f you’re new to home insurance, you may be curious about deductibles and premiums. What is it? How do they work? And how do they work together? We’ll cover some common questions so you can get a better understanding of how home insurance deductibles work in Canada.
What is a home insurance deductible?
A home insurance deductible is the amount you agree to pay first when settling an insurance claim. This allows the risk of insuring your home to be shared between you and your insurer. However, it’s important to consider whether submitting a claim makes sense, especially if the cost of your deductible exceeds the cost of your home’s repairs. Although your coverage and deductible can generally be tailored to your specific needs to cover both large and small losses, you should consider choosing a deductible amount that’s realistic for you to afford in case you need to submit a claim.
How does a home insurance deductible work?
Let’s say you experience water damage caused by a burst pipe somewhere in your home. After confirming your claim is eligible, you get the damage assessed and are told you have $5,000 in damages. Knowing you have a $1,000 deductible, let’s consider two options you can choose from:
You can opt for a cash settlement where you receive a payment (less $1,000 for your deductible) to hire a contractor of your choice to do the repairs.
You can use one of your insurer’s preferred contractors (if available) to do the repairs on your home. You’ll be responsible for paying your $1,000 deductible towards the contractor while your insurer covers the remaining balance. Note: If you’re a TD Insurance customer, we offer a 3-year guarantee on the covered loss-related repair if you go through one of our preferred contractors (conditions apply).
But what if the cost of your repairs is less than your deductible? In these instances, you’d have to pay for your repairs out of pocket since it wouldn’t make sense to file a claim. Remember to always consider your deductible amount and the cost of repairs before proceeding with a claim. You may be losing out on potential claims-free savings over future renewals if you choose to proceed with smaller claims.
What is the relationship between my deductible and my premium?
Deductibles and premiums go hand in hand. If you choose a higher deductible, you’ll typically have a lower premium. And if you choose a lower deductible, you’ll typically have a higher premium. If you’re unsure what your premium is, it’s simply the cost of your home insurance policy and what you pay to your insurer to keep your policy active. The amount you pay for your premium is decided by your insurer and is based on multiple factors like where you live, the age of your home, the deductible and coverage you’ve chosen, among other things.
How do I choose the right deductible amount for me?
Your insurer should be able to suggest a minimum and maximum deductible amount for you to choose from. From there, you’ll need to assess your risk tolerance. If you choose a lower deductible amount, you’ll pay less up-front costs during a claims settlement, but will typically have to pay a slightly higher premium. If you choose to pay a higher deductible, you’ll have to pay more up front during a claims settlement, but you’ll pay slightly lower premiums. It’s important that you choose a deductible amount that you’re comfortable with. If you do have to go through the claims process, you’ll want to ensure you can afford to pay out the deductible. Take a look at your affordability and choose a deductible amount accordingly.
AT TD Insurance, we want to ensure you have the right home insurance policy that suits all your needs, without compromising your budget. If you’re an existing TD Insurance customer, you can modify or review your policy from MyInsurance. Or, if you’re on the hunt for a new home insurance policy, you can get started with a quote to see what a customized policy could look like for you
What is Home Insurance?
Owning a home may be your biggest investment, so how can you protect it? Well, home insurance is a form of property insurance that you can purchase to protect your property and your belongings.
It may not be something we think about every day, but unexpected incidents can happen at any time to your home, which is why home insurance is important to have. But home insurance wasn’t always an option for people. Did you know that home insurance originated from something called “fire insurance?” As the name suggests, fire insurance was used to cover fires, but has since evolved to “home insurance” since it now covers more than just that. Like what, you may ask? Well, let’s talk about it. We have answers to some questions you may be wondering about.
Do I need home Insurance?
Before we get into the nitty gritty of all your home insurance questions, let’s start off by saying we strongly recommend that you have home insurance, simply for all the value it offers — even if home insurance isn’t mandated by law the same way that car insurance is. Keep in mind that if you’re looking to purchase a home, or if you’re a homeowner that has applied for a mortgage, your lender will likely require you to purchase home insurance first anyways. Having home insurance can protect you from having to pay a large lump sum to repair damages to your property and personal belongings if something happens to or in your home. So, although home insurance isn’t necessarily a requirement, it definitely plays a crucial role in protecting what may be your greatest asset.
What does home insurance cover?
Home insurance covers expenses that occur when something unexpected or accidental happens to your home and/or your belongings. That means that you’ll receive financial protection against losses due to theft, fire, wind damage and much more. Should anything happen to your home, your standard policy can include coverage for the structure of your home, coverage for your personal belongings, and coverage for additional living expenses (if you’re unable to live in your home while it’s being repaired due to a covered loss). Home insurance also covers more than just your home. It can also come to the rescue if someone injures themselves on your property, or if you damage someone else’s property or accidentally injure someone. This is where your liability protection will kick in which is also typically included in a standard policy. These policies can cover incidents that involve pets as well.
