How to get the right home insurance according to an expert
2 Minute Read
Summary
- Home insurance protects homeowners by covering rebuilding costs, belongings, liability and temporary living expenses.
- Coverage options include actual cash value, replacement cost, and extended replacement cost.
- Accurate valuation of homes and contents prevents underinsurance and reduces financial risk after loss.
Buying a home is the single largest purchase most Canadians make. So, it’s important to understand the role of home insurance in protecting your investment.
To help answer common questions, we spoke with Elliott Silverstein, director of government relations (insurance) at CAA. He shares what homeowners should know when choosing the right coverage and avoiding common mistakes.
He says home insurance is ultimately about peace of mind. Your home is often your largest investment, so you want to ensure both your house and everything inside it can be repaired or replaced if something happens.
While home insurance is not legally required, it is typically mandatory if you have a mortgage. That makes it essential to ensure your coverage accurately reflects the true value of your home and belongings.
Types of coverage
Silverstein explains that most insurers offer three main types of coverage. Actual cash value covers property and belongings at their depreciated value, meaning payouts are reduced to account for wear and tear, making it the least expensive option.
Replacement cost value coverage pays to replace your home and personal belongings at current market value using the same or similar materials, minus your deductible. Guaranteed or extended replacement cost coverage protects against inflation, which Silverstein says is especially important when building materials increase in cost, since standard replacement coverage may not be enough on its own.
How much coverage do you need?
Silverstein says choosing the right coverage starts with understanding the replacement cost of your home, the total value of your belongings, and the value of your overall assets, including vehicles and other high-value items.
Estimates can be obtained from your insurer, through a third-party replacement cost calculator, or by hiring an assessor, and he suggests getting multiple opinions to ensure accuracy. When calculating the value of personal belongings, Silverstein recommends keeping a photo record and documenting items in a spreadsheet or app, along with receipts or current values. He notes that expensive items such as jewelry, art, and décor should be professionally assessed, and that liability coverage should be sufficient to protect all assets. He also advises keeping this information stored securely online or in a safe place so it can be easily accessed and updated.
Home insurance mistakes to avoid
Silverstein cautions against choosing a policy based solely on price. While cheaper coverage may fit your budget in the short term, it might not provide sufficient protection when you need it most.
Another key mistake, he says, is failing to update coverage annually. Replacement costs change over time, and values from a year ago may no longer be accurate. Silverstein highlights that CAA offers free policy reviews to help Members ensure their coverage reflects current realities and rising costs.
He also points out that Members may miss out on savings if they don’t contact CAA first. CAA Members can save on home insurance and even more by bundling it with auto insurance. Call 1-888-545-7254 or go online to get a quote.
Auto and Property Insurance is underwritten by CAA Insurance Company. Certain conditions, limitations and underwriting guidelines apply.
*To qualify for the discount, you must be a current CAA Member in good standing (CAA Membership dues paid in full by membership expiry date).
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