Is your home properly insured?

Recently, figure skating great Kurt Browning suffered extensive damage to his Toronto home as a result of a fire.

If a fire, flood, tornado, or some other natural disaster were to destroy or damage your home, would you have the right insurance coverage to rebuild your house?

If you can't answer this question or your answer is no, maybe now's the time you should review your home insurance policy. There are typically four types of coverage that are contained in the homeowner's policy: home and personal property, personal liability, medical payments, and additional living expenses.




Dwelling damage coverage helps pay for damage to your home. Personal property coverage will pay for personal property including household furniture, clothing, and other personal belongings.

The amount of insurance coverage is usually 50% of the policy limit on your dwelling. The coverage only pays the current cash value of the item destroyed, unless you buy replacement cost coverage.

Your homeowner's policy also provides off-premises coverage. This means that the policy covers your belongings against theft even when they are not inside your home. Other structures such as a detached garage, a tool shed, or any other building on your property are usually covered for up to 10% of the amount of coverage on your house.

Homeowner's policies provide personal liability coverage that applies to non-auto accidents on and off your property if you, a member of your family, or your pet, cause the injury or damage. Basic liability coverage is usually $1million. You can obtain higher limits at additional cost.

Medical payment coverage pays if someone outside your family is injured at your home regardless of fault. The coverage does not apply to you or members of your household. Medical payments coverage limits are typically $5,000 for each person.

If it is necessary for you to move into a motel or apartment temporarily because of damage caused, your insurance companies typically pay an amount up to 20% of the policy limit on the dwelling for these expenses.

Many home business owners believe that their homeowner's insurance policy covers all of their home business needs. Your homeowner's policy may provide some coverage, but you are best to obtain separate coverage for your business.

The price you pay for your homeowners insurance can vary by hundreds of dollars, depending on the insurance company you buy your policy from. You should consider the following when buying home insurance:

Shop around: The insurer you select should offer a fair price and deliver the quality service you would expect if you needed assistance in filing a claim. Get price quotes but, similar to choosing a home inspector, don't consider price alone. Ask your friends and family for references.


Raise your deductible: The higher your deductible, the more money you can save on your premiums. Nowadays, most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25%.


Don't confuse what you paid for your house with rebuilding costs: The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowner's policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should.


Buy home and auto policies from the same insurer: Some companies that sell homeowners, auto and liability coverage will take 5% to 15% off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverage from different companies.


Improve your home security: Some companies offer to cut your premium by as much as 10 to 15% if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost and how much you'd save on premiums.


Stay with the same insurer: If you've kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. Some insurers will reduce their premiums by 5% if you stay with them three to five years and by 10% if you remain a policyholder for six years or more. But make periodically compare this price with other policies.


Stay current: Review the limits in your policy and the value of your possessions at least once a year.


When you're buying a home, consider cost of homeowners insurance: You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your home's electrical, heating and plumbing systems are less than 10 years old.