Let’s take a look at a couple of examples of what you’re generally covered for. Let’s say you become a victim to theft and some of your big-ticket personal belongings are stolen. Depending on how your policy is set up, your home insurance will provide you with coverage based on either the Replacement Cost or the Actual Cash Value of your stolen items (subject to your deductible, of course). Or, let’s say you experience a loss due to fire — your home insurance will cover the repair, the reconstruction or the replacement of your home, depending on the extent of the damages and your coverage limits.
Are there different types of home insurance?
Although different insurers may have different names for their coverages, here are a couple of types/tiers of home insurance to consider:
- Comprehensive form: This is the highest tier of home insurance and the most common of the three. Comprehensive (also referred to as “all risk”) coverage covers your home and belongings from all loss, with the exception of some exclusions which will be directly listed on your policy.
- Broad form: This is the mid-tier level of home insurance which provides more extensive coverage on bigger items such as the building itself and will provide basic coverage on other items that are specified on your policy.
- Basic form: This is the simplest level of insurance coverage offered, in which only certain items listed on your policy are covered and is usually suitable for those with seasonal cottages or camps. This option is cheaper than the two listed above; however, you do carry more financial risk should anything happen to your home.
What’s not covered under home insurance?
While coverage varies from policy to policy, it’s hard to determine the exact extent of what may not be covered. With TD Insurance, our home insurance offerings all follow comprehensive form/all risk coverage, meaning that all risks are covered, with the exception of specific properties and exclusions outlined in your policy. Regardless of who your insurer is, check your policy carefully to understand these exclusions. Should you find something you’d like/need coverage for that’s listed as an exclusion on your policy, you can always check to see whether there is an option to buy additional coverage for it through an add-on. If in doubt, talk to your insurance provider to get the information you need.
Keep in mind that some exclusions are outright, meaning that there are no options to add on coverage to include them in your policy. In these cases, you would be responsible for covering these losses yourself. These exclusions are common to most insurance companies and typically include wear and tear, damage caused by pests (such as rodents or insects) and acts of terrorism, to name a few.
Your policy is also likely to contain specific dollar limits and possible coverage restrictions on certain categories of items, such as jewellery or wine collections. If you have belongings of particularly high-value, you should check these limits and restrictions to ensure you’re properly covered. Should you need additional coverage, check out our Personal Valuables Coverage to learn more.
How do I choose the right coverage for me?
It can be difficult to find the best coverage that fits your needs, especially since there is no one solution that fits all. At TD Insurance, we’re here to help you find the coverage that’s right for you. We offer fully customizable packages that allow you to add extra coverages, ensuring your policy meets all your unique needs. Some examples of our add-on coverages include: earthquake, identity theft and damage due to water entering your home from the outside.
How much will home insurance cost me?
Well, just as how mortgage payments will differ from homeowner to homeowner, so will the cost of home insurance. What you pay for your home insurance premiums will depend on factors like how much coverage you want or even the location of your home, amongst many other factors. And since being a homeowner is already expensive enough,
Glossary: Home Insurance Terms
Insurance-speak can be complicated. Unless you’re fluent in the intricacies of indemnities or subrogation, it can be difficult to decipher what your policy means. That’s why we’ve put together this handy glossary of insurance terms, with definitions that are easy to understand. That way, we know that when it comes time to talk about insurance, you’ll be ready.
This is someone who assesses risk and determines how likely certain events are to happen and, as a result, how much insurance premiums should cost.
Advisor — Insurance
Advisors are on the front lines, working directly with customers to provide advice and guidance on what insurance policies are available as well as what policy makes the most sense for each person, group or family.
This is the process of assessing an item’s worth, including the cost to repair or replace the item. For example, if you have an engagement ring, you can get an appraisal from your jeweller to determine the value of your ring.
A temporary or preliminary agreement which provides insurance coverage until a final and complete policy can be written or delivered.
A set of rules that specify construction, repair and replacement standards for buildings and structures.
This is the factual information you submit to us after experiencing damage to your home and/or belongings. It’s needed for us to validate your coverage and work on approving your compensation for that loss. It’s also the factual information you submit if you accidentally cause damage or harm to someone else or their property.
This refers to what your insurance policy will specifically cover if your property gets damaged, or if someone gets hurt (for example, slips and falls) while on your property and brings a legal action for damages against you.
Coverage – Additional Living Expense
This will help you pay for reasonable and necessary additional expenses (like hotel costs) in the event you’re forced to leave your home for a period of time due to a covered damage or loss.
