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Home Insurance Basics


Property policies separate losses into various types:

  • Personal Property – This includes most of the normal contents of your home from clothing, pots and pans, furniture, to electronics
  • Real Property – buildings are considered Real Property
  • Liability - your responsibility to other people when they suffer a property loss or bodily injury due to your negligence. Liability coverage extends to most everyday life situations

Polices are packaged together to cover the various types of losses. The main policy forms available include:

  • Homeowners forms – for owner occupied houses
  • Condominium forms – for owner occupied condominiums (both high-rises and town homes)
  • Tenants Forms – for renters
  • Seasonal Dwelling Forms – for the various types of seasonal occupied buildings
  • Rented dwellings or rented condominiums – for buildings not occupied by their owners

When to Buy
Insurance coverage should begin as soon as you become the legal owner or tenant. This also includes buildings under construction. It is important to know how your policy covers your contents when moving from one location to another and to make sure that your old location stays covered until you no longer legally own it or are responsible for it. It is important to note that most companies do not provide theft coverage for vacant buildings and also require a vacancy permit when a property is vacant for over 30 days.

Insurance to Value
Don’t under estimate your contents. Complete an inventory annually and keep it up to date. Make sure to include taxes. Most polices are based on Replacement Cost, which is the replacing of an item with one that is new, and of like kind and quality.  Consider taking photographs or a video tape to keep with the list. An inventory will not only help you to access the total amount of contents you have but it will also help to prove your loss to your insurer in the event that you have a claim. The onus is always on you to prove your loss to the insurer.

Building limits should be based on the buildings estimated rebuilding cost and not its market value. Most home policies usually include Replacement Cost coverage for buildings. The settlement can be up to, but not greater than, the amount of insurance on the building. If the replacement cost of the building is underestimated, the policy will not pay more than the cost stated in the policy. There is an optional coverage called Guaranteed Rebuilding Cost that can change this. Please see a description of this in the preceding.

As part of our service we use the ezITV 2010 Evaluation to help determine rebuilding cost.

Policy Forms
There are three common policy forms available for Personal Property. They are Comprehensive, Broad, and Named Perils.

The “Comprehensive” policy covers both the building and contents for all risk that are not specifically excluded in the policy. This is the best form of protection that can be purchased.

The “Broad” policy provides all risk coverage on the building and named perils coverage on the contents. Although this form is good it is not as good as the ‘Comprehensive Form” but it does come at a lower cost.

The "Named Perils" policy is a very basic form and only provides protection for a specific list of coverages as follows:

  • Fire;
  • Lightening
  • Smoke
  • Explosion
  • Falling Object
  • Aircraft or Land vehicle Impact
  • Riot & Vandalism
  • Theft
  • Water Damage
  • Wind and Hail

It is normally the least expensive policy that is available.

What’s Not Covered
It's important to note that a personal property policy is not a maintenance contract. It is intended to cover only those unforeseeable events that are sudden and accidental. A partial list of those events that are not covered include:

  • Flood in certain areas
  • Freezing damage from outside the house
  • Damage from insects and Rodents
  • Direct Damage from the intentional application of heat
  • Damage from earth movement, snow slides, landslides
  • Intentional Damage

Special Limits and Limitations
Most Personal property policies contain special limits of coverage for a number of items. These items include:

  • Business Property
  • Jewellery
  • Fur Coats
  • Silverware
  • Cash
  • Negotiable securities
  • Garden tractors
  • Watercraft
  • Computer software
  • Bicycles
  • Coin, stamp and card collections
  • Manuscripts

If a building has been vacant for over 30 days all coverage ceases unless arrangements have been made with the insurer for a vacancy permit. It is important to be aware that even with a vacancy permit coverages are greatly reduced. If a house has been unoccupied for more than 96 hours during the normal heating season, frozen pipes will not be covered unless all the pipes have been drained and water shutoff, or arrangements have been made for a competent person to enter the house daily to check the heating system.

