Applying for home insurance is a necessity but it can often be a confusing and frustrating process. There’s a lot of information you need to know in order to choose the right policy that will offer you enough coverage at the best rates. Two common questions we hear are, “can I change my home insurance policy at any time?” and “do home insurance claims follow you?”
Today, let’s address these and other frequently asked questions to help you make a more informed and sound decision regarding home insurance.
Why do I Need Home Insurance?
While home insurance is not legally required, you will need it in order to get approved for a mortgage. Policies will protect your home from unforeseen circumstances like fire, explosion, weather damage, or vandalism. Damage or stolen personal property may also be covered. Additionally, if someone gets hurt on your property and takes legal action, home insurance includes liability coverage. Essentially, home insurance protects you from paying out of pocket in the event that injuries or damages arise.
What Are the Policies Available?
There are different types of policies available, depending on your living situation and property type. For instance, there is a policy specifically for homeowners and another designated for tenants. There are also specialized policies for condos, rentals, and vacation properties. Each will come with a set of standard terms, but you can also customize certain aspects and increase coverage amounts depending on your needs. For home insurance, insurers may have different names for their policies, but each one will generally have similar types of coverage available for you:
- Basic Policies: Usually the cheapest option, basic policies only cover certain perils and items. It is important to note that in choosing the basic option, you may carry more financial burden for losses.
- Broad Policies: This is the middle level of home insurance which typically provides coverage on the building and basic coverage on specified items.
- Comprehensive Policies: This is the policy that is most inclusive of risks, covering your home and belongings. Some exclusions will apply.
An insurance professional can help you decide which policy is right for you and your type of property.
What is the Difference Between a Premium and Deductible?
The premium is the amount of money you will pay for the coverage. The deductible is the amount of money you will pay out of pocket before the insurance company will cover the rest of the damages when you have a claim. The amount you’ll be required to pay will vary based on the terms outlined in the insurance policy. These two amounts directly impact the other. If you elect to have a higher deductible, you will be offered a lower premium and vice versa.
How Are the Rates Determined?
The rate that you receive is directly related to your risk factor. To determine your level of risk, the insurance company will take into consideration things like your age, claims history, the location and the condition of your home, and other similar factors. For example, if your home is located in a neighbourhood with high volumes of costly claims, your insurer will use this information to assess the probability of your future claims.
You might also be eligible for discounted rates if you have recently made certain upgrades to your home or are willing to increase your deductible amount. For example, if you install smoke detectors, carbon monoxide detectors, alarm systems, or upgrade your locks system, your insurer may see this as more protection for your home and, therefore, reduce your premiums. It’s important to speak with an insurance professional who can help you determine what discounts are available to you.
How much Insurance do I Need for my Personal Belongings?
To determine how much personal property coverage you need, it’s useful to do an inventory of all your belongings inside your home. This means that you will need to go through each item, attach a realistic value to it, and add the numbers up to determine how much everything is worth. This final value determines how much coverage you need for your personal items because it reflects how much it would cost to repair or replace them in the event of damage or loss.
Do Home Insurance Claims Follow You?
Yes. If you decide to change insurance companies, they will know if you have filed a claim or not. Insurance companies share information through a database called the Habitational Insurance Tracking System (HITS). Any claims you have made in the past will remain in the database for five to ten years, though this varies depending on the nature of the claim. If you have made many large claims in the past, this may increase your insurance premiums.
Can I Change My Insurance Policy at Any Time?
There are many reasons why you might want to change your home insurance policy. If you’re moving homes, looking for a lower rate, or have paid your mortgage off in full, changing your policy or moving it to a different company can often be worthwhile. However, it’s important to read the fine print and speak to a professional first. Changing your insurance policy before the maturity date is an option, but you might face a cancellation fee. If you wait until your renewal date, on the other hand, you can avoid any termination fees. To ensure you are making the right decision for your needs and finances, it’s best to have an insurance broker crunch the numbers for you.
For all your home insurance needs, you can turn to Tanner Insurance for the best service and rates. Our team of friendly and dedicated insurance brokers is here to help you make a confident decision that is best suited to you. Our goal is to make the process an easy one that you can understand! Get in touch with us today to get started.