value policy means that the claims payment is based on the value of replacing the product with a brand new one that’s a similar make or model. Premiums for this type of policy are higher than an actual cash values policy.
What are endorsements?
Endorsements are additional types of coverage (such as sewer backup endorsement) that can be added to your insurance policy.
What is a deductible?
This is the amount you have to pay towards damages before the insurer will pay. If, for example, there’s $5,000 in damage to your home and you have a $500 deductible, you will pay the first $500 in damage and the insurance company will pay the rest. A higher deductible will lead to lower premiums.
What is depreciation?
Depreciation is a decline in value of an item over time.
What are perils?
Perils are unexpected or accidental events.
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Home insurance policies: which one is right for you?
Key takeaways
- Before you start searching for the perfect home insurance policy, answer as many questions about the building and potential uses of your home that you can. Your insurance provider will ask for this information when setting up your policy.
- When selecting a home insurance policy, you can select from a number of different types: Comprehensive, basic coverage, broad coverage, no-frills coverage. Read on to learn more about these.
- When it comes to purchasing a policy, make sure , if you already own a car, that you give your auto insurance provider the chance to bundle your home insurance policy with your car insurance. You might save even more!
What do you need before you apply for home insurance?
Getting homeowners insurance is no small feat. In fact, even before you start shopping for home insurance, there are a number of questions you should answer about your home. Your insurance provider will definitely be asking these questions while you’re setting up your coverage. Even LowestRates.ca asks a number of these questions when you compare home insurance quotes online.
- Do you know your address? It might sound simple, but you’d be surprised at how many new homeowners don’t know their address by heart.
- Do you or have you ever had an active home or tenant insurance policy? If so, this might reduce your premium. If, however, over the past five years a home insurance provider has cancelled or refused to renew your policy, this might impact how much you’re charged.
- Is your home currently under construction or undergoing significant renovations? If so, you’ll probably need to tell your provider who’s doing the work and confirm that all the contractors have the appropriate licensing and insurance as well.
- Is the home intended to be your primary residence? For the purposes of this guide, we’re assuming that you’re planning to live in the home you’re insuring. If that’s not the case, however, you’ll need to inform your provider of the extent to which you choose to use the property.
- Do you intend to rent out part of your home? If you share your home with renters, this may impact how much you pay in home insurance. It’s also important to be upfront about this because, in the event that your home insurance coverage isn’t enough, you may be advised to purchase a landlord insurance policy. It’s also important to tell your insurer if you have a rental suite in your home or if you intend to participate in home sharing programs like “Airbnb.”
- What type of wiring and electrical does the home have? In an ideal world, every home would be built with copper wiring and at least 100 AMP electrical service. These are standard fixtures in modern homes. Some older homes may be built with aluminum wiring or (for homes built before the 1960s) knob and tube wiring, which may warrant a higher home insurance rate.. Additionally, older homes with less than 100 AMP service may not be well suited to today’s high electrical usage.
- What type of plumbing does your home have? Most homes built after the 1970s have copper plumbing. Home insurance providers often like to see copper plumbing because it doesn’t require heavy maintenance. Alternatively, home insurance companies will also be pleased to see cross-linked polyethylene (PEX) plumbing in your home. However, if your home has the KITEC plumbing system or Poly-B plumbing installed, you may have a harder time finding a provider to insure the property.
These are some of the most common things home insurance providers will ask prospective homeowners before they agree to insure them. But, they’re not the only questions your home insurance provider might ask. Be sure to have a home inspection done before finalizing the sale of your home or condo to determine whether the home will need upgrades or repairs before it can be insured.
- Do you conduct business from your home? This question has suddenly become much more relevant in 2020 as workers across Canada have been forced to work from home indefinitely due to COVID-19. We’d like to shine a light on this for you. Yes, you are required to inform your home insurance provider if you’re running a business from your home, but what does this mean exactly? If you simply have a home office, this probably doesn’t refer to you. However, if you’re seeing clients, housing inventory or creating any products (i.e., sewing scarves for a sewing company or baking cookies for an independent bakery), these items and activities probably won’t be covered under your regular home insurance policy.
