How to compare home insurance before you buy
Types of home insurance policies
While you don’t need home insurance by law, like car insurance, your lender or landlord will often require it. Home insurance experts will tell you that the key to getting the best plan in terms of cost and coverage is to shop around and compare policy offerings from company to company. In your search, these are the main kinds of coverage you’ll come across:
Comprehensive: The most inclusive type of policy, covering sudden and accidental occurrences on buildings and personal property, as well as liability. This covers everything except the exclusions specified in your policy.
Broad: It’s more affordable, but it comes with even more exclusions and restrictions, especially on your home’s contents.
Basic: It’s the most limited, covering only basic perils that are named in the policy, such as fire, wind and theft.
How to get an accurate home insurance comparison
Getting an accurate comparison between providers can be tricky, considering that all policies aren’t the same. Laidman adds that common differences to watch for include perils offered, limitations for big-ticket items such as jewellery and additional coverages, like identity fraud. Here are some quick tips for comparison shopping for home insurance policies:
- Be sure that the information to each company is consistent. Also, know that lying or omitting information can lead to a claim denial for misrepresentation, warns Laidman.
- Make sure you’re asking for the same coverage level (see above).
- Pay attention to limits on building and personal property, detached structure and additional living expenses and personal property, such as jewellery and electronics, adds Laidman.
- Ask your insurance broker what is and what isn’t covered in your policy, says Laidman. It’s imperative that you know in advance, so there are no surprises if and when you make a claim.
What else affects the cost of home insurance?
When comparing home insurance quotes, there are a number of additional factors to consider. It’s important to understand the implications of your policy decisions, like choosing replacement cost or actual cash value (ACV). Laidman shares down the pros and cons of each, outlining the short-term and long-term implications.
Replacement cost insurance
With replacement cost insurance, your claim will cover the lesser cost of restoring items to their original condition or buying new items of similar quality to the ones lost; there will be no deduction for depreciation. In other words, if your four-year-old TV is stolen, the claims payment you receive will allow you to buy a new TV with features as similar as possible to the stolen model. The payment you receive may not be the same as you originally paid, as a similar model is likely cheaper now.
Pro: Your claims payment will allow you to adequately replace your lost items, says Laidman.
Con: Your premium will be significantly higher.