5 Things You Need to Know Before Buying Home Insurance

Whether you own a detached house, townhouse, or condo/apartment in British Columbia, or you are a tenant, home insurance can help cover significant financial losses that you might otherwise have to pay out of pocket. However, insurance does not cover everything. Understanding which coverage you need, when to make a claim, and how to communicate with your insurance broker are equally important.

Here are five key home insurance concepts to help you better understand your policy and make informed decisions about your coverage.

1. What Does Home Insurance Cover?

Generally, home insurance serves three important purposes: protecting your home and personal belongings, protecting you against certain legal liabilities to third parties, and helping condo owners pay eligible Strata insurance deductibles under the terms of their policies.

1. Property Coverage

Home insurance can help pay for the repair, replacement, or rebuilding of your home and personal belongings when they are damaged, destroyed, or stolen as a result of an insured event, subject to your policy terms.

For example:

• A fire damages your home, requiring repairs or rebuilding.
• Sudden water damage that meets the policy’s coverage requirements damages your flooring, walls, or furniture.
• Personal belongings are stolen from your home and need to be replaced.

Keep in mind that the building itself (Dwelling / Condominium Unit) and your personal belongings (Personal Property / Contents) are generally covered under separate coverage sections. The amount payable may also be subject to policy limits, the applicable method of calculating compensation, deductibles, and other policy conditions.

2. Personal Liability

Home insurance does not just protect your property. It may also protect you against certain legal liabilities if you accidentally cause bodily injury to another person or damage someone else’s property.

For example, a visitor may accidentally get injured on your property, or you may unintentionally damage someone else’s belongings. If the incident falls within the scope of your policy, Personal Liability Coverage may help pay eligible compensation and legal defence costs.

One thing many people may not realize is that personal liability coverage is not necessarily limited to incidents that occur inside your home.

Some policies may also cover certain personal liability incidents that occur elsewhere in the world. For example, if you accidentally damage property in a hotel while travelling, your personal liability coverage may potentially apply.

However, coverage depends on the policy’s territorial limits, exclusions, and the specific circumstances of the incident. Not every overseas incident or instance of property damage is necessarily covered.

3. Strata / Condominium Deductible Coverage

For condo and townhouse owners, this is a particularly important coverage to understand.

When a strata building suffers an insured loss, the Strata Corporation may submit a claim to its building insurer. Strata insurance policies typically have deductibles, and these can be substantial. Depending on the Strata Property Act, applicable laws, bylaws, and the circumstances of the loss, the Strata Corporation may be entitled to recover some or all of the deductible from an individual owner.

For example:

• A burst water pipe inside your unit: If the incident originates in your unit and damages neighbouring units or common property, the Strata Corporation may submit a claim to its insurer and potentially seek to recover the building insurance deductible from you, subject to the applicable legal and policy requirements.
• Earthquake damage to the building: If the Strata Corporation submits a claim for insured earthquake damage, the building may face a substantial earthquake deductible. Owners may also have to contribute toward related costs through the strata’s cost-allocation arrangements.

In these situations, your own condo insurance may help cover an eligible Strata deductible, subject to the policy terms and limits.

However, you should not assume that every insurance company automatically provides sufficient coverage. Check the limit shown under your policy’s Strata / Condominium Deductible Coverage and compare it with the different deductibles listed in your strata insurance documents, particularly those for water damage and earthquake.

2. The Main Purpose of Insurance: Managing Unaffordable Risks with Affordable Premiums

Some people view home insurance as something they only need to satisfy their bank or mortgage lender. However, if you experience serious water damage, a fire, or another major incident, the resulting expenses could easily exceed what an average household can comfortably afford.

1. The Value of Insurance Lies in Protecting Your Financial Stability

Water damage is a significant source of home insurance claims in Canada. According to a report published by Insurance Business Canada in 2024, which cited industry data, approximately one in six homes experienced a water damage or freezing-related claim over a ten-year period, with the average claim approaching $17,000.

Source: Insurance Business Canada — How can insurers combat preventable water claims?

These are average figures, and actual losses can be considerably higher. If water damage affects multiple rooms, flooring, walls, and areas that require demolition and reconstruction, repair costs can escalate quickly.

The core value of home insurance is that, when an insured event occurs, you do not have to bear the entire financial loss yourself. By paying a premium, you transfer part of that financial risk to the insurer, helping protect your savings, financial stability, and future plans.