Once you have all this information, you’re ready to start canvassing the home insurance market. You can start the application process on LowestRates.ca where we’ll ask you for some of the information you’ve been gathering.
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Stefan Tirschler
Square One Insurance
“Most home insurance policies assume that not everyone works from home. Fast forward to today. As people change the way they use their homes, we need to remain on top of the changes in their coverage requirements over time.”
What type of home insurance do I need?
If you’re wondering how to choose a homeowners insurance policy, we don’t blame you. Shopping for home insurance can be confusing. When it comes to choosing homeowners insurance, your decision will often depend on what type of home you’ve decided to buy, where you live, how you use your home, and a number of other factors. Your options for homeowners insurance might be vast, but we’re here to simplify it for you. Here’s a summary of the different types of home insurance policies you can choose from.
Comprehensive Coverage: This policy offers the broadest range of home insurance coverage. With this option, your home and all its contents will be protected from all risks, with a few exceptions.
- Optional risks: Risks that aren’t covered in normal policies, but that you can buy additional coverage for if you choose. Some examples of these include sewer backup and earthquake coverage.
- Uninsurable peril: Risks you can’t insure because they could have been avoided with proper planning. For example, you can’t get coverage for flood damage if you built your house on a flood plain.
Basic coverage/named perils: This type of home insurance isn’t as broad as comprehensive coverage. Basic plans only pay for the damages that are specifically outlined in your policy.
Broad coverage: This type of coverage isn’t as broad as comprehensive, but it’s not as narrow as basic. A mid-priced compromise, a broad policy provides comprehensive coverage on main items, like your home’s physical structure, but only basic coverage for the contents inside.
No frills coverage: No frills policies are usually limited to properties that don’t meet normal standards, and are not offered by all insurance companies. These policies may be appropriate for homes purchased as fixer-uppers that need significant renovations or homes with serious structural problems. In this case, an insurance company may offer you a very limited no-frills policy.
If you’re wondering how to shop for home insurance, the Insurance Bureau of Canada (IBC) has a few home insurance tips for homeowners looking to get the most value out of their policies.
- Insure for the cost to rebuild the structure of your home.
- Confirm an accurate replacement value of your home so you know whether you’ll need to purchase additional insurance.
- Review your home inventory every year that you renew your policy to make sure you’re insured for the proper amount.
- High-value items such as art and jewelry may require a separate endorsement. Feel free to scroll back up to review what an endorsement is.
Making comparisons between homeowners insurance policies can often be a long process. This is why LowestRates.ca has partnered with 15+ home insurance providers across Canada to let you see the best home insurance rates in your area. Fill out a form to get started.
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Purchasing your home insurance policy
When it comes to home insurance, the importance of finding the right policy can’t be overstated. Now that you’ve decided which type of policy you’ll need, we’ll now cover how to get a home insurance policy. When it comes to buying homeowner insurance, our experts recommend that you talk to your auto insurance provider to see if you can bundle your policies. Bundling your home and car insurance can often save you 10-15% right off the bat.
Andrew Foster
HUB International
“Nine times out of 10, you should probably be contacting the same company that you have car insurance with. Always give them the opportunity first because they're the only company right now that can give you that 10 to 15% discount for having both home and auto insurance with them.”
When it comes to buying home insurance, every provider will have their own process. Some home insurance companies will have a phone number that you can call to set up a policy, while others have the option to do it online. You may be able to get some insight into how others feel about specific companies that offer home insurance through reviews posted online.
Beginning the process of buying home insurance online is becoming more and more popular. If you compare rates on LowestRates.ca, however, a broker or insurance agent will contact you to help you secure your preferred rate. All you have to do is spend a few minutes filling out a form. It’s really that easy.
How can I get a cheaper home insurance rate?
Like many types of insurance, your home insurance rate will be customized to you. That doesn’t mean though that your rate is entirely out of your control. There are a number of different discounts you can take advantage of when applying for home insurance. Most home insurance companies will offer discounts for the following things:
- Bundling insurance policies (e.g., auto and home) with the same insurer.
- Increasing your deductible (e.g., the amount you pay out of pocket for damages).
