Insurance policy

A cursory overview of your home insurance policy is enough to cause your eyes to glaze over, but it is an important document to understand. Although it won’t win any rave reviews or Pulitzer Prizes, it’s imperative to read the fine print and ask questions about details you don’t understand.

Considering that your home is likely the single most expensive investment you will make, ensuring it is well protected in any event is vital.

Before you choose a policy, it is essential to establish your home’s replacement cost should disaster strike and you need to completely repair or replace your home. A local builder can provide the best estimate. The general recommendation is to buy enough insurance to cover 100 per cent of the replacement cost of your home.

If you have valuables such as jewelry or electronics or collectibles, it’s a good idea to list them all and take photos, storing all of this information in a safe place where it won’t get damaged or stolen. And make sure your insurance policy covers these items as well.

Home insurance also covers your liability for anything that occurs on your property, such as someone being injured or their belongings damaged while they’re in your home.

Most home insurance companies include a deductible, which is the amount you must pay out when making a claim. So if your deductible is $500 and your claim is $1,500 for damage or theft to or from your home, then you would pay the first $500 and your insurance company would pay the difference.

You can choose to raise or lower your deductible when you purchase your insurance policy. Generally, the higher deductible you choose, the lower your monthly premiums will be. But keep in mind that if you do file a claim you will be on the hook for more of the cost.

The cost of home insurance will vary depending on your home, your insurance company and the factors mentioned above.

And make sure you compare while you shop, remembering that the lowest price may not be the best guide to follow. Find out whether your insurer is quick to respond when claims are made, as well as the company’s financial stability.

Also, check your policy annually to ensure it continues to meet your needs.