Comprehensive insurance, as the name implies, is insurance that covers your home and its contents against all risks that have not been specifically excluded from the policy. Some examples of specifically excluded risks are terrorism, war, wear and tear, to name a few.
Because these risks are minimal in most parts of Canada, homeowners find these exclusions have little impact on when they make a claim.
This makes comprehensive insurance one of the best types of insurance for an average Canadian homeowner. Still, before you sign a comprehensive insurance policy, ask your insurance broker to explain the exclusions.
There are a few things to watch out for with comprehensive coverage. The policy does have limits on certain types of claims, so if you have expensive jewelry, a pricey coin collection or other valuable objects, talk to your insurance broker about purchasing supplementary coverage.
One big advantage with Comprehensive insurance is mysterious disappearance on the policy. For example, if you take your wedding rings off to wash your hands at a public restroom and forgot to put them back on and when you went back to get them, and they were gone. Your policy will cover the rings if they were under the policy limit or were scheduled on the policy for the price of the rings.
If you had a dinner party and someone spilt red wine on your carpet this would be covered.
Broad form insurance can be described as comprehensive insurance for your home so covering everything that may happen to your home if it’s not listed as an exclusion on the policy. For example, terrorism, war, wear and tear to name a few.
With broad form insurance, your property is covered against all risks, except those specifically excluded (terrorism, war, wear and tear). However, unlike comprehensive insurance, the contents of your property are not covered under the policy unless a risk is specifically named. You will need to look at your policy and see what the insurance will cover. If it is not listed, then your insurance will not cover the loss
Broad form insurance may be suitable if you own a home, but have little of value in the home. If you only want to insure your contents against a burst pipe, you could name that peril in a broad form insurance policy to ensure coverage. As with named perils insurance though, your claim will be denied if your insurance company determines the damage came from a flood or fire (not covered), instead of a burst pipe (covered).
The dinner party with the spilt wine would not be covered under this policy, you would need to replace the carpet on your own.
As a middle ground between named perils insurance and comprehensive insurance, the cost of broad form insurance generally falls in between the two.
Purchasing home insurance is complicated. By knowing your options and talking with your broker about the pros and cons of each policy, you can rest assured that your home insurance coverage is right for you.
In the same situation where you lost your wedding rings. This may not be covered on your policy if it was not scheduled.
The big thing about broad form is the policy might cover a specific loss. You would need to take the time to read each company broad form to see what they cover and what they do not cover.
Peace of Mind
Finally, the difference between Comprehensive coverage and broad coverage is peace of mind. You know you are covered for many losses that may happen to your biggest investment. Where broad form you have limited perils that you are covered for and you need to make sure you understand your policy.
If your neighbour has a broad form policy for ABC insurance and you have a policy for XYZ insurance. You both may be covered for different losses.
The financial impact of major losses not being covered for your home is not worth the difference in premium you may save.
There are other ways to save premium on a Comprehensive policy. You could increase your deductible. You can save money when you bundle your home and auto together. As well, adding a security system can help you save money on your home insurance as well.