Top Mistakes to Avoid When Buying Home Insurance

Buying home insurance is a crucial step in protecting what may be your largest investment: your home. While many homeowners are aware of the need for coverage, it’s easy to make missteps during the buying process that could leave you underinsured or unprotected.

Please note: This blog provides a general overview of updating your home insurance policy. It is not all-encompassing and should not be taken as specific advice. Be sure to discuss your unique circumstances with a licenced insurance broker to receive guidance tailored to your situation.

Mistake 1: Underinsuring Your Home or Belongings

One of the most common mistakes homeowners make is underestimating the amount of coverage they need. Many people base their coverage on the market value of their home, rather than the replacement cost. Market value includes land and fluctuates with real estate trends, whereas replacement cost refers to what it would take to rebuild your home and replace your belongings.

Underinsurance can leave you footing a huge portion of the bill if your home is damaged or destroyed. Make sure to:

• Request a professional evaluation for your home’s replacement cost
• Create a detailed inventory of personal belongings
• Review your policy limits and ensure they reflect current values

Mistake 2: Forgetting to Update Your Policy After Renovations or Major Purchases

Whenever you complete a significant renovation, such as a kitchen remodel or finished basement, or purchase high-value items like new appliances, electronics, or artwork, your home insurance policy should be updated. These changes can significantly increase the value of your home or contents.

Failure to report updates might mean they aren’t covered in the event of a claim. Keep your policy current by:

• Notifying your broker about renovations before or immediately after completion
• Asking if specific upgrades qualify for additional discounts (e.g., a new roof or alarm system)
• Adding endorsements for high-value items like jewelry or collectibles

Mistake 3: Not Reading the Fine Print on Exclusions and Deductibles

Your policy might look comprehensive at a glance, but exclusions and deductibles can limit what’s actually covered. Many homeowners don’t take the time to review these details, leading to unpleasant surprises when filing a claim.

Key areas to double-check:

• Flood and sewer backup coverage: Often not included by default
• Earthquake coverage: May require a separate rider depending on your region
• Deductibles: Know how much you'll pay out-of-pocket before insurance kicks in

Mistake 4: Choosing the Cheapest Policy Over Proper Coverage

It can be tempting to go with the lowest premium, especially when money is tight. But cheaper isn’t always better when it comes to home insurance. A bare-bones policy might overlook crucial protections, such as liability coverage, water damage coverage, or replacement cost options.

Instead of shopping by price alone:

• Compare policies based on coverage quality, not just cost
• Look for comprehensive plans with customizable options
• Ask your broker which discounts you qualify for (e.g., bundling, loyalty, alarm systems)

Mistake 5: Assuming Everything Is Covered

Many homeowners mistakenly believe their standard home insurance policy covers everything. In reality, some events and items require special endorsements. For example:

• Jewelry, fine art, and collectibles often have limits unless scheduled separately
• Home-based businesses may need commercial add-ons
• Secondary structures like detached garages or sheds may require additional coverage

Mistake 6: Ignoring Liability Coverage

Liability coverage is one of the most critical components of your home insurance. It protects you if someone is injured on your property or if you cause damage to someone else’s property. Despite its importance, many people opt for only the minimum required.

Here’s why you should consider higher limits:

• Legal fees and medical expenses can be extremely costly
• Liability coverage can protect you from lawsuits arising from incidents like dog bites, falls, or property damage

Speak with your broker about increasing your liability coverage to $1 million or even $2 million for added peace of mind.

Mistake 7: Not Asking Questions

Insurance policies are filled with complex terms, and many homeowners hesitate to ask questions. But the more you understand your coverage, the better protected you’ll be.

Questions to ask your insurance broker:

• What exactly does my policy cover?
• Are there any exclusions I should be aware of?
• What add-ons or riders do I need for full protection?
• How are claims handled, and how long does it take?

At BIG Insurance, we specialize in helping Canadian homeowners find the right coverage without the guesswork. Our experienced brokers will:

• Evaluate your home’s replacement cost
• Help you create an accurate inventory of personal property
• Recommend appropriate endorsements for high-value items or home-based businesses
• Explain all coverage options clearly and simply

We believe home insurance should give you peace of mind—not headaches. By working with a BIG broker, you’ll get tailored coverage and ongoing support, all at competitive rates.

Home insurance is more than a checkbox—it’s your financial safety net. By avoiding these common mistakes, you can make sure your policy works for you when you need it most.

Need help reviewing or updating your home insurance policy? Contact a BIG Insurance broker today for personalized advice and a no-obligation quote tailored to your needs.