Types of Home Insurance Policies You Can Buy and What They Cover

There are several types of insurance polices you can purchase. Please remember that the wording and what is covered may vary within these general categories from one insurance company to another. Trade names may also be used.


Comprehensive

This is the most inclusive home insurance policy; it covers both the building and its contents for all risks, except for those specifically excluded. There are two types of insurance risks that are not normally included in any home insurance policy – those for which you can buy insurance “optional coverage” which is explained later at “Extra Protections” and those for which insurance is not available “uninsurable peril".


Basic/Named Perils

If you are looking to save money by carrying the financial risk of some losses yourself, you may wish to consider a named perils policy that covers only those perils that are specifically stated in the policy.


Broad

If the comprehensive policy costs more than you want to pay and the named perils policy seems too risky, a mid-priced compromise is the broad insurance policy. This policy is a named perils policy but provides comprehensive coverage on the big-ticket items like the building and named perils coverage on the contents.


No Frills

Some insurers offer very basic or “No Frills” coverage for properties that don’t meet their normal standards. If there are physical problems with your home that keep it from meeting insurers' standards, you may save money in the long run by correcting these problems in order to qualify for better coverage.

Extra Protection You Can Buy

There is additional protection, otherwise known as “optional coverage”, you can buy depending on where your home is and how much peace of mind you require. These perils are not automatically included in any home insurance policy. If you want to be protected against these risks, you must purchase coverage separately.

Earthquake

This coverage is especially worth considering if you live in a quake-prone region, such as parts of Quebec — especially around Montreal — the Ottawa Valley and British Columbia. Earthquake insurance generally covers loss or damage to your property caused by the actual shaking of the earth. It is subject to a higher deductible than the other perils insured by your policy. Your ordinary homeowner’s policy, on the other hand, would likely not cover this peril. However, if the shaking were to cause a gas main to break and ignite, the damage as a result of the subsequent fire would probably be covered under your homeowner’s policy. The cost depends on where your house is and how it was built. Your insurer may be able to advise you of things you can do to cut the risk of earthquake damage to your home.

Sewer Back-up

This coverage is useful in some low-lying areas, especially if your area has storm and sanitary sewers combined. You may also want to install a back-flow prevention device, where permitted by local codes.


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