Getting the right Type of home insurance in Ontario for your household !
Here at New Street Insurance we know that no two households are the same. Each homeowner has unique circumstances and coverage requirements. That’s why we shop many different insurance companies in order to find the best one for your individual home insurance needs.
There’s a lot to consider when getting home insurance and whether you’re getting your first policy changing an existing policy or simply have questions about all your coverage options available our insurance brokers will be happy to help walk you through it.
How much home insurance coverage is Mandatory in Ontario ?
There is no mandatory insurance limit in Ontario for home insurance unlike with Auto insurance, however it is always recommended to purchase a comprehensive home insurance policy that covers you for a worst-case scenario. Most Canadians homes make up a large portion of their net worth. That’s why even though it’s not mandatory by law it is a must. It protects not only your dwelling but also all your contents, lawsuits and additional living expenses in case of a claim. If an unforeseen accident damages your property or home a comprehensive homeowners insurance plan provides you with the protection your family needs.
Do I need Home Insurance If I Have A Mortgage?
If you have a mortgage in Ontario, you need homeowners insurance required by the Mortgagee. The financial institution or mortgage company requires the home they have a financial interest in to be properly protected by insurance. Lenders will require proof of insurance before loaning out the funds.
Understanding the Three main types of homeowner’s insurance forms in Ontario
What is Homeowners Compressive Form?
Comprehensive Form Coverage
This form of Home Insurance offers the largest range of homeowner’s insurance coverage. Comprehensive coverage covers the contents and the dwelling (building) against almost all risks except for occurrences that a specifically excluded from the policy (Earthquake coverage is one of the risks often excluded in Ontario’s comprehensive home insurance coverages). This is known as “All perils” Converge.
Broad Form Coverage
Broad Form coverage includes Comprehensive coverage on the building and named perils on the contents of the building. Named perils are just what it sounds like, in this case you’re only covered for the types of losses that are listed in your policy.
Named Perils Coverage also known as Specified Perils
Named Perils Protects you from specific perils listed in your insurance policy. Perils not named in the policy are excluded from the coverage. These are the coverages usually offered in a named Perils Policy.
Weight Of Ice, Snow and Sleet
Sudden and Accidental damage from an Electrical Current
Theft and Attempted Theft
Repture, freezing and Water Escape
Fire, Smoke, Lightning or Explosion
A common misconception is that the replacement cost of your home is valued on rebuild cost not the land it sits on.
Types of Coverages
Under Policy Wordings, What is Dwelling Coverage
Dwelling is a common term used in homeowners insurance policies to describe the building and the coverage it has. This coverage shows the amount or cost your policy will cover to rebuild or repair the home after a covered claim has occurred.
What is detached Private structure coverage ?
Most home insurance policies include detached private structures, with the coverage amount being a percentage of the insurance offered for the main dwelling. Detached Private Structures includes other structures on your property such as Sheds, fences, garages and decks.
What is Additional Living Expenses coverage ?
Most home insurance policies include Additional Living Expenses, with the coverage amount being a percentage of the insurance offered for the main dwelling. If you experience a claim and your home is deemed unfit to live in or you’re denied access into your home by civil authorities or police because of a direct result from an insured peril. The insurance company will cover the additional living expenses during this time covering such things as hotel bills, storage units, rent (for a short-term apartment), pet boarding, restaurant meals.
If someone is hurt on your property and you are found legally responsible your insurance policy will usually cover the cost of the settlement. This protects against lawsuits from ones actions or from being the owner of the property itself. This is limited to the liability insurance portion on your policy and is often set at 1 or 2 million dollars in Ontario. It extends to your dependents under the age of 18 residing in your household or your children under 21 that are away at university. This can be used in several situations from someone slipping on ice walking up to your door or a fire on your property catching the next building on fire.
What is Contents Insurance?
Contents insurance is the coverage for the value for all items in your home. If you had a total lose (fire) how much would the cost you to completely replace all of the items in your home. Usually this coverage amount is a portion of the dwelling around 80% of value. If your home was valued at 100,000 dwelling coverage rebuild your contents coverage would most likely be 80,000. This covers everything from furniture to televisions. There are a few items that are not added to this automatically and examples of that would be jewelry and fine art. Typically in these situations you would get an appraisal of the jewelry or artwork and schedule it separately to make sure it has enough coverage.
Which coverage is the best for you, Actual Cash Value Plans Vs. A replacement cost plan.
What you should know before Buying Your Home Insurance
Actual cash value
Actual cash value plans often have lower premiums and the coverage offered reflects this. Actual Cash Value of your property and contents are based on the market value of your personal property and home with depreciation factored into it. It calculates the difference between what it would cost to replace your property today and the lowered value after depreciation. Which is what making this option the most affordable choice. If you end up making a claim however the payments will reflect the current value of your home. Contents will be valued at a loss.
Replacement Cost Insurance Coverage
Sometimes referred to as RCV.
Replacement Cost offers insurance equal to the amount that it would cost to replace the lost items. A claim will either cover the cost of restoring items to their original condition or purchasing a new item equivalent to one of the same quality that was lost, whichever option costs the insurance company less. This coverage guarantees the rebuild value even if the cost to rebuild the original home is estimated to be higher than the coverage limit on the policy.
What coverages aren’t usually covered by Homeowners insurance?
Home Based Business
Home Sharing Insurance
Renting out your home or a portion of it to others in exchange for money, changes the use from a personal basis to commercial. If you plan on renting your home out for Airbnb, flipkey, homeaway, or VRBO it is important to add an endorsement to your policy to cover the added risk.
Flooding from a river or body of river usually isn’t covered, however damaged cause by plumbing or appliance malfunctioning is often is.
If you’re a snowbird and leave during the winter make sure you drain your pipes because often if you’re away on vacation frozen pipes are not covered by homeowners insurance policies.
Wear and Tare
Insurance is designed to cover the cost of unexpected disasters, not the cost of neglecting regular home maintenance.
While some policies will cover mold resulting from a named peril ( damage due to a malfunctioning toilet for example), mold resulting from neglecting maintenance of the home or lack of cleanliness is not covered.
Most problems resulting from insect are preventable and are not covered by insurance policies. This isn’t limited to bugs but also racoons’ squirrels and rats.
High Value Items
Most insurance policies do not cover the cost of high-ticket items like jewelry or Rare Art. Instead you can add endorsements to your policy to include these items.
What Determines the price of home insurance in Ontario?
Insurance companies take many factors into consideration when determining the price of home insurance. They do this by analyzing large groups of data from existing and past clients and determines what the rates for individual risks should be based on many factors.
Type of building construction material
Type of Heating, Electrical System, Piping
Home Features – Spa, finished basement, Pools, Roof Age
Where your home is located City and postal code
Proximity to rivers and lakes
Past claims history
Home Security and fire Prevention
The distance to a fire station and fire hydrant