Nearly 70 percent of households in Canada are owned rather than rented.
While homeownership certainly has its benefits, its also a huge responsibility. You've likely made a huge financial investment in your home. If a natural disaster, fire, or other accident destroys it, you'll be stuck figuring out what to do next.
If you don't have home insurance, you'll also be stuck footing the bill.
While most people realize the importance of home insurance, not everyone knows exactly what it will and won't cover.
Keep reading to learn about some of the most common myths about home insurance in Canada, and what you need to know to choose the right policy.
Your home insurance policy is designed to protect your home itself, your property and sometimes outbuildings if your policy specifies them, and your belongings.
But while most policies will cover your coach in the event of a fire or a TV if your home is broken into, they don't cover everything you place under your roof.
Most policies have sub-limits that exclude certain types of belongings or those that are valued over a certain dollar amount. This usually includes items like fur coats or jewelry.
The items that your home insurance doesn't cover can be protected by adding specific coverage for them to your policy. To obtain this coverage, you'll need to provide proof of value through a receipt or an appraisal.
If you're like most people, you probably believe that home insurance is a set-it-and-forget-it deal. Once you've chosen your home insurance policy and started paying for it, it should cover your home in case of damage from a storm, a fire, or a home invasion.
But what happens if that damage occurs when you aren't around? If you haven't taken the necessary precautions, you might not be covered.
Many home insurance policies require that you take certain precautionary measures if you plan to be away from your home for more than a couple of days.
Most stipulate a period of between 3 and 7 days. If you know that you'll be away that long for a vacation, work trip, or to visit family, you need to take those precautions if you want to still be covered if damage occurs.
Typically these precautions are required during the "usual heating season." This means the time of year when you're likely to have your heat on.
Many homeowners turn down the heat while they're away to save money. But without heat or hot water running through your pipes, they may freeze and burst, causing serious, costly damage.
Your home insurance policy may require you to shut off your home's water supply and drain your pipes. You may also be able to avoid this by ensuring that your house stays properly heated while you're away.
Another common myth about home insurance is that some providers include an "Act of God" exclusion. The exclusion means that home insurance policies won't have to pay out if your home is damaged in a natural disaster like wildfires, lightning, hailstorms, or tornados.
The only thing that your home insurance would then cover would be things like house fires or broken pipes.
The reality is that no such clause exists.
All homeowners policies will cover common natural disasters. Some do include coverage for more rare events, like freshwater flooding or earthquakes, as an optional coverage you'll have to pay extra for.
The only "Acts of God" that are rarely covered by any home insurance policies, even as an optional coverage, are landslides or seawater flooding.
However, another "Act of God" that can leave a homeowner or beneficiary high and dry is if the person whose name is on the mortgage passes away. This leaves anyone else on the mortgage or the beneficiary responsible for paying for it, whether they are financially able to or not.
Home insurance won't protect against this, but you can get mortgage insurance to help protect your loved ones from having to pick up your payments if something does happen to you.
One big myth that many homeowners and soon-to-be homeowners believe is that having home insurance is required. But unlike auto insurance, the government doesn't require homeowners to purchase insurance in order to buy a piece of property.
That said, if you need a home loan to buy your new property, many lenders will require you to have an active home insurance policy.
Some may also require that you name the lender on your policy as well. This ensures that they'll get their own cut if something were to happen to your home.
Even if you don't own your home, and instead rent, you aren't required by law to have insurance. But as with home loan lenders, many landlords will still require it.
Whether you have to show proof of insurance to get your mortgage or not, protecting your investment should be a no brainer.
If you think that buying an older or less expensive home will help you save when it comes time to pay for home insurance, think again.
While it may seem as though flashy new appliances and a new build would require more insurance and therefore a higher rate, the opposite is usually true.
New homes feature brand new plumbing, materials, and appliances that are less likely to break or be faulty. Older homes do not.
Less expensive homes may also be made from cheaper materials, making them more prone to accidents. This leads to higher insurance premiums as well.
When a natural disaster strikes and you have home insurance, you may breathe a sigh of relief. After all, this is exactly the reason you pay for home insurance; when the storm is over, you can repair your home without going into debt.
But if a flood or earthquake is to blame, you might not be covered.
Most insurance policies will cover damage caused by burst pipes or a leak. But they won't cover damage from overland flooding, which is caused when rivers swell from melting snow or endless rain.
Until 2015, flood insurance wasn't even an option in Canada. The only way for homeowners to get relief was through disaster financial assistance programs through the government.
Now, home insurance companies offer flood protection, but usually only as an optional add-on. The same usually goes for earthquake coverage, though some providers do automatically include it in their coverage.
Without extra riders to cover earthquakes or floods, you'll be left covering the repairs yourself. And with 100-year-floods on the rise in the nation, there's never been a greater threat of flood damage.
You're working on replacing a deck, tearing down a wall within your home, or simply notice that one of your walls suddenly seems hollow. You look behind the drywall and find wood that's been chewed away and reduced to sawdust.
You have termites.
Because your home has been damaged by bugs, a natural phenomenon, you probably assume that your home owner's insurance will cover the damage.
Unfortunately, that's not the case.
Homeowners insurance will rarely cover damage from termites or other insects. With the average termite treatment costing homeowners more than $3,500, you'll end up on the hook if they appear in your walls.
If you want to protect yourself from this unexpected expense, be sure to look for a policy that covers termites and insect damage.
If you drive a car that's a few years old and you get into an accident that totals your vehicle, your auto insurance will pay you the market value for your car.
After all, you got years of use out of it. And if you would have sold it before getting into an accident, you would not have been able to sell it for what you originally paid.
In the same way, home insurance policies won't pay you the original price of your home in the event that it is destroyed by a covered disaster. In fact, unlike auto insurance, home insurance won't cover the market value of your home either.
Instead, home insurance will pay the replacement value of your home or the rebuilding value.
That's because the insurance is only having to pay to replace your home itself. The land is still there, so your insurance provider doesn't need to pay for the value of that land.
There are plenty of myths out there about what home insurance in Canada does and doesn't cover. Sifting through those myths to find the truth is a must if you want to ensure that your home is protected in case of a disaster.
When you're shopping around for policies, make sure that you know exactly what types of disasters could strike the area that you live in. Don't just include the common ones either; just because your area hasn't experienced an earthquake in recent history doesn't mean that it never will.
Now that you know exactly what to look for in a home insurance policy, it's time to find out what it's going to cost you to protect your home. Learn more about the cost of home insurance in Canada here.