Why do we need it?
Whether you’re a student heading off to university, a young person renting your first apartment, a newlywed buying your first home, or an empty nester downsizing to a condominium, you need home insurance.
Home insurance is a “package” policy that generally covers not only your house itself (and any detached structures like garages and sheds), but also its contents, whether they’re in the house or temporarily away from it. That means, if your state-of-the-art skis are stolen while you’re in the chalet sipping hot chocolate, they’re covered, but only up to the dollar limit specified in your policy. Or perhaps a thief nabs your luggage during your Florida vacation. Again, your property insurance kicks in. If someone breaks into your car and steals your expensive camera, it would be your home insurance — not your automobile insurance — that would cover the loss.
It also gives you legal protection if someone gets injured on your property and sues you, or if you accidentally injure someone or cause damage to a person’s property. Let’s say your neighbor trips on the loose board on your step, breaks her leg, and decides to sue you for damages. Or you go careening down a ski slope, accidentally slamming into a bystander and injuring him. In both cases, your liability insurance would come to your rescue, to cover not only any damages that you are ordered to pay, but also the legal fees to defend you in court.
If you’re planning to buy a home, you won’t be able to borrow money for your mortgage unless the lending institution knows you have home insurance to cover the property in case of a big loss, like a fire.
For tenants too…
Many young people moving into their first apartment — and even some veteran apartment dwellers — think they don’t need home insurance. After all, they may not have much furniture, and they assume the landlord’s insurance will cover any major damage to their unit. Wrong! If you cause the damage, you’re legally responsible for it. If, for example, you drop a cigarette on the carpet and it starts a fire in the building, you would be liable for all the damage that you caused — not your landlord. Obviously, that could amount to a hefty chunk of money.
And if you lost all your possessions in the fire, could you afford to replace them out of pocket? While you might not think you own much of value, it all adds up. Perhaps your CD collection alone would cost more to replace than you could afford. Your renters or tenants insurance would not only pay for the damage you caused and replace your belongings; it would also pay your additional living expenses if you had to live elsewhere while your unit was being repaired. It’s a no-brainer.
[ Excerpted from “The insurance book: what Canadians really need to know before buying insurance,” by Sally Praskey and Helena Moncrieff ]
Home Warranty Insurance on New Homes
Homes built by Licensed Residential Builders are covered by mandatory, third-party home warranty insurance. As a minimum, this coverage includes 2 years on labour and materials (some limits apply), 5 years on the building envelope and 10 years on structure. It’s the strongest construction defect insurance in Canada. Some homes have home warranty insurance that exceeds this minimum requirement.
The warranty is attached to the home, not to the owner of the home, and remains in effect upon the re-sale of the home until the coverage expires.
Strata-titled homes have two policies of home warranty insurance, one on the home and another on the common property. When the coverage of a new strata-titled home commences, it is possible that the coverage on the related common property has already commenced or expired. Coverage on the common property of strata-titled buildings starts when the first unit in the building is occupied or sold.
For more information about home warranty insurance please visit http://www.hpo.bc.ca/