Home Insurance and Contents Insurance

So far, you have learned about two different types of insurance: Mortgage Default Insurance and Title Insurance.  Aside from Mortgage Default Insurance and Title Insurance, there are also other types of insurance that are available for home-owners to protect you if something should ever happen to you or your house.  DO NOT get these types of insurance confused with Mortgage Default Insurance.

To ensure that you understand the different types of insurance and do not get them all confused, I am going to briefly explain the other four main types that you will likely encounter during your home-buying process:

·         HOME INSURANCE and CONTENTS INSURANCE

·         MORTGAGE LIFE INSURANCE (or Mortgage Protection Insurance) and LIFE INSURANCE

I will explain MORTGAGE LIFE INSURANCE and LIFE INSURANCE in my next blog entry.

HOME INSURANCE, sometimes called Homeowners Insurance, insures you and the lender if something ever happens to your property.  Home Insurance is a requirement of the bank when you get a mortgage.  There are many different facets to Home Insurance and you can pick and choose what kind of coverage you would like to get for the house.  However, you must obtain fire insurance payable to your lender for all mortgages (for the full replacement cost).  The reason for this requirement is because the bank wants to know that if your house goes up in flames, the property will still be covered and they will be able to recover the money they have lent to you.  Home Insurance can be obtained from a number of companies across Canada, including BCAA (in BC) and Canadian Direct Insurance.  Home Insurance is paid for by you and is usually paid on a monthly  basis.

CONTENTS INSURANCE can be added to a standard Home Insurance plan and I highly recommend this to all home-owners.  However, this is just a recommendation and Contents Insurance is not mandatory.  Getting insurance coverage for your contents (anything that is not attached to the house, such as televisions, computers, jewellery, etc) will provide you with peace-of-mind in case anything ever happens to your house.

Remember:  Home/Fire Insurance is mandatory when obtaining a mortgage and Contents Insurance is recommended.  The above information is a very general overview of Home Insurance and Contents Insurance and you should contact a Home Insurance provider for more detailed information on your options and for rates.