December 16 2022
A home is one of the most significant investments you’ll ever make. It’s a place for you to make memories, find comfort and grow. We all work really hard to purchase a home and so, it’s only expected that we would do anything to protect it against damage or loss? This is where property insurance comes into play.
What is property insurance?
Property insurance provides homeowners protection or liability coverage against their homes in the event of a fire, vandalism, severe weather damage or theft. It offers homeowners financial reimbursement if they experience any type of loss or damage to their property (as specifically outlined in their policy). It also protects them if someone living outside of their home is injured on the property. When you purchase property insurance, you agree to pay a small fee to an insurance company in exchange for a guarantee that they will bear the burden of a large and/or uncertain loss in the future. Depending on the level of coverage (e.g. $1 million of coverage), the cost of property insurance is roughly $50 to $60 per month.
Although property insurance isn’t mandatory in Canada, most banks and lenders require home buyers to obtain it and show proof of purchase before getting a mortgage. Given that lenders are making a shared investment with you, they are motivated to mitigate risk and ensure that the home is protected against loss or damage.
How do you get property insurance?
If you currently have other types of insurance such as automotive or health, you can start by reaching out to your current provider. In doing so, you may benefit from a lower cost as you’ll have multiple types of insurance with the same company. Otherwise, there are many insurance providers you can shop around for to find the best option. Our friends at Sonnet, Canada’s first fully-online insurance company, have made the insurance process easier than ever. In just five minutes, they auto-fill all of your information and provide you with multiple customizable quotes to choose from. Plus, their policies are easy to read, so you can clearly understand what you’re being covered for.
What does property insurance cover?
The extent of your property insurance policy will determine the amount of coverage you have. The chart below explains some of the most common elements of a property insurance policy and the type of coverage you’ll get with each one.
|Coverage of your dwelling||This covers your home as well as structures that are attached to it (i.e., a deck or garage), in the event of a fire, rain, hail or windstorm.|
|Detached private structures||Typical home insurance policies also cover structures that are separate from your home, but are still on your property, like a detached garage, shed or fence.|
|Liability coverage||This protects you if someone who is not living with you is injured while on your property.|
|Personal property||This is coverage for valuable personal belongings in your home. For example, if your household appliances, furniture and treasured possessions are stolen, damaged or lost.|
|Personal articles floater||This is optional and additional to a typical property insurance policy. You may want to consider adding this to your policy for certain valuables such as jewelry or expensive sporting equipment. These may exceed typical personal property coverage limits, which is why you would need to purchase this additional coverage.|
|Home business endorsement||With more people working from home these days, it may be a good idea to cover your home-based business, including your equipment and inventory. This is something that personal liability and property insurance doesn’t typically cover.|
|Water damage||One of the most common causes of claims in Canada is due to water damage. While standard policies cover water damage caused by burst pipes or appliances, they may not include damage caused by sewer backups or overland flooding. This is why adding this extra coverage may be useful.|
Getting property insurance is essential as a homeowner as it protects your home and everything you’ve put into it, while giving you peace of mind should any damage or loss occur.
As a home being one of the largest investments you’ll ever make, protecting your home from unforeseen circumstances is essential, even for mortgage approval by your lender.
If you’re purchasing a home and want to get an idea of what property insurance will cost, check out our closing costs calculator, providing you an estimate so you can budget more effectively.
For a full financial picture, you can also apply online with us in minutes and one of our dedicated Mortgage Advisors will walk you through the process and present the mortgage options right for you.
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