Home insurance provides financial cover to the home owners against a variety of damages, loss and risks. Although home insurance is not mandatory in Alberta but considering the protection it offers and the number of things that can potentially go wrong, it is highly recommended that homeowners purchase home insurance.
WHAT DOES HOME INSURANCE COVER?
Damage to the house
Damage caused by most natural disasters
Theft of items of personal property
Fire, causing damage to the house or personal belongings
Visitors injuring themselves in your house and make claim
Property stolen
Additional living expenses in case the house become unlivable
WHAT IS NOT COVERED BY HOME INSURANCE
Home insurance doesn’t cover everything.
Damage caused by homeowners’ negligence.
Deliberate damage
Pest Infestation
Mold
Predictable events related to maintenance
Some natural disasters, such as, earthquakes
This is by no means an exhaustive list. Homeowners should read the fine print and speak to their insurers in length to be sure about which risks are covered or not covered. If there is a specific concern, be sure to double check with the insurance agent.
TYPES OF HOME INSURANCE IN ALBERTA
There are four types of home insurance, listed below.
Comprehensive: other than specifically excluded, comprehensive policy covers the homeowners against all risks and the contents of the house.
Standard or Basic: Standard or also called Basic policy has the list of risks that it provides cover for and anything other than mentioned in the policy is not covered.
Broad: Broad policy lies somewhere in between Comprehensive and Standard Policy. Broad Policy covers house for all risks other than specifically excluded and it covers only those contents that are mentioned in the policy.
No Frills: No frills offers the minimum level of coverage. This policy is usually offered to houses that do not qualify for required standards of insurance.
WHAT IS HOME INSURANCE INSPECTION & WHY IT IS DONE
Home Insurance Inspection is the type of inspection that helps insurance companies determine the replacement cost of a house. It also allows them to assess the condition of the house and the likelihood for a homeowner to file a claim. Based on these assessments the insurance companies set an insurance premium.
When is it done?
Home Insurance Inspection takes place after the policy has been bought. When a new policy is purchased, it can take upto a month or sometimes longer before inspection is done.
Home Insurance inspection is not mandatory and insurers decide whether or not an inspection is required. There are a number of factors that determine when the inspection will be conducted and how detailed it would be.
Insurance companies usually carry out insurance inspection when: a new policy is purchased, or an inspection has not been done for a long time, or after a major construction/maintenance activity or installation of a new system, such as, electrical or HVAC system or the replacement cost of the structure is hard to determine.
HOW DOES INSURANCE INSPECTION IMPACT THE PREMIUM?
The insurance premium can either go up or down after the inspection. On some occasions insurance companies may give homeowners a list of issues to be fixed and in extreme cases may even cancel the policy if the house is deemed too risky to insure.
HOW DETAILED IS INSURANCE INSPECTION?
How detailed and thorough insurance inspection will be depends upon the discretion of the isurer
Exterior Inspection: For newer homes, insurance companies will do a visual inspection of the exterior. Assessing the structure, roof, windows, doors, and detached garages etc.
Interior Inspection: Usually for older homes and on some occasions if the insurance company decides so an interior inspection would be carried out.
Following is the list of what an insurance inspection focuses on:
Exterior fire hazards, such as, overhanging trees
Drainage system
Age and condition of the roof
Basement and Attic
Condition of electrical and plumbing systems
Fire & Smoke Alarms
Anti theft and security systems
COST OF HOME INSURANCE INSPECTION
Home Insurance in Alberta ranges between $1300 to $1900 yearly. The cost of insurance depends on a number of factors.
Age of the house
Risks associated with newer homes are less than older homes; this is why insurance premiums on newer homes will be less.
Location of the house
Some areas are prone to natural disasters or have higher crime rates which increases the associated risk for the insurer. Premiums will be higher for houses in high risk areas.
Condition and Construction of the house
Newer and well maintained houses are less likely to have issues; hence, lower premiums. Poor construction quality and construction material translates into higher risks for insurers and higher premiums.
Insurance Deductible
Deductible is usually a fixed amount or sometimes percentage that the homeowner agrees to pay before the insurer begins to pay. Deductibles help lower the premiums because the homeowners would pay for small claims and would only need insurance for bigger claims.
Credit Score of the homeowner
Higher credit score always translates into lower risks for the insurer. Homeowners with an excellent credit score will have lower premiums.
Claims history of the homeowner
Homeowners who have history of insurance claims or have a house in an area where the ratio of insurance claims is higher will end up paying higher premiums
Additional Risks
If the house has additional features, such as a trampoline, a swimming pool or extra construction or exotic pets etc will be charged extra for insurance.
WHAT CAN FAIL A HOME INSURANCE INSPECTION
The purpose of home insurance inspection is that the insurer can assess the risks in insuring a house and the likelihood of a claim being made.
An insurance inspector will be looking into the structure, roof, electrical, plumbing and HVAC systems to determine the level of risk. In addition, they will be looking around the house to see if there are any hazards present.
Inspectors will be inspecting the house for damages like:
Structural cracks
Water Damage
Rusting and Rotting
Molds & Pest Infestation
Fire Hazards
Other safety & Security Concerns
If the inspector identifies the property to be too risky to insure the policy will be denied. In some cases they recommend certain improvements as a condition to insure the house.
HOW TO PREPARE FOR AN INSURANCE INSPECTION?
Home inspectors sometimes will just do a visual inspection of the exterior or they can conduct a thorough inspection of the outside as well the inside of the house and the systems installed in it. As a homeowner you should be prepared for a thorough inspection. The houses that are maintained, are free of risks and hazards are not only insured but their insurance premiums are also reduced.
Following are the things a homeowner can do to prepare for a home insurance inspection.
Ensure that foundation is free of cracks
Ensure that there is no water damage
Roof is free of damage and missing shingles
Gutters are cleaned
No fire hazards, including no overhanging branches on the roof
No trip hazards around the house
Inside of the house is free of fire hazards, smoke alarms are functional and fire extinguishers are present.
Entire house, especially the basement and other concealed areas such as, attic are free of mold and other pest infestation.
HVAC, plumbing and electrical systems are well maintained and are free of hazards.
CONCLUSION
Home insurance is not mandatory but highly recommended for homeowners. There are numerous risks and threats to a house ranging from fire, theft, accidents to natural disasters like, hailstorm, floods etc. Home insurance is the mechanism of transferring the financial aspect of those risks to an insurance company.
Insurance companies do their due diligence by inspecting the house for issues and problems before they sell policy to a homeowner. Houses that are well maintained and are free of risks and threats are more likely to be offered insurance policies and have lower premiums as well.
By knowing the types of insurance and what inspectors look for, the homeowners can be proactive and have their houses ready for insurance inspection so that they get the best policy and better premiums.
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