A house is not a home, except in home insurance policies.

Most people think of home insurance as providing coverage for the risk of fire. Such policies do indeed cover the risk of loss by fire, but most cover much more. You may be surprised by what coverage you have.

Home insurance is not required by law, but mortgage lenders require you to have it and to name the lender as loss payee at least to the extent of the loan. (The "mortgage clause" is usually printed on the back of the Declarations Page.)

The Declarations Page

Every policy has a Declarations Page that, literally, declares what the policy covers, how much it will pay for a loss, what the deductible (if any) is, and what the premium is for each portion of the coverage. To understand what really is covered you must look beyond the Declarations Page and read the body of the policy. Many insurers have worked very hard to make home insurance policies more easily understood--by using plain language and by laying out the various descriptions of coverage on colour-coded pages. It is worth your time to read your policy.

The Coverage

Home insurance policies provide two main types of coverage. Property insurance insures against:

* Loss to buildings (for example, house and garage),

* Loss of personal property (contents of the house and garage, but not vehicles),

* Additional living expenses (to cover the cost of living elsewhere while your house is repaired or rebuilt), and

* Scheduled personal property such as jewellery, stamps and coins.(1) This type of insurance is called "first party insurance" because it is insurance that covers you, the policyholder. This covers you for, among other things, damage to your house caused by fire and lightning, impact by aircraft or land vehicle, riots, windstorms, hail, water, burglary and theft, vandalism and the weight of ice and snow!

The coverage for loss of personal property may include property of a student who is an insured "principally dependent" on the policyholder while the student is residing away from the home in connection with full-time studies. It may also include your personal property while temporarily away from the insured house or uninsured personal property of others while it is in the your possession. So, if you borrow your friend's plasma TV for the weekend and it falls off its stand into your hot tub, you may have some coverage?

The second main coverage area is liability insurance. This type of insurance is called "third party insurance" because it insures you against claims made by others. This covers an insured (3) for claims made for bodily injury (to others) (4) or damage to property of others caused by an insured. So, if a delivery person trips on your garden hose and is injured, you may have some coverage. Or, if you are at the beach and accidentally trip a passerby who falls onto your cooler and breaks her arm, resulting in pain, suffering, and time off work, you may have some coverage.

There are some interesting additional coverages commonly available. They include Fire Legal Liability that covers the insured for loss caused by fire (and some other events) to premises or contents in those premises "used by or rented to, or in the care, custody or control of the insured." Premises are defined to include the house insured in the policy (including the grounds, driveways, garages and other buildings), cemetery plots or burial vaults, and premises in which an insured is temporarily residing, if not owned by an insured. So, if you accidentally burn down the lake cottage your friend allowed you to use for the weekend, you may have some coverage.

Additional coverage can include "Voluntary Medical Payments" that will pay for medical, dental, hospital, nursing, ambulance and funeral expenses resulting from accidental bodily injury caused to a person as a result of maintenance or use of the premises or the personal acts of an insured. So, if the backyard Frisbee game extracts your friend's front teeth, you may have some coverage for the dental bill.

A third type of additional coverage is "Voluntary Payment for Damage to Property". This pays for loss arising from direct physical damage to or destruction of property caused by an insured and resulting from maintenance or use of the premises or by the personal acts of an insured. So, if after dinner at a friend's you stay behind to help with the clean up and drop his/ her set of 10 Limoges dinner plates on the tile floor, you may have coverage for their replacement.

The Exclusions

Not surprisingly, there are many specific exclusions that eliminate or restrict coverage or that specifically limit the amount recoverable. For example, under the property insurance coverage, the following is not covered: property of roomers and boarders, property in storage, motorized vehicles, property pertaining to a business, profession or occupation, property illegally acquired or kept, and computer data.

Your Responsibilities

You, as an insured, have certain responsibilities after there has been a loss. Those include reporting the loss to the insurer (in writing) and taking reasonable steps to prevent further loss.

If you are not able to sort out your claim with your insurer, note that you must start a legal action against the insurer within one year of the loss. Otherwise, you are out of luck.

Your biggest responsibility is to look at your own policy to see what is covered, and for how much, and what is not covered. This article is just a rough guide about what you might expect to find.

Jim McCartney, LL.B., C.Med., C.Arb., is a Calgary arbitrator and mediator.

Notes

(1.) Scheduled property is described by the homeowner in a schedule attached to the policy. If you don't "schedule" such property it may be subject to quite low coverage amounts.

(2.) In this situation, if your friend's insurance policy covered the TV, his insurer would pay to replace it, but then claim against you for that cost. The liability portion of your home insurance policy would then come into play because the claim then becomes a third party claim.

(3.) Who is an insured? Generally, policies cover the person in whose name the insurance policy is issued and, if residing in his or her household, his wife or her husband, a same-sex partner, the relatives of either and any person under 21 in the care of the insured.

(4.) Bodily Injury is usually extended to include "personal injury" arising out of, among other things, unintended wrongful arrest, detention, imprisonment or prosecution, defamation, wrongful eviction or invasion of the right of private occupancy.