Coverage – Claim Forgiveness Enhancement
This means we won’t increase your renewal premium just because you’ve filed a home insurance claim. The Claim Forgiveness enhancement can be added to your home coverage for an extra cost.
Coverage – Condo Insurance
This simply refers to a policy that offers condo coverage.
Coverage – Direct Damage Policy
This means that coverage under the policy is limited to the direct physical damage to your property.
Coverage – Extended Water Damage
This is extra coverage that financially protects you for loss or damages caused by water damage due to events like a sewer system backup or fresh water flood.
Coverage – Extensions of Coverage
Because the base policy typically doesn’t include everything, extensions are included to provide additional coverages to the policy for specific property or circumstances (with limits in most cases).
Coverage – Family Coverage
This coverage provides additional protection against cyberbullying for children attending school and for parents’ property and liability when living in a care facility within Canada.
Coverage – Insured Perils
This refers to the risks (perils) that can cause loss or damages to your property – fire, lightning, windstorms, hail, and more. It also refers to losses that are specifically covered under your particular policy.
Coverage – Loss Assessment
Loss Assessment is insurance coverage for condo owners which provides protection in the event there is a covered loss to a common area in your building and your condo corporation doesn’t have adequate insurance to cover it. If you’re asked by the Condo Corporation to cover your share of a loss assessment (a.k.a. “special assessment”), then your insurance will cover it, up to your policy limit for loss assessments.
Coverage – Replacement Cost (Also known as Actual Replacement Value) This is the cost to repair or replace your home and/or belongings with material of similar kind and quality without deduction for depreciation as a result of a covered loss.
Coverage – Seasonal Dwelling (Also known as a secondary dwelling) This is coverage that would protect a vacation home, like a cottage, cabin or chalet, that is not occupied throughout the entire year.
Coverage – Tenant Insurance (Also known as renter’s insurance) This is like home insurance but for people who don’t own the property and are renting from someone else. It provides coverage for the renter’s belongings, liabilities and additional living expenses due to an insured loss or damage.
Declarations — Coverage Summary Page
This is a term used in insurance that describes the portion of the contract which contains all the basic information that defines the policy. These declarations include everything from the name and address of the insured to the types and limits of the coverage that has been purchased.
This is the amount you agree to be responsible for if you receive an insurance payout for a covered loss or damage. The lower your premium, the higher the deductible you’ll have to pay.
An endorsement is a document that reflects and acknowledges a change in the standard policy coverage. An endorsement can add, modify or remove coverage.
Some perils or sources of damage aren’t covered by an insurance policy, like mold damage or wear and tear. These are called exclusions and are specifically indicated in your insurance policy.
Fair Rental Value
This is the amount of rent you will lose if the dwelling you rent to others is damaged by an insured peril. For example, if you are renting a house to others and there’s a fire, you are no longer able to collect rent while it’s being repaired.
Home Claims Submission Form
This is a covenient, secure and easy way to start your claim through our mobile app. We will contact you within 1–2 business days. Please note that in the case of an extreme weather event, we may be delayed in contacting you due to a high volume of claims. Another way to get to this form to start your claim is through our mobile app or by calling 1-866-454-8910.
This is the amount we pay to repair or replace the damage when there is a covered claim.
This is when an insurance policy term expires and the policy is not renewed for a future term.
This is a set period of time in which you can take legal action against an insurance company for a fault or contractual breach. Depending on which province you live in, this time period can vary.
A person who takes a loan from a lender and who offers his property as a security for repayment.
This is failing to use reasonable care when doing an activity that results in property being damaged or a person being injured.
Perils are the forces or events that can cause damage to the things you’ve insured. They range from common natural disasters (like lightning, wind or hail) to rare events (like earthquakes).
This is a contractual document that details the terms and conditions of your insurance coverage.
The policy period is the time during which your policy coverage is effective. Typically, this period is for one year.
This refers to the state of your property or possessions prior to them being damaged or lost.
A premium is what you pay to purchase insurance and is based on several factors, like where you live, the coverage you choose, industry related factors and your past claims experience.
This represents the probability of an uncertain and fortuitous loss, damage, injury or liability occurring.
Scope of Repairs
A list that identifies any loss-related damages to your home or belongings that need to be repaired or replaced due to a covered claim.
Special Limits of Insurance
This refers to specific limitations within your insurance policy that state the maximum amount that will be paid out for certain items on a per-claim basis.
When an insurance claim involves a loss to you caused by a third party, an insurance company has the right to pursue legal action on your behalf to recover, from the third party, the amount paid to you.
Someone who pays rent for the home in which they live.
What does home insurance cover?
