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What Homeowners Insurance Covers


Your home is one of, if not the biggest purchases you will make in your lifetime. Aside from being an asset, your home provides a sense of safety, security, and protection to yourself and family. Homeowners insurance, or home insurance, ensures that if an accident occurs then you will be covered and not suffer significant financial loss. 

Not all homeowners insurance is the same and the cost of your premium will differ based on various factors, including insurance provider, policy tier, and more. Home insurance is a necessity and if you have a mortgage then you will most likely need it as it is a requirement for most mortgage providers. 

As a homeowner, understanding what your policy covers is important as it may not include the coverage you require to provide full protection from damage, injury, or financial loss. Typically your homeowners insurance policy will cover the following:

The Interior and Exterior of Your Home

This coverage, usually referred to as Dwelling or Building, protects your home from damage or loss that occurs to the interior or exterior portions of your home that are permanently attached. For instance, your kitchen, roof, or attached deck. 

Items or structures that are not permanently attached are usually covered under the other detached structures and personal property sections of your homeowners policy. Typical coverage includes protection from: 

  • Fire

  • Lightning

  • Smoke

  • Theft 

  • Water Damage

  • Wind 

  • Aircraft or Vehicle Impact 

  • Explosion 

  • Falling Objects

If one of these events occurs your insurer will compensate you to ensure your home can be repaired or rebuilt. The amount of coverage should be the amount it would cost to rebuild your home if it were destroyed. The cost of this portion is determined by how much insurance you have on your home. All of the other coverage limits on your home insurance policy will be a percentage of your Dwelling or Building limit.

Other Detached Structures on Your Property

Usually under home insurance policies other structures are also covered. Referred to as Outbuildings or Detached Private Structures, this coverage will help you repair or replace various structures on your property that got damaged or destroyed. Some common structures include: 

  • Fences 

  • A Detached Garage 

  • Sheds

  • Gazebos

Under a common policy, the coverage limit is usually between 10% and 20% of your Dwelling amount, which is sufficient for most homes in city or suburban areas. However, if you live on a rural property with a large garage, shed, barn, or other structure it is recommended to increase the coverage limit to ensure you are protected. 

Your Personal Property

Contents or belongings that are within your home, but not permanently attached, are also covered under homeowners insurance if they are damaged, destroyed, or stolen in an insured disaster. In your policy this section may be titled as “Unscheduled Personal Property”, “Personal Property” or “Contents”. Common items that are insured under this section include: 

  • Clothing 

  • Furniture

  • Appliances

  • Sporting Equipment

  • Electronics

If some of these items are damaged or stolen while being outside of your home, it is very likely your homeowners policy will provide some coverage for that too. Depending on your insurer, you may have coverage within Canada, North America, or anywhere in the world — which can be very helpful if your luggage was stolen on vacation.

Depending on the insurance provider, your personal property coverage can range from 60% to 80% of your dwelling limit. For instance, if your dwelling limit is $500,000, with 60% personal property coverage, you would be insured for $300,000 under the personal property section in addition to your dwelling limit of $500,000.

It’s important to note that if you possess high-value items, like jewellery, fine art, or collectibles, your home insurance policy may have certain set limits towards those items. The limit on high-value items will vary based on the insurer, but if you possess these items it may be worth adding them in as a Rider or Endorsement to your policy. 

Personal Liability Coverage

This section provides coverage for bodily injury to a person not living in your home or damage your home may have caused to their property. This coverage may include medical, legal, replacement, or repair costs to a person or their property. Most home insurance policies provide personal liability coverage, but the amount and type of coverage will differ by insurer and affect your premiums. Ensure to get coverage that suits your needs and budget. 

Living Accommodation While Your Home Is Being Repaired or Rebuilt 

If your home is damaged to a point where you are not able to occupy it during the repairs or it is being rebuilt, then your homeowners policy will cover the cost for a different living accomodation (short term rental or home), food costs, and other incidental costs that occur while being outside of your home. Your policy may refer to this section as “Additional Living Expenses” or “Loss of Use of Your Dwelling”. Typically the limit for this coverage is 20% to 30% of your dwelling limit. 

Optional Coverages You May Need

Optional coverages, also known as riders, add-ons, or endorsements, allow you to purchase extra coverage for events or items that are not covered in your policy. Some common optional coverages are: 

  • Flood

  • Sewer backup 

  • Scheduled Personal Articles (High-Value Items)

  • Equipment Breakdown

  • Guaranteed Replacement Cost 

  • Earthquake

For full details on these optional coverages, click here.

Importance of Homeowners Insurance

Typically your homeowners insurance will cover your Dwelling, Other Structures, Personal Property, Personal Liability, and Additional Living Expenses. Depending on your situation, lifestyle, insurer, coverage tier, location, and other factors your premiums and coverages may not be suitable for what you need. 

Your home is important to you and ensuring you have a homeowners policy that provides the coverage you need should be too. When buying home insurance make sure to do your research, compare prices and policies, or contact one of our brokers to get a quote on a tailored homeowners insurance policy.