Home insurance and what you should know

Many homeowners believe that their policies will cover them for practically any damage sustained to the house or contents. The reality is that homeowner’s policies have exclusions and restrictions that can leave you naked when it comes to protection.

“Loss-of-use”. If your home is unlivable after a disaster of some kind, and you have “loss-of-use” coverage, there may be restrictions on how much per day you are paid and for how long you are paid.  Out of home expenses add up rapidly for a family of even 3 people.

“Replacement Cost”. Your home is destroyed. You’ve got replacement cost insurance. Yippee. Maybe not so yippee if your policy value for replacement cost is far less than the actual cost to replace your home after the disaster. Get “Guaranteed (or extended) replacement cost”; it offers more coverage than you purchased, but there is a ceiling; typically, it is 20-25% higher than the limit.

Below are some links to sites with more information on insurance

Five myths about homeowner’s insurance, article in the Globe and Mail here.

Preparing your finances for a natural disaster.

Beginners Guide to Homeowner’s Insurance.