With home insurance, any time your house suffers from structural damage, be it internal or external, your insurance policy will cover the expense of fixing the damage.
But what about the contents inside your home?
Whether your home is struck by a natural disaster or human invasion, it’s not the building alone that will suffer. Everything inside and all your personal belongings will be at risk. How will you protect those? That’s where content insurance steps in.
Today, we will share the difference between home and content insurance so that you can decide which of these is better for you.
Continue reading to learn how to compare house and contents insurance in Canada.
After you’re done learning how to compare house and contents insurance, feel free to click the following link to search for affordable home insurance quotes in Canada.
How to compare house contents insurance with home insurance in Canada
Before learning how to compare house & contents insurance quote prices in Canada, you need to learn what the two are!
What is home insurance?
A typical home insurance only covers the structure of your house and the permanent fittings. This includes the base construction of your house, like walls, floors, pillars, and roof. It also includes permanent fittings like bathroom sinks and waterline, fitted kitchens as well as wardrobes and cabinets if fitted to the house.
Some insurance plans also cover other structures surrounding your main house, which include swimming pools, garages, gardens, patio, greenhouse, etc. These coverages are usually added later to the main policy as an extension.
If you are wondering how much you should invest in home insurance, we have a simple thumb rule for you. Invest enough to cover all your expenses in case you need to rebuild the house from scratch.
Types of home insurance
Here are the common types of home insurance:
1. Structural cover
The structural cover is the standard home insurance policy. Here, only the damages to your house’s structure will be compensated for. For example, if your property is hit by an earthquake that damages your roof or cracks the floor, your insurer will pay to fix these damages.
2. Fire cover
Whatever insurance policy you choose, they will all have a cause of damage mentioned under the terms and conditions. And only the things damaged by these specified causes will qualify for coverage. Similarly, with the fire cover, everything damaged in a fire accident will be covered by your insurer. This will include structural damage as well as damaged personal belongings.
3. Home content cover
Content insurance is available as a stand-alone policy as well as an extension of your home insurance. Under this, any personal belongings listed under your policy will be compensated for in case they are damaged or stolen. This can include your electronics, decor items, clothing, jewelry, etc.
4. Burglary cover
Burglary cover is only for goods and personal belongings stolen during a theft. You just need to ensure that those belongings are listed under your insurance policy and that their value can be accurately determined.
5. Liability cover
Liability cover is used to pay for any damages, be it structural or bodily, that you or your family member causes to a third party. For example, if a chunk of your roof falls on a guest in your home, liability cover will help you pay for their medical expenses. Similarly, if your kids or pets destroy a neighbour’s expensive rug, liability protection will kick in and compensate the neighbour on your behalf.
In case the extent of damage is grave and the victim decides to take you to court, liability protection will cover all your legal fees as well as any fine if imposed by the court.
6. Rental’s cover
If you live in a rented house or apartment, a renter’s cover will insure your personal belongings. It will not cover any damage to the structure itself; that’s your landlord’s responsibility. But everything inside the home will be protected.
7. Landlord’s cover
If you have rented your home to someone else, a landlord cover will insure the main structure of the house as well as your personal belongings inside it.
What is content insurance?
Content insurance, on the other hand, protects and covers the items and personal belongings inside the house. This could include your furniture, electronic appliances, art & collectibles, decor items, clothes, etc.
If you have a greenhouse, garage, or garden shed, make sure you get an add-on to protect the equipment stored outside your house as well. This type of insurance comes in very handy during thefts. It does not cover any damage to the structure; just the things inside it are insured.
While investing in content insurance, make sure you evaluate your personal belongings carefully. A lot of buyers often undervalue their personal items, which leads to a huge loss in case they are stolen or damaged.
Types of content insurance
Here are two common types of content insurance:
1. Replacement value
Under this type of coverage, you get paid the exact current market rate of your lost possession. For example, if your TV is stolen, you will only get paid the current price for the exact TV set.
The problem with replacement cost arrangement is that the value of almost everything depreciates with time. So you will get much less than what the item was actually worth.
Under the new-to-old arrangement, you will be paid the entire amount it takes to replace your lost possessions with a new one of the same type. For example, if your TV is stolen, you will be paid the exact price of a new TV of the same model. Even if that model is no longer in the market, you will be paid the price of an equivalent model.
Here, you are insured for every penny you lose. That’s why new-to-old content insurance policies are more expensive.
How to compare house and contents insurance in Canada? — Conclusion
There is no simple way to pick one of the two as more important. Protecting the structural integrity of your house is as important as protecting your belongings inside it.
However, if you are running on a tight budget, go for home insurance first, especially if your personal belongings aren’t too valuable. After all, buying back a few furniture pieces or clothes is still doable. But renovating or rebuilding your entire house without insurance is almost impossible.