A homeowners insurance policy will protect you against certain losses and damage to your new home and is generally required by lenders prior to closing.
Coverage exclusions:
Most insurance policies do not cover flood or earthquake damage as a standard item. You may need to buy these types of coverage separately.
Dollar limitations on claims:
Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
Replacement cost:
If your home is destroyed, you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll still receive only $150,000.
Actual cash value:
If you choose not to replace your home when it’s destroyed, you’ll receive replacement cost minus the depreciation. This is what’s referred to as actual cash value.
Your liability:
Generally, your homeowner’s insurance covers your liability for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that amount is sufficient, especially if you have significant assets.
When buying a new home in Ottawa, securing a homeowners insurance policy is a crucial step in the process. As an experienced Ottawa real estate team, We emphasize that this insurance protects you against specific losses and damages to your new property, and it’s generally required by lenders before closing on your home. Here’s what you need to know about homeowners insurance, particularly when navigating the Ottawa real estate market.
Coverage Exclusions in Ottawa Home Insurance
Most standard homeowners insurance policies in Ottawa do not automatically cover flood or earthquake damage. If you're buying a home in areas prone to these risks, consider purchasing additional coverage. As you navigate the home buying process with an Ottawa realtor, understanding these exclusions can help you make informed decisions.
Dollar Limitations on Insurance Claims
Even with comprehensive coverage, there are often limits on how much your insurer will pay out. For instance, many policies cap the amount reimbursed for stolen jewelry unless those items are insured separately. Ottawa home buyers should carefully review these limits to ensure adequate protection.
Replacement Cost vs. Actual Cash Value
Understanding the difference between replacement cost and actual cash value is vital in the home buying and home selling process in Ottawa. Replacement cost covers the expenses to rebuild your home, but only up to your coverage limit. If your Ottawa home is insured for $150,000 but costs $180,000 to rebuild, you’ll receive only $150,000. On the other hand, actual cash value accounts for depreciation, meaning you'll get less if you choose not to replace your home.
Liability Coverage in Your Ottawa Home Insurance
Your homeowners insurance typically covers liability for accidents that happen on your Ottawa property. This includes medical expenses, court costs, and any court-awarded damages. However, there is usually a maximum limit to this coverage. Ottawa real estate buyers and sellers should ensure their liability coverage is sufficient, especially if they have substantial assets.
As you work with us, your trusted Ottawa realtor, understanding these aspects of homeowners insurance will help you navigate the Ottawa real estate market with confidence. Whether you're buying or selling a home in Ottawa, having the right insurance coverage is essential for protecting your investment.
(SOURCE: RUBY XUE REAL ESTATE TEAM)
