Basic Canadian Home Insurance Terms

Insurance terms can be very confusing. Use this guide to help you understand the basics:

"All Risks" The term "all risks" describes insurance for losses due to a wide range of causes. Instead of listing each insured peril, such as fire, lightning, and so on, the policy covers all loss or damage to insured property that is the result of any "risk" that is not specifically excluded. "All risks" is a confusing insurance term and does, in fact, incorporate some listed exclusions which allow coverage to be tailored to individual needs and priced more fairly. Perhaps a better description would be "all common risks"!

Business premises, equipment at home:  Loss or damage to buildings or structures is not normally insured if they are used for business or commercial farming. Business equipment is covered only while at your home, usually only up to $2,000 in total. There is no coverage for samples and merchandise for sale. If these limits are a problem, you may wish to consider buying an insurance policy, or an endorsement to your home insurance policy that is designed for home-based businesses.

Coverage limits: These are dollar limits will often apply if the certain articles are stolen such as: bicycles; jewellery and gems; watches; furs; coin, stamp and card collections; and manuscripts. Many insurers no longer limit coverage of silverware. Check your policy.

Deductible:  The amount of money that is not covered by the insurance policy.  You may see this in Auto, Home or Medical Policies.  Typically the deductible is shown as a fixed amount such as $500,  $1,000 or $2,000.  The total cost of the insurance or Premium will depend on the deductible that you choose.  The higher the deductible, the lower the premium and vice versa.

For Example: You have a car insurance policy with a $500 deductible.  You are involved in a car accident that will cost $2,000 to fix.  The Deductible means that you have to pay the first $500, then the insurance company pays the rest or $1,500.  If the damage is less than $500, then you have to pay the full cost.

Home Insurance:  Coverage that typically applies to your home and "attached structures" such as a garage or carport.  These things are collectively called your Dwelling.  Permanently installed outdoor equipment on the premises, such as a swimming pool and the equipment attached to it, is usually also included. Building materials for use in construction, alteration or repair of the insured dwelling or related structures on the premises are covered too, if they are on the site or adjacent to it. Theft and vandalism losses during construction are usually not covered.

Negligence: To be negligent is to fail to do what a reasonable and prudent person would do (or to do what such a person would not do); this can result in property damage, injury or death.

Personal property:  Your home insurance policy will usually cover the contents of your home and other personal property that you own, wear or use (including clothing, cameras, furniture, etc.) while on your premises. It may even cover uninsured personal property of others, excluding roomers or boarders who are not related to you. Your policy will normally cover personal property while it is temporarily away from your home anywhere in the world. Personal property not normally kept at home is not covered. Personal property in a warehouse is usually covered against theft without time limit; but other perils may not be covered, or may be covered only up to 30 days, so be sure to consult your agent or broker.

Premium:  The amount of money that you pay to the insurance company in return for covering a risk for a pre-determined period of time.

Riders: These are supplemental (or additional) insurance policies that can cover risks that are not fully protected under the main insurance policy.   These "riders" or "floater" policies provide all-risk coverage for specific items - often fragile and/or valuable - subject to certain exclusions. Coverage can be world-wide and there's usually no deductible.

Risk:  a chance event that is unexpected and accidental as you, far as the policy holder is concerned. For example, if your dog's tail sweeps an ornament off a table and onto the floor where it breaks, that is due to a "risk"; the ornament would not otherwise have broken. The gradual wearing out of clothes, however, or the rotting of fruit, are quite natural and expected... and therefore are not insurable "risks".

Note:  These descriptions are for information purposes only.  InsQuote.ca accepts no liability for these descriptions.   Insurance Policies can be complex and vary in the terms and conditions that will apply to your individual situation.  Speak to your insurance professional for complete details on your particular policy.

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