Therefore, when buying home insurance, you should look beyond whether it satisfies your lender’s requirements and ask yourself: If a major incident happened tomorrow, could I afford to pay for the resulting damage on my own?

2. Claims Require Careful Consideration: Insurance Is Not Necessarily the Best Option for Every Minor Repair

Home insurance is primarily designed to help manage significant financial risks, not to replace routine maintenance and repairs.

For example, suppose a minor repair costs $1,200 and your policy has a $1,000 deductible. Even if the loss qualifies for coverage, the amount potentially payable by the insurer would be relatively small. If making a claim could also affect your future renewal or premium, it may be worth understanding the overall implications before deciding how to proceed.

This does not mean that you should never claim for a smaller loss. Rather, before making a claim, consider the following:

• How much is the estimated loss compared with your deductible?
• Does the incident actually fall within your policy’s coverage?
• Could the claim affect your renewal, premium, or future insurance options?
• Would paying for the damage yourself better suit your financial circumstances?

Insurers often have strict underwriting requirements regarding previous claims. If you make several claims within a relatively short period, it may become more difficult to find suitable coverage in the standard insurance market, or you may need to consider a specialty market option with higher premiums or different coverage conditions.

Insurance can play a vital role when a major loss occurs. For smaller incidents, however, it is worth understanding your policy terms and the potential implications before deciding whether to claim. If you are unsure, consult your insurance broker to help you make a more informed decision.

3. Home Insurance Does Not Cover Everything: Understand Optional Coverages and Exclusions

Even if a policy is described as “Comprehensive” or “All Risks,” that does not mean every type of loss is covered. Understanding what is included, what must be purchased separately, and what is excluded is an important part of choosing home insurance.

1. Endorsements / Optional Coverages

Home insurance typically includes basic coverage, but some risks may require additional protection to be purchased separately.

Common examples include:

• Sewer Backup
• Overland Water
• Earthquake

These coverages are not necessarily included automatically in every policy. The scope of coverage, limits, deductibles, and eligibility requirements can also vary between insurers.

You can think of this like buying a car with different optional features: the standard equipment is not the same as the available upgrades. Similarly, when purchasing home insurance, you should confirm exactly which coverages you have purchased rather than relying on the policy’s name alone.

Reviewing the policy wording is one of the best ways to understand what each coverage actually provides.

2. Exclusions

Policies also specify circumstances in which coverage does not apply. For example, if a kitchen countertop gradually becomes discoloured, scratched, or worn out over several years of normal use, its deteriorating appearance would not generally qualify for compensation on its own.

Home insurance is generally designed to cover accidental losses that meet the policy requirements, rather than routine maintenance, natural ageing, or ordinary wear and tear.

However, whether a loss is covered cannot be determined solely by asking whether it happened suddenly. The cause of the damage, the policy wording, applicable exclusions, and other coverage conditions may all affect the outcome.

The key takeaway is not to assume that every loss is covered simply because your policy is labelled “Comprehensive” or “All Risks.” If you are unsure, check with your insurance broker.

4. Why Can Home Insurance Premiums Increase Even If You Have Never Made a Claim?

Many homeowners and tenants wonder why their renewal premiums have increased despite having no claims for years.

The reason is that home insurance premiums are not determined solely by your personal claims history. They may also be affected by construction and repair costs, property-specific risks, the insurer’s overall claims experience, and broader market conditions.

1. Inflation and Rising Rebuilding Costs

When the costs of building materials, labour, transportation, and other repairs increase, insurers may also have to pay more to repair or rebuild a property after an insured loss.

As a result, even if your property has not changed, your insurer may adjust your coverage limits and premiums to reflect rebuilding costs, its risk assessment, and its underwriting arrangements.

An increase at renewal does not necessarily mean the insurer has simply raised your price without reason. It may also reflect changes in overall repair costs and risk exposure.

However, premium increases vary by insurer, property, and coverage arrangement. You should not assume that premiums will increase by a fixed percentage every year.

If your renewal premium rises significantly, your insurance broker can help review your coverage, compare quotes from other insurers, and determine whether there is room to reduce your premium without sacrificing important protection.