Let’s start with a little bit about home insurance and why you would need it.
Whether you own a home or a condo, or you’re a tenant, the place you live is an investment. From the building itself to all your possessions inside of it. Home insurance is there to help financially protect you if something unexpected happens and you have to pay for damage and repairs to your home and/or its contents.
At TD Insurance, we put together different home insurance packages to suit different types of needs. There are standard home coverages that include the building (if applicable), contents (your belongings), personal liability (if you’re held responsible for unintentional injury or damage to other people or their property) and additional living expenses. Additional living expenses may be covered if you’re unable to stay in your home in the event something happens you are covered for such as fire or flood, until you can move back in or if you’re renting, until you find another place to live. On top of these coverages, there are more specialized add-ons (also referred to as endorsements). Depending on your needs, you get a customized policy that directly correlates to your home and what you’re looking for. Home insurance helps you feel confident, knowing your home is properly protected.
Below are some typical questions we get asked. These examples will help you understand what’s covered with TD Insurance and what coverage you can add on. From your new laptop, mobile phone or tablet to a new bike or an addition to your art collection – let’s look at what’s covered and what type of coverage would be available in each of the different questions below.
Do I need special laptop insurance or does that fall under home insurance?
If you use your laptop for everyday personal use, it would generally be covered by your content insurance both at home and if you’re temporarily away from home (for example if you go away for the weekend or on a vacation). However, if your laptop is used for a side-gig or a full-time job, it would be considered property pertaining to business, which would be subject to a limit. If you want to increase that you could look at adding additional coverage such as our In-Home Office add-on or insure specific items through something called a floater.
Is there such thing as camera equipment insurance or does that fall under home insurance?
If you take pictures as a hobby and invest in expensive equipment, it would generally be covered by your content insurance both at home and temporarily away from home, such as when you go on vacation. However, if your hobby becomes a side-gig or a full-time job, your equipment would be considered property pertaining to business, which would be subject to a limit (similar to how a laptop in the above question is treated). Get in touch with us to discuss your unique situation and we’ll be happy to provide coverage advice that best fits your needs.
Does my home insurance cover someone falling in my house and hurting themselves?
Personal Liability coverage is part of your standard home coverage and it protects you if you are sued for causing bodily injury or property damage arising from your (unintentional) actions, ownership or occupancy of your home.
Are bicycles covered under home insurance?
Yes, bicycles are typically covered under home insurance, both at your home and while temporarily removed from the property, however, if your bike is stolen, lost or disappears without explanation, there will be a limit imposed. If you’re buying a specialty bike that’s on the pricier side and want to make sure it’s properly insured, you can increase the limit of what is covered by upgrading to our Enhanced Home Coverage or by purchasing Personal Valuables coverage specifically for bicycles.
Does home insurance cover floods?
Depending on how you define it, “flooding” can be caused by a wide range of sources. Luckily, TD Insurance offers comprehensive coverages for water damages that are either included automatically or can easily be added, subject to eligibility. For example, overland flooding caused by a rising or overflow of a body of freshwater is covered by our Extended Water Damage coverage, which is automatically included for eligible homeowners (subject to a limit). This also covers flooding that results from sewer-backup or water entering your home from below ground.
Beyond floods, there are several other water damage coverages you might be interested in. Want to know more? Dive in a little deeper on water damage coverage.
Does home insurance cover swimming pool damage?
With a pool there are typically two major considerations, Liability and physical loss or damage. Typically, your Personal Liability Coverage, included as part of your policy will automatically extend to cover you from any additional liabilities that come from owning a pool. For increased financial protection, you could increase your liability coverage and even add on Personal Umbrella coverage, to provide increased, multi-faceted liability coverage – not just for your pool but for watercraft, cars and more. As for physical damage, your home policy will cover damage to your pool, however, the amount covered will depreciate over time as the pool ages. If you have a swimming pool or are planning on getting one, it’s important you let your insurance company know so they can update your policy accordingly and review any relevant coverages and additional options.
Is AC covered under home insurance?
Wear and tear to your air conditioner over time is not covered by your home insurance. However, coverage from sudden and accidental damage to your air conditioner by a covered peril (such as a fire) is included in your basic home insurance.
Here is a bit more detailed information about your air conditioner, your insurance and the environment.
Is there such thing as art insurance or does it fall under regular home insurance?
Pieces of art in your home are treated similarly to bicycles. It’s covered but only up to a certain limit while at your home or temporarily removed (for example, if you’re taking it out of the house to get appraised it’s covered, but not if you remove it and hang it at your office). Like bicycles, you can also increase this limit by upgrading to Enhanced Home Coverage or by adding Personal Valuables Coverage, providing increased blanket coverage for works of art.