A home insurance policy generally protects both your house and its contents in the event of loss. But it’s important to remember that there is no such thing as a 'one size fits all' policy. Here are the three most common types of policies.
Standard Policy - Named perils coverage on contents
Sometimes called designated risks coverage, named-perils coverage will insure your home's contents against a list of the most common perils covered under your insurance. Named-Perils coverage will typically include risks such as fire, theft, and water damage.
Broad Form Policy - Named perils on contents, all risk on building
An all risks and named perils policy offers a mid-range compromise: a combination of All Risks coverage for your home, and Named Perils coverage for the contents.
Comprehensive Policy - All risk on contents
All-risk contents coverage insures your belongings inside your home for the most common types of losses. When you have All Risk coverage, your contents are insured for everything, unless it's specifically excluded from your policy.
Liability is a legal responsibility. Liability Insurance protects you from having to pay damages to people, if you've been found responsible for unintentionally injuring them or damaging their property. Here are some examples:
- If someone injures himself/herself on the property you occupy, you may be responsible for damages. For example, if someone slips on your front steps, breaks his/her leg, and can't go to work, you could be held responsible for the person's lost wages.
- If you or a member of your family damages another person's property, you may be held liable. So if your son accidentally throws a baseball through the neighbour's window, and breaks an expensive antique, you may have to pay.
If you are forced to leave your home because of a loss, this coverage pays for your reasonable and necessary expenses to temporarily live away from home. Hotel and food costs are the type of expenses that would be covered under such circumstances. There is usually a limit on this kind of coverage.