At the Insurance Experts blog, we get a lot of emails with questions surrounding home insurance. To help you understand your home insurance policy and how your insurance premiums are calculated, we've collected a few of the most frequently asked questions and answered them for you. Feel free to comment on any of our posts to ask questions! You can also follow us on Twitter at @SharpInsurance.
1. Why do I need home insurance?
Your home is often the biggest investment you'll make in your life. It's also one of the most important possessions you will own; it's where you and your loved ones live. It's your foundation and base, where you go after a long day of work and where you relax. Home insurance protects your home and its contents from loss and damage. This loss or damage could be due to theft or natural causes like thunderstorms and earthquakes. Home insurance also has a liability component, covering you in the event that someone harms him or herself on your property.
2. What are the different kinds of home insurance policies?
There are three main types of insurance. Comprehensive policies covers your home and its contents against all risks, except for excluded risks. This kind of policy tends to give you the most coverage, and as expected, costs the most. Basic / Named Perils insurance is a type of insurance that covers you against specific risks and is not all-encompassing like Comprehensive. A Broad insurance policy is a mix between the Basic and Comprehensive policies, offering one kind of insurance for your property and another for your contents. For instance, you may choose to have your property covered for all losses and damages, and only specific items in your home covered.
3. How does an insurance company calculate my premiums?
There are many factors that contribute to your insurance premiums. Primarily, an insurance company will look at the cost of replacing your home and its contents. The more expensive your house, and the more costly items you own, the higher your premiums will be. The neighbourhood in which you live also comes into play, as different neighbourhoods have different levels of crime. Your home's age is also a factor, as older homes tend to have more problems and newer homes tend to have fewer.