CHOOSING THE RIGHT INSURANCE POLICY FOR YOUR HOME

Make sure you purchase an insurance policy that reflects the unique qualities of your home, its contents and the people who live there.

Your home should be insured from the moment you take legal ownership - even if it is under construction. Our expertise is particularly useful at this stage when you really need to match policy features with needs. Here's a primer to get you started:

Home insurance covers the building, its contents and liability
There are usually three parts to your homeowners policy. For condominium owners and tenants, just the contents and liability coverages apply:

1. Building insurance covers the main dwelling, garage and any outbuildings.
2. Contents insurance covers the cost of replacing furniture, carpets and personal possessions. Valuables such as art, jewels and furs may require additional coverage. Note that most contents are insured even outside the home, for example, if stolen while you are on a trip.
3. Liability policies insure against the costs incurred if, due to negligence, you are held responsible for an act causing injury or property damage to others.

Policies range from comprehensive to "bare-bones"

You can save money by scaling down your policy, but be careful not to underinsure. There are three general policy categories from which to choose:

1. Comprehensive policies cover the building and its contents for normal risks to which a home is exposed. Some risks will be excluded, such as acts of terrorism or flooding.
2. Basic/named perils policies help you save by letting you carry more of the financial risk. You will be covered for just the perils that are specified, for example, lightning and explosion.
3. Broad policies take a blended approach by providing named perils coverage on big items, such as your dwelling, and all-risks coverage on contents.

HOME INVENTORY

A home inventory of what you own can make an insurance claim for damage or loss faster and easier. But many of us don't worry much about what we have until it's gone.

Preparing a home inventory does require a bit of work up front but it will save you painstaking effort later should you ever need to figure out with your insurer what you own and the value of it to repair or replace.

What are valuables?

Anything can be a valuable depending how much you paid, what the market value is at the time of damage or loss. Art (paintings, sculpture), collectibles (stamps, comic books, music or videos), jewellery, clothing, silverware and linen, electronics (camera, TV, stereo, computer) are commonly defined as valuables.

Creating a List

There are different ways to create a home inventory, but a few key things to know:

1. Include all the details you need.
   Name and describe the item, what part of the home it's in (room or location), the brand, make/model, serial number, purchase price, and any other details you think are vital. Using an Excel spreadsheet is handy because the self-totalling columns can help you tally up the total value of your belongings.
2. Keep a visual record of belongings.
   In addition, insurers recommend taking digital photos of your items and catalogue them. Take a picture of each item you enter in the inventory. Another option is to videotape your home room by room, panning around first, and then zooming in on individual valuables. It helps to open doors and drawers to get a sense of how much clothing, linens, etc. you own.
3. Update it regularly.
   Keep a running list and update it as you make new purchases, adding the items to your inventory and filing a copy of the receipt, warranty, instruction manual, and anything else that helps to establish value and proof of ownership.

INSURANCE FOR COTTAGES, CAMPS & VACATION HOMES

Your vacation property is your second home or your home away from home, so you need to protect it as you would your primary residence. Many insurance policies, however, treat vacation properties differently, so don't assume that you'll automatically get the same coverage for your cottage as your home.

If rent your vacation property you will need landlord's insurance to protect your investment. There are several kinds of coverage to consider for your rental property.

What you should consider about coverage

You need to think about a few things to figure out what kind of policy terms you'll need for proper coverage. How much time do you spend there-summer weekends, a month in the winter, or do you use all-year round? The amount of time you spend at your vacation property will help you to determine how much and what kind of coverage you need exactly.

What plans will typically cover

Most insurance plans will only offer coverage for named perils as opposed to comprehensive coverage, so only spelled out risks will be included such as fire, explosion, or smoke damage.

What policy exclusions should I be aware of?

What plans will typically NOT cover are sewer back-up, damage or loss pertaining to frozen food, fences, gardening equipment, outdoor plants/vegetation or greenery. They also typically don't cover vandalism or water damage, primarily because the property is only occupied part-time, which increases the risk of something happening and someone not being there to address it quickly enough to stem the damage.

So what do I need to cover?

Insurance for your vacation property is similar to your home policy.

Contents coverage: Some vacation property plans cover a number of items that are permanently at the property up to a certain limit. Anything you regularly bring back home should be covered under your home owner's policy rather than your secondary home policy. Your insurance broker can help you determine what is covered automatically by your policy and advise you on whether you need additional coverage.

Third-party liability coverage: This is to provide you with legal protection in case something happens on your property. Maybe you're letting friends use the place, or some uninvited kids in the neighbourhood decide to hang out on your property. You may want to consider whether you intend to rent or loan your property to others. For more information on the unique considerations for landlord's insurance, talk to your broker.

TENANT'S INSURANCE

As a tenant, you don't own your property but you're still liable for anything that happens at and to the property and others residing or visiting there.

There are two main types of insurance coverage for tenants to consider: contents insurance and liability loss.

What would it cost to replace everything of value in your space?

Even the most modest clothes or furnishings are costly if you had to buy them all again. Contents coverage will cover the cost of repair or replacing your items. This kind of coverage ranges to include named perils to all risks policies. So your "named perils" policy may cover only the cost of damage or loss related specific risks, such as fire or water hazards, whereas an "all risks" policy would include more causes.

