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What Does Home Insurance Cover? An In-Depth Coverage Guide

on 27 May, 2019

In January 2019, the Canadian Multiple Listing Service (MLS) sold 23,968 properties.

Granted, that represents a 4% decrease from the year before. But it still shows that many folks pursue their dream of becoming homeowners. Especially Millennials, 59% of whom are already homeowners.

Regardless of your age though, a house is one of the biggest investments you can ever make. It’s also the most expensive purchase you’ll ever make in your lifetime.

That’s why you want to get a home insurance policy to protect your home and its contents.

The big question is, what does home insurance cover exactly? How does it protect your home, its contents, and you from potential losses?

That’s what this post is for — your ultimate guide to home insurance coverage. So, be sure to keep reading to know what it’ll cover you for and how helpful it is to have one!

What Does Home Insurance Cover: Covered Perils in Standard Policies

Unlike auto insurance in Canada, homeowners insurance isn’t a legal requirement. In some cases though, mortgage lenders may need borrowers to get this as part of their contract.

But even if it isn’t required, you should still get it, as it can make a huge difference in case a disaster happens. In Canada, we refer to these covered disasters as “insured perils”. All homeowners policies detail which perils they cover.

From fire to theft to lightning strikes, standard policies protect you from a lot of perils. Let’s take a closer look at each of these covered disasters.

Fire and Smoke

Most standard homeowners insurance coverage includes protection for fire and smoke damage. In fact, insurers consider this as a form of “total loss”.

First, because fire and smoke often result in the entire dwelling becoming inhabitable. This then warrants the need for repairs or even a complete rebuilding of the house.

Second, it’s very likely that the fire and smoke have also damaged the contents of the home. As such, they need replacement before the home’s occupants can live in the house again.

There are two cases, however, wherein a homeowners policy won’t cover fire and smoke damage.

There’s arson, which is a criminal offense in Canada. Arson is the intentional setting of a fire in a house or a property. It’s not as common as other crimes, but there were still some 23 arson cases per 100,000 residents in the country in 2017.

The second one is a fire that occurs in a vacant property. Insurers have differing definitions for “vacancy”, especially how long it has been vacant. In general though, these are homes unoccupied for over a month.

But even if your policy covers accidental fire and smoke damage, it’s best to make your home as fire-proof as you can. Don’t leave your open stove or oven unattended and don’t let anyone smoke inside the house. Doing these two alone can already make your home not only safer but healthier too.

Explosion

Explosion is almost always a basic covered peril in Canada homeowners’ policies. In fact, if you look at a policy, you’ll see “Explosions” listed by itself without any other explanation.

But there are some cases wherein you may not get home insurance coverage for an explosion. An example is if the explosion resulted from a nuclear reaction.

Now, keep in mind that Canada has 19 reactors, where 15% of its electricity comes from. Also, most of these are in Ontario. If you live somewhere near a nuclear facility, be sure to ask your insurer what your options are.

Lightning

Canada sees a lot of lightning strikes — 2 million on average each year, to be more specific. Alberta gets a lot of this, averaging 400,000 lightning strikes in the summer. But Southern Ontario’s small Windsor town remains the stormiest and most active.

Luckily, lightning damage is often included in standard home insurance coverage. Your policy will cover your home and valuables in case a lightning strike hits and damages them. Damages from a fire or explosion caused by lightning are also often part of the coverage.

What you may not get coverage for is damage from a power surge caused by a lightning strike. While they won’t cause destruction of your home, they may ruin your electronics. If you have a lot of pricey gadgets, be sure to check your additional coverage options.

Falling Objects

If a meteor strikes the earth and part of it damages your home, your policy should cover the damages. The same goes true if a storm uproots a healthy tree and slings it to your home.

Damage Caused by Aircraft or Land Vehicle Impact

If an airplane falls on your house and damages it, your homeowner’s policy should also kick in. It should also cover damages caused by a car that crashes into your home.

Riot

Riot and civil commotion are also part of the basic named perils in homeowners policies. These violent acts can result from a mob and cause property damage. Because these are “unpredictable”, most policies cover damages that arise from their occurrence.

