Types of home insurance coverage
There are three types of home insurance to choose from. The first is comprehensive, which is the most wide-reaching and most costly, covering sudden and accidental occurrences on buildings and personal property, as well as liability. This option covers just about everything—except the exclusions specified in your policy.
The next type of home insurance is broad, which offers coverage similar to comprehensive but with more restrictions. One of the main restrictions is that your home’s contents are only covered for the perils (see below) specifically stated in your policy.
The final type of home insurance is basic. What does basic home insurance cover? Only the perils that are named explicitly in the policy, like fire, wind and theft. It is the cheapest option upfront, not necessarily in the long term.
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What does home insurance cover?
Your home insurance covers perils, essentially meaning anything harmful or dangerous. This includes:
- falling objects
- wind and hail
- aircraft and vehicle damage
- electrical currents
- smoke (not from the fireplace)
- water (with limitations)
It also includes personal property that’s temporarily away from your home (whether it’s in your car with you or travelling with you anywhere in the world). Liability is also covered in your home insurance policy, meaning that if someone is unintentionally injured or suffers damage to their personal property because of you or your property, liability coverage will protect you if they decide to sue. Home insurance also covers personal property, like electronics, appliances, jewellery and clothing, with certain expensive items being subject to special limitations or requiring additional contents insurance.
What isn’t covered by home insurance?
A general rule is that home insurance covers things that are unexpected, not wear and tear that happens over time. “Your policy is meant to cover sudden and accidental occurrences, not something that has been occurring over time,” says Denobrega. So, you’re covered if you have an unexpected leak or flood due to a pipe breaking, but if you’ve neglected to care for your home and you have a known leak or flood, your home insurance won’t cover that claim.
What does home insurance cover for water damage? The answer is tricky. Water damage isn’t always covered by home insurance. “While there is some basic coverage in your policy, it doesn’t cover damage from, for example, floods and sewer back up,” she says. Find out if you need flood insurance.