The following infomation are excerpted from the BC insurance broker flyer. I think it is good enough to explain the basic need for home insurance and limit of coverage.
A house is more than the place where you live. It is your home. It represents security for those who live in it. It is probably the biggest investment youâ€™ll ever make; it is independence for first-time homebuyers, and so much more. Something as valuable as your home needs a lot of care.
This is why you need insurance. Insurance is vital to protecting yourself from unexpected losses.Your homeownerâ€™s insurance policy covers your house and personal property, and protects you from liability claims. It is something you cannot do without, and should purchase as soon as you become the owner of a house, even if it is still under construction.
All homeownerâ€™s policies provide coverage for:
â€¢ The house and the structures attached to it.
â€¢ Personal property or the contents of the insured dwelling, such as the furniture, the appliances, your clothes, etc., as well as the personal effects of your family members.
â€¢ Liability, when, due to negligence, you may be held responsible for an act causing injuries or property damage to others.
However, policies differ with respect to coverage and claims settlement. For example, most policies will cover the dwelling(s) on a Replacement or Rebuilding Cost basis.
This is why the limit of insurance provided for your house can be higher than the purchase price of the house.
Insurance calculations are different from the real estate meaning of appraisal, because they are based on the cost
to replace the home, and because they don't include the cost of the land.We have new tools at our disposal to help us calculate accurate and detailed replacement or reconstruction cost. New calculations are often different (i.e. higher) than those done in previous years.
Experience shows that these higher calculations have been reliable right across the country. Areas of large catastrophic loss such as Kelowna, B.C. in which 238 homes were lost last summer, and about half are in the process of reconstruction or have been completed, have provided an excellent test for the insurance industry.
In order to assist us in arriving at an accurate amount for insurance purposes, you should provide as much information as possible about your home including square footage, building materials, etc. It is also important to periodically review your policy with your broker to make sure that the limits of insurance accurately reflect your home improvements.
So, while home insurance policies are necessary for everyone, it is important that you purchase one that will
fit your needs. In order to find the right policy, you should take home insurance into consideration when shopping
for a new home, when planning renovations to your existing home, and even when acquiring new personal property.While an insurance policy may not be the best way to pay for a small repair, such as fixing that burn in
your carpet, a policy with an up-to-date home audit of your possessions will be invaluable if for any reason these
are lost, stolen, or damaged.This is especially true if you have taken precautions to include coverage for that
inherited stamp collection, or that big engagement ring that likely needs greater protection.
As insurance brokers,we know that every individual is different, and it is our job to make sure you have the best
coverage possible for your specific needs.