Property of roomers and boarders are not automatically covered

Optional Coverage Extensions
There are a number of additional coverages that can be added to your policy in order to receive the full protection that you require. A partial list of these coverages are:

  • Replacement Cost
  • Guaranteed Rebuilding Cost
  • Jewellery, furs, fine arts, silverware, cameras, bicycles, tools, property in storage, firearms, musical instruments, personal computers, stamp/coin collections, sports equipment, safety deposit boxes, and golf carts
  • Identity Theft
  • Home-based business
  • A parent in a long term care facility
  • Students property
  • Liability extensions for rented land or dwellings, vacant land, incidental office use, swimming pools, draft or saddle animals, elevators, escalators, residence employees, and child care
  • Watercraft including fishing boats, cruising boats, jet skis, etc.
  • Vacation trailers
  • Sewer backup endorsement
  • Overland water / Flood
  • Earthquake
  • Bylaws Endorsement
  • Loss Rental Income

Umbrella Liability Coverage

What is Umbrella Insurance?
Umbrella Insurance provides exactly the type of coverage that it sounds like it would; it provides an umbrella for you to stand under. Providing protection against liability losses which exceed the limits of your existing personal insurance policies, be it your home, cottage or car insurance. You don’t need to be rich or famous in order for someone to sue you.

What does Umbrella Insurance cover?
The liability coverage within most of your current insurance policies only provide coverage for bodily injury and property damage to others. Umbrella policies will extend those limits to not only provide additional coverage for bodily injury and property damage, but also to cover things that are not listed under regular liability coverage. Examples would be libel, slander, defamation of character and invasion of privacy. Every policy is different, so what is considered a covered liability loss under one insurance policy may not be covered on another. Umbrella Insurance kicks in when these situations present themselves and/or you exceed the amount of liability coverage for the events that are already allowed under your regular insurance policies.

Why should you purchase Umbrella Insurance?
You may not think you need an umbrella policy, but consider this: What happens to you and your family’s assets should you be sued for something that occurred at your home and the legal costs of the lawsuit greatly exceed the liability coverage defined by your homeowner’s policy? Who will pick up the tab if you are responsible for a multi-car accident and your liability costs exceed the limits on your car insurance by thousands of dollars? Although these kinds of things may be few and far between, you cannot be too careful. Umbrella Insurance is typically purchased at a low cost to you, but will provide enough coverage to where you shouldn’t have to worry about liability costs in the future. Contact L.D. Dermody today for more information on umbrella policies.

Guaranteed Replacement Cost
What is Guaranteed Replacement Cost Coverage on Dwellings? Your insurer will guarantee to rebuild your home, even if the cost to rebuild it is more than the amount of insurance you have purchased. To obtain this coverage you must insure your home to its estimated replacement cost, keep the home updated and notify your company of any changes made to the home which would increase the homes' rebuilding value by $5,000 or more. The perk of this coverage is that you will never be underinsured.

There are many discounts provided by Insurers. Make sure you are aware of the discounts offered by your company so that you may maximize your savings. Some of the more common discounts are:

  • New Home Discount - for newer homes that are generally 15 years old or newer
  • No Claims Discount - you have had no claims in the last 3 years
  • Loyalty Discount - you have been with the same company for a number of years
  • Alarm Discount - usually provided for a monitored burglary and/or fire alarm
  • Age Discount - provided when the home owner reaches a certain age
  • Multi-Line Discount - provided when you also insure your automobile with the same company
  • No Mortgage Discount
  • No Smokers Discount
  • Seniors Discount
  • New Hot Water Heater
  • Professionally Installed Backflow Valve Discount

The Deductible is the portion of a loss that you are required to pay before your insurance coverage will respond. Consider lowering your premium by taking a higher deductible. Common deductibles today are $500 and $1,000.

Working from home
If you work from home it is vital to look at the range of options available in your home insurance policy. Some insurers automatically cover up to $2,000 for home office equipment. This is likely to be adequate unless you use specialized equipment or employ other people, in which case you will need to speak to your insurer about the possibility of gaining specialized coverage. Most companies offer a home run business extension or policy. You could need extra coverage for more valuable items, and items that are particularly susceptible to theft, such as laptops.

The liability protection provided by your homeowners policy does not automatically cover your homerun business operations. If you are working from home check with your insurer to see what coverages you have and what options are available to you.  


However you wish to communicate we’re here to help. Call directly to speak to one of our insurance specialists, schedule an appointment, send an email or simply complete our online enquiry form. Whatever method you choose you’ll receive the same individualized service and attention to details. We’ll happily review your insurance program making sure that it's right for you.
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Our Address:  7750 Birchmount Road, Unit 4, Markham Ontario L3R 0B4
L.D. Dermody Insurance Brokers (1982) Inc.