Thank goodness then, that Canada is one of, if not the friendliest country in the world. So, such violent acts are pretty rare in the country. But still, it’s nice to know that in case a riot does happen, you have a policy protecting your home and possessions.

Water Damage

Your home insurance will provide water damage coverage if the cause is accidental. For instance, one of your plumbing pipes just burst and let all that water out. Unless the pipe wasn’t frozen, your policy may help cover the costs of the resulting water damage.

Floodwater from exterior sources, say from an overflowing creek, isn’t covered. Your policy also won’t cover damages caused by a sewer back up or continuous water seepage.

Wind and Hail Damage

Homeowners insurance coverage also comes with protection against wind and hail damage. Note though, that this usually only applies to the exterior of your home. Also, not all insurers cover antennas or satellite dishes.

But what if a storm damages your home and allows water or snow to enter? In this case, it may also cover the contents of your home. This already depends on your specific insurer though, so be sure to read your exclusions.

Theft and Vandalism

Most standard homeowners policies also cover property damages caused by burglars and thieves. An example is when they break a window or kick the door in to get access to your home

Your policy’s personal property coverage will handle the coverage for the stolen property. Keep in mind that almost all policies have coverage limits though. They also have certain exclusions, such as big-ticket items like jewelry and antiques.

If you have a lot of these super pricey items, consider getting optional coverage for them.

Of course, it’s always better to keep your home secure, especially if you’re going on a holiday. This way, you get to preserve the sanctity of your home and avoid dealing with messy claims. Plus, using home security technology may even lower your insurance premiums.

Damage from Man-Made Electricity

Some power surges result from fluctuating supply of electricity from your electricity provider. This is an artificial electrical current, as opposed to lightning strikes. But if this happens and it causes damage to your personal property, your policy may cover the damages.

An example of such damage is if the power surge causes an appliance to overheat and melt. If the surge was accidental and caused by man-made electricity, your policy may kick in. It may help pay for the repair or replacement of the damaged device.

Take note though that policies offering this damage always have coverage limits. Exclusions also vary from one provider to another. Be sure to speak to your insurer, as you may need extra personal property coverage.

Damage from the Heavy Weight of Ice, Snow, or Sleet

Think it’s always snowy in Calgary? Not quite. In fact, with only 54 snowy days on average, it doesn’t even make it to the top 10 list of snowiest cities in the country.

The snowiest of them all is St. John’s, Newfoundland, getting an average of 131.9 inches of snow a year. As for the city with the greatest number of snowy days, it’s Saguenay, Quebec, with 93 days of snow.

Wherever in the country you live though, you’ll be happy to know that your home policy covers snow damage. To be more specific, damage caused by the heavy weight of snow or ice. In most cases, these include caved in roofs or glass breakage.

Liability Coverage

In Canada, standard homeowners insurance policies come with “personal liability coverage”. This is the part of your policy that protects you against lawsuits filed by other people against you. This can happen if you, another family member, or your pet causes injury or damages to other people.

Take note that pet insurance in Canada isn’t a type of personal liability. You do want pet insurance though, as it helps cover veterinarian fees and medicines if your pet gets sick. But it may not have liability coverage if your pet bites a guest or people not part of your household.

This also helps cover accidents that injure other people while on your property. Let’s say you have a guest who gets injured after slipping, tripping, or falling while inside your home. Your liability coverage may cover the medical bills of your injured guest.

Get Covered Now before Any Of These Perils Happen

There you have it, all the answers to your question, “what does home insurance cover?” And as you can see, even the standard policies already cover quite a lot of perils. But this doesn’t mean that a standard policy is already enough to cover everything you own.

That’s why it’s important to determine how much you own by taking an inventory. This way, you know how much you’re likely to lose and how much coverage to get. This’ll also give you an idea on the cost of home insurance you’re likely to face.

As soon as you’re ready to shop for home insurance, ask us for your quote! We can help you find the most affordable homeowners policies in Canada.

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