2. Your Own Claims History

After a claim, an insurer may reassess your risk and premium at renewal. The impact depends on the insurer’s underwriting rules, the type and amount of the claim, the number of claims, and whether the policy includes any claims forgiveness provisions.

One common question is: “If the incident wasn’t my fault, why could the claim still affect my premium?”

For example, a water pipe bursts in the unit above yours, causing water damage to your home. Even though you did not cause the incident, you may need to claim under your own home insurance policy. That claim may still be considered as part of the insurer’s future risk assessment.

This is not exactly the same as determining fault in an auto insurance claim. Home insurance renewal assessments do not necessarily focus only on who was responsible for an incident. Insurers may also consider the losses that have occurred at the property and the associated risks.

However, this does not mean every claim will automatically result in a premium increase, nor that insurers will treat every loss caused by someone else in the same way.

3. Other Policyholders’ Claims and Overall Market Risk

One of the principles of insurance is that premiums paid by many policyholders contribute to a shared pool of funds, which insurers use to pay eligible claims.

When insurers face more frequent or more expensive claims overall — such as widespread water damage, severe weather events, or rising construction and repair costs — they may adjust premiums and underwriting conditions for certain regions, property types, or coverage arrangements.

As a result, your renewal premium may increase even if you have never made a claim yourself.

This is another reason why maintaining your property, understanding its risks, and reviewing your coverage regularly can help you manage your home insurance more effectively.

5. Notify Your Insurance Broker When Your Property or Living Situation Changes

Home insurance is not something you can purchase once and forget about. When your property’s use, occupancy, or coverage needs change, notify your insurance broker promptly so they can determine whether your policy needs to be updated.

1. Keep Important Information Up to Date

You should proactively notify your insurance broker if you:

• Undertake major renovations or alterations.
• Start renting out part of your home or change how the property is used.
• Plan to leave the property vacant for an extended period.
• Change your mortgage lender or financial institution.
• Purchase high-value items or experience other significant changes that may affect your insurance needs.

These changes may affect the insurer’s underwriting decision, premium, or coverage conditions. If you do not update your information when required, it could affect how a future claim is handled in certain circumstances. It is therefore best to confirm your policy requirements before making a change.

For condo and townhouse owners, it is also a good idea to provide your insurance broker with updated strata insurance documents periodically, particularly when the building’s deductibles have changed.

If the Strata Corporation significantly increases its water damage or earthquake deductible while your personal condo policy retains its previous coverage limit, you may have a coverage shortfall.

On the other hand, if your current coverage no longer reflects your actual needs, it may also be worth reviewing whether your premium and coverage remain appropriate.

2. Don’t Guess — Ask When You’re Unsure

Insurance policies can appear similar while providing significantly different coverage. Even if you find relevant information online, you should confirm that it is current, applies to British Columbia, and is consistent with your own policy wording.

For example:

• Is your Strata Deductible Coverage limit sufficient for the building’s current deductibles?
• Do different coverage sections have different deductibles?
• Does your policy provide Guaranteed Replacement Cost coverage?
• Are Sewer Backup, Overland Water, and Earthquake coverage included?
• Will your existing policy remain appropriate if you change how the property is used?

These details may seem minor, but they can have a significant impact on your financial obligations when you need to make a claim.

As an insurance broker, I work with different insurers, policy wordings, and underwriting requirements. I can help you compare options, explain differences in coverage, and identify details that deserve particular attention.

Sometimes, the real value lies not simply in finding the lowest premium, but in identifying gaps in your coverage before an incident occurs — rather than discovering that an important risk was not covered when you need insurance the most.

Conclusion: Choosing the Right Coverage Matters More Than Simply Finding the Lowest Premium

The value of home insurance goes beyond receiving compensation when your property is damaged. It is also about protecting yourself from having to bear the full financial burden of an unexpected event.

When choosing a policy, look beyond the premium. Understand the coverage, deductibles, exclusions, and which risks may require additional protection. Condo owners should also pay particular attention to whether their personal insurance coverage is aligned with the deductibles under their Strata insurance policy.

You do not necessarily need to buy the most coverage available, but you should understand exactly what you have purchased — and which risks you may still need to pay for yourself.

If you have questions about your existing home insurance or would like to review whether your coverage is adequate, feel free to contact me. I would be happy to help you assess your property and insurance needs, understand the available options, and make a more informed decision.