Home Insurance 101

Your home should be insured from the moment you take legal ownership, even if it is under construction. The policy should always be in the same name as shown on your deed.

Your M&R broker’s 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, contents, and liability.

    There are usually three parts to your homeowner’s policy. For condominium owners and tenants, just the contents and liability coverages apply:

    1. Building insurance covers the main dwelling, garage and any out buildings.
    2. Contents insurance covers the cost of replacing furniture, carpets, and personal possessions. Valuables such as art, jewels and furs may require additional coverage. Most contents are insured even outside the home, for example, if stolen while you are on vacation.
    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"coverage

    You can save money by scaling down your policy, but be careful not to underinsure. There are two most common types of protection.

    1. Named Perils coverage provides coverage for specific basic perils outlined in the policy. This coverage is usually less expensive, but places more risk of financial loss on you.
    2. All Risks coverage provides broader coverage for normal risks to which your home is exposed, except those which are specifically excluded, such as acts of terrorism or flooding.

    There are three general policy categories from which to choose:

    1. Basic/Named Perils policies which is the most basic policy you can buy, providing “Named Perils” coverage only for both your home/outbuildings and its contents.
    2. Broad Form policies provide slightly broader protection, offering “All Risks” coverage on your home and outbuildings and “Named Perils” coverage on your contents.
    3. Comprehensive policies provide the most thorough coverage available by offering “All Risks” coverage for your home/outbuildings and also your contents.

    Regardless of which policy you select, some coverages can be increased and certain items insured separately. Your broker will be happy to sit down with you to review your coverage needs.

  • Special limits of coverage

    Household insurance policies are designed for basic insurance needs. There may be instances where individuals may need additional coverage. What follows are a few examples where coverage may be limited. Our advice is to contact your insurance expert if you have any questions. In most cases extra coverage can be purchased.

    • Bicycles – coverage varies by insurer, some as low as $500
    • Jewelry, watches, gems and furs – maximum $5000 – $6000
    • Boats and motors- depending on your insurer are covered up to $2000 and less than 10hp.
    • Coin collections – generally $500
    • Silver and gold
    • Money – generally no more than $500 -$1000 depending on insurer
    • Business property – not covered by standard home insurance policy
  • A thorough home inventory will tell you where you stand

    One of the best ways to know if your belongings are covered is to do a complete inventory of your contents and review it with your broker. A home inventory will help you itemize your property if you need to make a claim, and it is a good way to test if your overall policy limits are adequate. You should include a list of contents, a brief description or photograph and an estimate of the replacement value of each item. Consider making a video of your rooms, cupboards and shelves and store it off-site.

  • With a professional appraisal, you can arrange the extra insurance you need

    If you have high value items that exceed the limits in your policy and you want to have them separately insured, you will likely need to have the items valued by a professional appraiser to determine what limit of coverage to purchase. 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.

    Knowing the value of the contents of your home is vital to being properly insured. Your broker can help you find the tools and resources you need.