How to read your insurance policy
3 minute read Published on Aug 7, 2026 by BrokerLink Communications
Most people file their home or tenants’ insurance policy away for safekeeping without actually reading it. But with insurance costs on the rise and extreme weather losses hitting record-breaking $8.5 billion in 2024 across Canada, reviewing your insurance policy documents is more important than ever. Your life can change drastically in a year, which is why this 10-minute checklist is worth reviewing when you’re up for an insurance renewal.
1. Who’s insured and how insurance companies reach you
Start with the basic information. Confirm who is listed as the named insured (policyholder), your address, email and phone number. Minor errors can delay your claims and renewal notices. Homeowners should also verify the listed mortgage lender or lien holder on their policy documents. If you’ve paid your mortgage off, updating your policy may help you reduce your insurance premium amount.
2. Dwelling limit and rebuild costs (coverage a)
Your home’s market value is not the same as its rebuild costs. Your insurance company will cover what it costs to rebuild it after a loss, including materials, permits and labour, not what your home would sell for. According to Statistics Canada, residential construction costs rose 3.7% year-over-year in the last quarter of 2024. With these costs continuing to rise, reviewing the dwelling portion of your policy, including your coverage limits, is essential to ensuring you have enough coverage and whether inflation guard protection is included. Ask your insurance provider for a rebuild review if you’ve conducted any renovations to your property, like a new basement, installed an EV charger, replaced your roof or added solar panels.
3. Detached private structures (coverage b)
The dwelling portion of your insurance policy sets aside around 10% of your coverage limits for detached structures on your property, such as sheds, garages, workshops or gazebos. If you’ve recently added a large structure or hot tub or if a building is being used for a home business or short-term rental, you may require higher limits or an extra endorsement to avoid gaps in coverage.
4. Contents (coverage c) and special limits
Replacing your personal property costs more than you may expect. Policies may replace your items based on an actual cash value (takes into account depreciation) or replacement cost value (doesn’t factor in depreciation), which is something you need to double-check. Most policies have special limits for personal belongings like jewellery, artwork, instruments, tools and other high-value items, which may need separate coverage limits with appraisals.
5. Loss of use/additional living expenses (coverage d)
If a covered loss occurs and your home becomes uninhabitable, additional living expenses can help with temporary accommodations and meals.
Coverage is usually limited to a percentage of your dwelling coverage limit and only applies to a reasonable repair period. It does not apply to losses caused by uninsured exclusions like gradual water seepage, wear and tear or flooding (unless you’ve added an endorsement).
6. Personal liability (coverage e) and umbrella insurance
If you unintentionally injure somebody else or damage their property, personal liability insurance will cover you. This includes medical and legal costs associated with the incident (up to your coverage limit, which ranges from $1 to $2 million). Liability excludes intentional acts, business activities and certain motorized vehicles unless endorsements are added.
7. Deductibles: know how many you have
Many policies have multiple deductibles and higher or percentage-based deductibles for water, wind or hail damage. While increasing your deductible can lower your insurance premiums, it will increase your out-of-pocket expenses.
8. Water, service line and systems: common endorsements to review
Water damage is one of the most common and costly home insurance claims in Canada. Some insurance companies report that basement water damage repair costs have risen about 20% since 2019, making add-on endorsements all the more valuable. Key endorsements to review include:
Sewer backup: Sewer water that backs up into your home through your drains.
Overland flood: Flood damage from rivers, lakes or surface runoff.
Service line coverage: Repairing water, sewer or power lines.
Equipment breakdown: Protects HVAC, appliances and EV chargers.
9. Savings and risk prevention discounts
Premiums may be reduced when you notify your insurance company of updates like roofs, plumbing, HVAC and electrical systems. Similarly, installing leak sensors, automatic water shut-off valves, backwater valves and sump pumps with a battery backup can also reduce your risk exposure, leading to insurance policy savings.
10. Vacancy, unoccupied homes and renovations - tell your insurance agent or broker
Insurance policies will distinguish between unoccupied (temporarily away) and vacant homes. Vacant properties often have coverage restricted unless a vacancy permit is added to your insurance policy. Major renovations or structural changes to your home may also require a renovation endorsement. Additionally, when living with roommates, pets or in properties with wood stoves or high-value items, contact your agent or broker to declare this information.
Contact BrokerLink today
Performing a quick annual review of your insurance policy can help you avoid coverage gaps, unlock savings and ensure your plan reflects your current risk exposure. If something is unclear or outdated, contact BrokerLink for assistance.