Make sure you know what you own

Furniture, electronics, clothing, jewellery, sport equipment - losing what you own to fire or theft is incredibly stressful, so it's hard to think of the make and model and cost of everything you own when calamity strikes. That's why it helps to keep a record of items you own with descriptions, warranties, serial numbers, and receipts - anything that can help establish ownership and dollar value.

Additional living expenses

If your place is uninhabitable for a while, you will need to relocate elsewhere temporarily. Talk to your broker to see if your insurance policy covers the cost of a hotel/motel stay and meals, or additional rent charges if you have to live somewhere else while also paying for your regular unit.

Tenant liability for damage or loss

Your landlord isn't liable for any damage to your possessions, but tenants are responsible for any damage they cause to their living space and other persons living there or visiting. If you start a fire while cooking, or you flood your bath, you're legally responsible for any damage to your rented unit or extending to other parts of the building too if you live in a complex.

Landlord Insurance

Owning rental property is a major investment and involves more risks than simply buying a home to live in yourself. That's why you need landlord's insurance to protect your investment. There are several kinds of coverage to consider for your rental property.

HOME BUSINESS AND YOUR INSURANCE

More and more people are starting home-based businesses for everything from marketing homemade products to keeping a home office for a consulting business. From an insurer's perspective, this adds new types of risk to your home and, therefore, may require additional insurance.

Residential policies provide limited coverage on business property

Anything you use to carry on your home-based business, as well as your other possessions, is subject to the limits of insurance, and some things might not be covered at all.

• Separate Limits - Coverage for personal property, or your home's contents, are usually insured on a blanket basis, meaning all claims for any property damaged or stolen is covered up to the stated policy limit. Some items have lower limits written into the policy wording itself, which limit the maximum amount payable for specific types of property or property losses. This list usually includes money, credit cards, watercraft, and business property, amongst others. Talk to your insurance broker for more details about the special limits of insurance on your policy.
• Limits on what is covered might completely exclude any special equipment that you keep in your home for business purposes.
• Items that are covered for business use are only covered while in the home.

So, for example, if the computer you use for your home-based business is stolen while on a trip, it will not be covered.

Some home businesses may require added liability insurance

The operation of your home-based business might mean that you have more people coming and going and, therefore, more risk associated with the activities in your home. If this is the case, not only will a basic liability limit of $1 million likely not cover you, some insurers might refuse to cover a third-party claim by a customer or employee who is injured in your home. If you think this situation applies to you, be sure to tell your broker about your home business and make sure your insurance company is made aware of your home-based business activities.

Consider augmenting your policy to give you more security

If you have high-value or business items that exceed the limits in your policy and you want to have them separately insured, you will likely have to have the items valued by a professional appraiser so that the insurer knows what level of coverage to set. Depending on the type of property and how much information you can provide, an estimate of value can be determined. There is a fee for this service.

WHAT TO DO WHEN YOUR HOME IS UNOCCUPIED

Your insurer considers an unoccupied dwelling riskier than an occupied one. Depending on how long you are away from your home, you need to make arrangements to ensure your dwelling is checked regularly, especially through the heating season. In some circumstances, you may need to inform your insurer.

When away for a short time

If you will be away from your home for fewer than 30 days, you do not need to inform your insurer. However, you do need to arrange for a competent person to look in on your home every day or two to make sure that everything is in good order. If a deep freeze and a broken furnace results in exploding pipes and water damage that goes unnoticed for several days, your insurer could refuse to cover the costs if no one was looking in on the house.

For longer absences

If you are away for more than 30 days, your home is considered "unoccupied" because you plan to return. In this case, you should contact your broker to determine whether you will need to inform your insurer and obtain a special permit to leave the house empty. You will still need to arrange regular checks on the property, and you might want to consider draining water pipes and installing a good security alarm system.

If the property is empty

A fully vacant property is one with no occupants and no contents. This may occur if a house sale is delayed and the property remains vacant until sold. In this case, you need to obtain a vacancy permit from your insurer. This permit will maintain most of your coverage, except for risks associated with vacancy such as broken water pipes, broken glass or vandalism. These permits can be obtained for up to three months.

NATURAL DISASTER INSURANCE

Your home is meant to provide shelter from the elements-keeping you cool when it's hot, warm when it's cold, and dry when it's raining. Weather can still creep in and do serious damage to one of our most important assets.

Don't assume your home insurance policy covers everything that Mother Nature can toss out. There are some conditional "only if" clauses, so talk to your broker to make sure your policy includes these if you want them covered:

What's usually included:

• Damage due to high winds from hurricane or a windstorm
• The cost of rebuilding a destroyed home due to a storm or hurricane
• Additional living expenses: If you have to live elsewhere for a while due to damage making your home uninhabitable and while repairs are being done, insurance policies will usually cover it. But amounts and terms of coverage vary, so check with your broker before assuming you can spend a month at a hotel.

What's optional as an add-on:

• Water damage due to a back-up sewer is not automatically covered by basic home protection plans. Your broker can help determine if this coverage makes sense for you.
• Damage from a snowslide, landslide, or earthquake are usually "excluded perils" from policies, which you have to request.

What's usually excluded (excluded perils):

• Damage resulting from the condition of your home due to age or neglect-meaning it's reasonable to expect you would have made an effort to repair or maintain it-would not be covered.
• Flood-related damage is usually not covered unless you have broad water damage coverage, or the loss or damage is due to the backup or escape of water from a sewer, sump or septic tank.