- Paying an annual lump sum up front as opposed to monthly premiums, which include administrative costs.
- Being part of a union, certain organizations, or an alumnus of certain universities.
- Equipping your home with smoke detectors and monitored intruder alarms.
- Never having made an insurance claim (being “claims free”).
- Being a senior citizen.
- Newly-built homes can sometimes qualify for a discount.
LowestRates.ca’s quote tool asks whether you’re already eligible for some of these discounts. This is incorporated into the rates we show you on our site. Fill out a form to see what you’re eligible for today.
Stefan Tirschler
Square One Insurance
“Home insurance doesn't need to be intimidating. Customers shouldn't be afraid to ask their home insurance provider questions. I think the vast majority of challenges that we see come down to probably just a lack of familiarity and a lack of understanding with how it works and how much the customer can be involved in the process of deciding what's right for them”
Wait...I need to maintain my home insurance policy?
Once you’ve purchased your policy, you probably won’t think about it much until you need to use it. That’s ok! Home insurance is one of those “get it and forget it” personal finance products.
However, in order to make sure your home insurance policy kicks in when it counts, there are some things you should do regularly to ensure you’re keeping your end of the agreement.
Home renovations: If you renovate your home in any significant way that would change its overall value, you should inform your home insurance company. This is so, if something happens, you’re insured for the full value of your home. It might not always make a difference, such as in the case of a few small upgrades. But, adding a bedroom, bathroom, pool, or any significant home addition might. Furthermore, if you decide to put in a pool, make sure to tell your home insurance provider, as this might change the level of risk your insurer has allotted you.
Running a home business: Should you decide to start your own company and run the business from home, we’re happy for you! Becoming an entrepreneur is a big deal and you should be proud of yourself. But, depending on the nature of your business, your home insurance coverage might change. This especially applies if any products are being stored or you’re manufacturing something (i.e., sewing or cooking). Make sure you tell your home insurance provider about these changes.
Maintaining the roof, plumbing, electrical and structure: General maintenance on your home is considered your responsibility when you purchase a home insurance policy. It’s important to keep up to date with roof repair, electrical and plumbing maintenance, and other structural aspects of your home. If, for example, your roof falls in due to a thunderstorm, but your home insurance provider determines that it should have been replaced years ago, that’s not covered.
Renting out your home: If you choose to turn part of your home into a rental property, you must inform your home insurance provider. They’ll determine whether your personal coverage is enough to cover you. Your provider may advise you to purchase additional coverage, or landlord insurance. However, if your tenants cause damage to your home and you haven’t informed your insurance provider that you’re renting out your property, not only are you not covered for the damage, but your provider may cancel your policy.
Making a home insurance claim
Key takeaways
- It might not be worth it to make a home insurance claim. Our experts advise on when you should and when you should hold off.
- Every company will offer you different ways to make a claim. Don’t worry. We’ve profiled more than 15 providers of home insurance right here, so you don’t have to hunt them down.
When should you make a home insurance claim?
When it comes to making a home insurance claim, your first question should be whether or not you actually need to. Our experts suggest that if you’re comfortable handling the loss on your own, you should avoid making a claim. Alternatively, if the loss is too substantial for you to handle without calling your insurance provider, that’s the time to make a claim. This is because your premiums will probably increase once you make a claim. If you make claims frequently, this will drive up your premiums even more.
Another thing to note is that many insurance companies often give people a claim-free discount. As soon as you make a claim, no matter how frivolous or small, your claim-free discount will be removed.
Andrew Foster
HUB International
“I think people just don't realize that making small and frivolous claims will affect them in the same way as a large full loss to their home would.”
How do you file a home insurance claim?
Different home insurance companies will offer you different avenues for filing a claim. While some will require you to file a claim over the phone, others will allow you to file a claim through a mobile app.
On LowestRates.ca, we’ve profiled several different home insurance companies to get you started. Find out more about them here.
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About the author
Jessica is the former Associate Editor for LowestRates.ca. Before joining the team, Jessica worked as a National Online Journalist with Globalnews.ca and previously spearheaded the launch of the Business Section at one of Canada's largest technology websites, MobileSyrup.
