Understanding a home insurance policy


Congratulations on purchasing your new home! Now that you’ve taken this significant step, it’s crucial to ensure your investment is adequately protected with home insurance. Home insurance policies typically consist of two main sections: Property Coverage and Liability. In this blog post, we’ll break down these sections and explain the common coverage areas you should be aware of. Please note that while specific terminologies may vary between insurance companies, the concepts remain similar.

The Policy Small Print: All policies of Insurance are Subject to Limitation, Conditions & Exclusions


Section 1: Property Covered and Additional Living Expenses

Coverage A: Your House – Determining the right insurance amount 

Coverage A focuses on your house itself. It is essential to determine the appropriate insurance coverage to rebuild your home in current market conditions. To avoid any pitfalls during a claim, it’s recommended to assess the accurate rebuilding value. Your broker can guide you in this process and help you make an informed decision. 

Coverage B: Detached private structures

Coverage B includes structures separate from your main house, such as garages. However, it can also extend to other detached structures like guest houses or laneway homes. In areas with limited land availability, homeowners may choose to build secondary houses on their lots for personal use or rental purposes. 

Coverage C: Personal Property – Safeguarding your belongings

Coverage C protects your personal belongings, encompassing everything you own, including clothing and valuable items. However, it’s important to note that there may be special limits of insurance for certain items. For instance, expensive possessions like a high-end mountain bike, jewelry, or artwork may require separate insurance coverage to ensure adequate protection. 

Coverage D: Additional Living Expenses – Support during displacement

Coverage D provides assistance if your home becomes uninhabitable due to a covered loss. If you need to stay elsewhere while your house is being repaired or rebuilt, this coverage helps cover additional living expenses. It includes allowances for essentials like clothing, food, and personal care items during this challenging time. 


Section 2: All About Liability: Protecting Yourself from Lawsuits 

Coverage E: Your Legal Liability to Others

Coverage E safeguards you in the event that you are held responsible for property damage or injuries caused by your actions or failure to act. For example, if an unattended candle in your home starts a fire that spreads to your neighbor’s house, resulting in damages, your insurance company can assist with legal costs and help facilitate the restoration of both properties. 

Coverages E & F: Medical Payments and Property Damage

Coverage E focuses on immediate medical care for someone injured on your property, even if you may not be legally liable. Coverage F, on the other hand, allows for voluntary payments to repair or replace property damaged by you or your family members. These coverages promote goodwill and help maintain positive neighborly relationships. 


Additional Coverage Options

You have the option to add extra coverage to your policy for specific items that may exceed the limits under Coverage C. This can include items like boats, vacation trailers, or valuable belongings such as a mountain bike, artwork, or jewelry. 



Fine-tuning Your Coverage Endorsements enable insurance companies to modify or broaden certain coverage areas based on your needs. For example, while sewer backup coverage may be excluded from standard policies, you can opt to add it for an additional premium. On the other hand, coverage for windstorm and hail damage may be subject to limitations or higher deductibles based on the condition of your home’s roof or siding.


By understanding the different sections of home insurance, consulting with professionals, and considering additional coverage options and endorsements, you can ensure that your new home is properly insured. Take the time to review your policy, ask questions, and make informed decisions to safeguard your property, belongings, and protect yourself from potential liability. 


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