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How to get the right home insurance according to an expert

Buying a home is the single largest purchase most Canadians make. So, it’s important to understand the role of home insurance in protecting your investment. 

To help you make an informed choice about home insurance, we spoke with Elliott Silverstein, Director Of Government Relations (Insurance) at CAA. He answered Members’ top questions, including how to pick the right home insurance and common mistakes to avoid. 

Our homes are often the biggest investment we make in a lifetime. So, what do we need to know about home insurance?

Home insurance is about peace of mind for that very reason – you want to ensure your house and everything you’ve invested in it are safe and can be replaced or repaired should anything happen. While home insurance isn’t legally required, it is mandatory if you have a mortgage.  

It’s crucial to insure your house adequately. That means accurately assessing its value and content and ensuring that any specific items of value are called out and added to your policy (this is called a rider). You also want to get liability coverage and living expenses if your home is made uninhabitable.

How do you go about assessing what coverage you need?

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There are a few variables in this, but most insurers offer three kinds of coverage: actual cash value, replacement cash value coverage and guaranteed or extended cash coverage.   

Actual cash value ensures your property and belongings are covered at their depreciated value, so if something is stolen, you’re compensated minus its depreciation. Therefore, it is the most inexpensive policy.  

Replacement cash value coverage means the insurance company will replace your dwelling and personal belongings at the current market value. So, if you have fire damage in the kitchen, the company will pay you to replace the items in your kitchen and the structure with the same material or something similar, minus your deductible.  

Guaranteed or extended cash coverage protects you against inflation, which is good when the cost of building materials fluctuates. When materials are expensive, your replacement cost may not cover the materials, so this add-on automatically adds inflation protection. 

What are the steps to choosing the right home insurance?

To pick the right home insurance for your needs, start by determining the cost of your home, the total value of your belongings and the total value of your assets, including your car and other high-value items. You can get an estimate from your insurer, use a third-party replacement cost calculator, or even an assessor. Getting a few opinions to ensure you have a clear idea of replacement costs is wise.   

When assessing the cost of replacing personal items, some people keep a photo record and put them in a spreadsheet or app with the current value or receipts. If you have expensive jewelry, art or decor, get it assessed as well.   

Liability insurance is another thing to consider. You should get enough liability coverage to cover your assets. Finally, keep all that information securely stored online in the cloud or in a safe where you can easily access and update it.

What are some common mistakes with home insurance?

When it comes to home insurance, one mistake you’ll want to avoid is getting the cheapest coverage. It may fit your immediate budget but may not give you the coverage you need.   

Another error is not updating your coverage amounts annually. CAA offers free policy reviews to ensure you have the coverage you need and help you save with the rising cost of living.  

That isn’t the only thing that changes. Replacement costs a year ago are not what they are today. So, you need to update coverage to reflect current realities.   

Finally, you’ll want to avoid, not calling CAA first! CAA Members save 10% on CAA Home Insurance policies and even more, if they bundle that with CAA Auto Insurance. Call 1-888-545-7254 or go online to get a quote. 

Auto and Property Insurance is underwritten by CAA Insurance Company. Certain conditions, limitations and underwriting guidelines apply.

*To qualify for the discount, you must be a current CAA Member in good standing (CAA Membership dues paid in full by membership expiry date).

® CAA trademarks are owned by, and use is authorized by, the Canadian Automobile Association.

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