Home Insurance Basics for First-time Homeowners

Posted by Dave Kotler on Friday, February 4th, 2022 at 7:53am.

What Should First-time Homebuyers Know About Home Insurance?Home insurance is often necessary for first-time homebuyers. However, all home insurance companies and their policies are not the same, and some customers have been less than satisfied with their home insurance companies in Canada. Home insurance is generally needed for those homebuyers taking out a home mortgage loan on a home. What should homebuyers know about home insurance before choosing a policy?

Why Homeowners Buy Home Insurance

A house is an investment, and it can be expensive to make repairs should serious damage occur. A home is vulnerable to vandalism, fire, storm damage and more. Homeowners can protect the equity in their homes when purchasing home insurance. Home insurance policies can differ significantly. Homeowners should learn what types of coverage, discounts and premiums may apply in policies. Home insurance is not legally required in Canada. However, most home mortgage lenders want proof of home insurance before giving a loan to purchase a home.

Determine How Much Insurance Is Needed

Standard homeowners insurance policies protect your home’s structure from disasters, such as fire, lightning, and hail. Several factors may influence how much insurance you need. Common elements include being in a flood zone, an area prone to natural disasters, or the home being of significant value. Calculate the actual costs of rebuilding your home, and if that amount is higher than your mortgage, it might be a good idea to increase the amount of homeowners insurance coverage you purchase. Other things to consider are how many structural improvements and upgrades were made that might not have been included in the mortgage or initial value of the home.

Home Insurance Coverage

Homeowners can expect home insurance to apply to the contents, the dwelling and personality liability of the policyholder and their immediate family. Those who rent out part of a home should inform their insurance representative. Additional living costs may be covered when a policyholder files a claim and cannot reside in a home due to property damage.

Dissatisfaction with Home Insurance

Gen Y customers are among those that have become more critical of home insurance service interactions. There are many aspects that many want to review regarding customer satisfaction. These areas include:

  • Non-claim interaction
  • Price
  • Policy offerings
  • Billing and payment
  • Claims

It appears that non-claim interaction, according toone study, is the main reason for declining satisfaction with home insurance companies. Those who require home insurance may want to look for a company known to help customers understand their bill payment options, policy coverage options and what to do in the event of having to file a claim. There are many providers of home insurance, and those with the highest satisfaction rankings include The Co-operators, State Farm, RBC Insurance, The Personal, Intact Insurance, La Capitale, BCAA, Portage Mutual Insurance and Intact Insurance. Providers and satisfaction rankings vary by region.

Obligations for Homeowners

It may be difficult to file a claim in instances when changes to a property have not been reported. Insurance professionals should be contacted when a policyholder:

  • Purchases art or jewelry
  • Leases any portion of a property
  • Starts a home-based business
  • Installs a spa or pool
  • Renovates a home

The team at Best Insurance Companies explain that providing accurate information to an insurance professional can make it easier to process claims after a loss:
“A break-in, vandalism, or fire can cause unforeseen financial hardship. Home insurance can help cover losses for those affected. First-time homebuyers may want to insure for replacement value in the case of severe weather and for rebuilding costs. Before renewing a policy, it is useful to perform a home inventory on an annual basis. This can make it easier to initiate a claim if needed.”

Understand Home Insurance Coverage

As many first-time homebuyers need to have home insurance to purchase a home, it is helpful to learn more about home insurance coverage, types of policies and the processes that occur in the event of substantial damage or loss. Work with an insurance professional ready to explain these aspects and more and allow them to exceed your expectations.

Dave Kotler

Leave a Comment