Homeowners insurance offers financial protection in the event of an unexpected disaster or accident involving you, your home or your personal property. However, homeowners insurance policies consist of several different types of coverage. With this in mind, it’s important that you review each form of coverage included on your policy to make sure you are adequately insured for your specific risks.
Here are some key coverage elements to look out for:
Dwelling Coverage:
This is the portion of your homeowners insurance policy that can offer compensation for the cost of repairing or rebuilding the physical structure of your home if it gets damaged or destroyed by a covered event (e.g., a fire, a windstorm or vandalism). To secure proper dwelling coverage:
- Make sure you have enough coverage to compensate the full cost of rebuilding your home in the current market—including construction expenses (e.g., labour and materials) and the associated costs of making sure your home is compliant with any new or updated building codes within your community.
- Don’t forget any important features of your home’s structure when determining the cost of rebuilding. This includes the flooring, countertops and the type of or quality of materials used throughout the structure. Further, avoid making a rough estimate when determining the cost of rebuilding. Be as exact as possible and consider getting assistance from a qualified property valuation expert to ensure a correct calculation and adequate coverage.
- Be sure to recalculate the cost of rebuilding your home and review your coverage needs whenever you make changes to your home—such as renovating the bathroom, remodelling the kitchen or adding an attached garage.
Other Structures Coverage:
This is the portion of your homeowners insurance policy that can help cover the cost of repairing or rebuilding any detached structures on your property (e.g., a shed or fence) if they get damaged or destroyed by a covered event.
Similar to dwelling coverage, it’s crucial to ensure that you have enough other structures coverage to compensate the full cost of rebuilding any of your detached structures. In addition, be sure to re-evaluate your coverage needs whenever you make changes to any of your detached structures or add a new detached structure to your property.
Personal Property Coverage:
This is the portion of your homeowners insurance policy that can provide reimbursement for the cost of stolen or damaged items inside your home, such as furniture or electronics. To ensure adequate personal property coverage:
- Review your policy to ensure you have the best form of coverage for your unique needs. At a glance, there are two forms of personal property coverage—replacement cost and actual cash value. Replacement cost coverage can offer compensation for the cost of replacing your stolen, damaged or destroyed property with a brand-new version (as long as it’s similar in kind and quality) following a covered event. Actual cash value coverage, on the other hand, can offer compensation for the depreciated value of your property. This value is determined by the age, condition and expected remaining useful life of your property prior to the covered event.
- Maintain an up-to-date home inventory checklist (be sure to include photos) of all of your belongings and their original value, as well as an estimate of their current value. This practice will help you better determine just how much coverage you need to fully protect your personal property. However, keep in mind that certain high-value items—such as jewellery, collectible items or fine art—won’t be covered by your homeowners insurance policy and will require specialized coverage.
Find Out More:
Your home is one of your greatest assets and a significant long-term investment. As such, it’s vital to protect your home and its contents with adequate homeowners insurance. This list is not exhaustive and there are other coverages to take into consideration.
Download your own copy of our in-depth guide “Know Your Insurance: Home” for free so you can better prepare your home and protect your assets:
