If you’ve been in the market for a new home, you know there’s a lot to understand about the process. An important fact that every Canadian home buyer needs to be aware of is this: If you’re planning to apply for a mortgage to purchase a home, any lender you work with will require you to buy home insurance before the closing date.

Because of the complexities of home insurance, it’s common for homeowners to have questions about the specific types of coverage they might need, what is included in their policy, and how a home insurance policy protects them. Here are answers to some of the most common questions that our team gets asked about home insurance.

1. Does home insurance cover water damage?

There are numerous ways that your home can be damaged by water. This is what you need to know. Each of them is treated differently when it comes to home insurance:

• Burst Pipes

Damage caused by escape of water from a plumbing system is usually covered under a homeowners policy on a replacement cost basis. However, not all properties (such as a rental property) provide this type of coverage. You should talk to your broker to see if your property qualifies. During the heating season, if you are away from your home for more than 96 hours you must shut off your water and drain your appliances and pipes OR have someone check your property daily. Not following this requirement will result in your claim being denied.

• Sewer/Septic Backups and Sump Pump Failure

In most cases, coverage for these issues can be added onto your policy. Your insurer will want to know that you have installed a back check valve before offering this coverage.

• Overland Flooding

Coverage for flooding can be added onto your policy as long as you don’t live in a designated flood plain.

• Storm Water That Leaks Through Basement Walls

If you have a crack in your basement wall, your insurer will not cover this water damage. If you are buying a new home, you need to be aware of any previous water damage that was caused by basement cracks. These repairs can be costly and you could be assuming someone else’s problem.

2. Is my home-based business covered under my home insurance?

Working from home temporarily is different than running a home-based business. Basic homeowner’s insurance will cover equipment like your printer and computer, but it won’t provide liability protection or cover you for lost data or income. To do that, you’ll need to add increased business property limits to your policy.

Your insurer may consider your home home-based business to be too active to be added under your home policy. In this case, you will need a standalone policy. If you use your vehicle for business purposes, be sure to tell your broker. Your auto insurer needs to be notified and rated accordingly.

3. What are the occupancy requirements for home insurance coverage?

If you vacate your home permanently for any reasons, you need to report the vacancy to your insurance broker. After 30 days of permanent vacancy, your home insurance is null and void. If you change the occupancy of your home to a rental property, you need to inform your broker. Failure to do so will result in a claim being denied.

4. Do I have to tell my insurance company about my home renovations?

It’s exciting to plan for a home renovation that enhances your living space, but don’t let that excitement overshadow the need to be adequately insured. Renovations that increase the value of your home can affect the replacement cost coverage in your policy. You should always inform your insurance broker if you are doing renovations.

Usually, minor renovations do not require any changes to the policy, but if you have to move out while the renovations are ongoing, then additional coverage is required. In addition, as construction increases the risk of a claim, your insurer will require that you notify them or they could deny the claim.

Expert Tip: If your renovation is over $10,000 and you don’t report it to your insurance broker, you could lose Guaranteed Replacement Cost coverage if something happens.

Ready to get your home covered properly?

We understand that choosing the right homeowner’s insurance can sometimes feel overwhelming. Our brokers are here to help you make the decisions for your lifestyle and will make sure that you get the coverage you need at the best price for your budget. Contact the team at Dawson & Keenan today to start the process.