If you own or rent a home, then you likely have home insurance. Home insurance comes in many forms as there are several additional types of coverage that policyholders can purchase. Beyond making the decision to purchase additional insurance, you may also be required to add an additional interest to your policy. We explain what an additional interest is and how the process works below.
Home insurance coverage
First, let’s dive into what home insurance coverage looks like so you can better understand how and why you may need to add an additional interest to it. Home insurance policies vary between policyholders. This is because policyholders have different preferences and budgets when it comes to their insurance coverage. While policyholders have these different characteristics, homes also vary, therefore premiums will vary. Plus, in the case of policyholders who bought their homes with a mortgage, their lender may require additional insurance coverage, which will dictate what their policies look like. Below, we’ve compiled a list of some of the most common types of home insurance coverage, ranging from basic coverage like dwelling or personal liability to extra coverage like equipment breakdown, overland water, and sewer backup:
Dwelling coverage is a key component of almost any type of home insurance policy because it protects something that all policyholders want to be protected: the physical structure of their home. No other type of coverage will protect your physical property from damage. Specifically, under the dwelling coverage portion of your property insurance policy, you can be compensated if your home is damaged by an insured peril. Insured perils are those which are named in your policy and may include the following:
- Car / aircraft impact
- Falling objects
Please note that dwelling coverage usually does not cover the land your property sits on or any detached structures on your property. It is likely to cover attached structures, though, such as attached garages.
Contents coverage is another core element of home insurance. After all, policyholders don’t just need the outside of their homes protected, they need the inside of their homes protected too. That’s what content(s) coverage offers. This type of home insurance coverage is designed to protect policyholders against losses relating to their personal belongings. If a homeowner suffered a loss relating to the items in their home, such as if expensive jewellery or electronics were stolen, an insurer may reimburse you. The loss or damage must have occurred as a result of an insured peril listed in your policy. Insured perils for contents coverage may include theft, fire, smoke, and more. Note that the amount of contents coverage you purchase should correlate to the estimated value of your personal belongings. If you have especially high-value items in your home, like musical instruments, antiques, vintage wine, or artwork, you should speak with an insurance broker about purchasing additional coverage for protection, like high-value home insurance or insurance floaters or riders for specific items.
Personal liability coverage
Personal liability coverage is an important part of any property insurance policy because it protects policyholders against third party lawsuits. More specifically, with this type of coverage, you will be safeguarded against third party claims alleging property damage or bodily injury relating to your home. A common example of when personal liability coverage comes into play is if a guest visited your home and slipped and fell on your driveway, injuring themselves. Since the incident occurred on your property, you could be held liable if they sued you. Lawsuits are expensive, between the defence fees and settlement costs, not to mention any applicable medical expenses or repair bills. Therefore, adding personal liability coverage to your home insurance policy is of the utmost importance.
Operating a home business isn’t without risk, but add to that the risk of damage occurring as a result of your home business and you not being covered? It’s simply not worth it. That is why, if you run a business out of your home or work from home regularly, adding a business endorsement to your home insurance policy is a smart idea. This will extend coverage to your stock or inventory and also offer additional liability for business related incidents or accidents. Otherwise, you may not be covered if something went wrong. Therefore, home business insurance is one example of when paying for additional coverage can be worth it.
Equipment breakdown coverage
Equipment breakdown insurance is one of the most common additional coverages in the world of home insurance. This type of coverage aims to offer financial protection to policyholders in the event that a piece of covered equipment in their home, like a refrigerator, washing machine, or dishwasher, stops working. Conditions vary but typically, to be covered, the piece of equipment must have suffered a mechanical or electrical failure that renders it inoperable. If you qualify for this coverage, your insurer would reimburse you for the cost of repairing or replacing the broken piece of equipment, less your deductible.
Sewer backup coverage
Another type of additional coverage for home insurance policies is sewer backup coverage. Sewer backups are a worst-case scenario for many homeowners, and when you learn how much water damage they cause, you will see why. Luckily, sewer backup coverage exists to make this worst-case scenario a little bit easier to handle. By adding this coverage to your property insurance plan, your insurance company would help pay for the cost of repairing your home following a sewer backup incident.
Overland water coverage
Overland water coverage is a type of homeowners insurance coverage that safeguards your home against flooding. For overland water coverage to be claimed, the flooding must have been caused by proximity to a nearby lake/river, overflow, heavy rain, or rapid snow melt. Ultimately, if your home is located near a major body of water or stated in an area prone to heavy rainfall or snow, you should consider additional coverage in the form of overland water coverage.
Additional interest home insurance
Now that you understand the basics of home insurance coverage, let’s begin our discussion of additional interest home insurance. First, additional interest is a general term that refers to an interested party or a party of interest in an insured item, such as a house. This person is a third party, either a person or an organization, that has a vested interest in the insured item, and therefore wants to know that the item is covered but doesn’t need to be covered themselves. For example, in the case of home insurance, a mortgage lender might require themselves to be added as an additional interest to a borrower’s property insurance policy. Once added as an additional interest, they will be notified of any changes made to the policy, such as if you were to stop making payments.
Additional interest vs. additional insured
Additional interest and additional insured are two terms that frequently get lumped together. However, there is a key difference between them. While an additional interest is an interested third party that is not actually covered by your policy, an additional insured is a third party who is jointly covered by your policy and has a financial stake in the insured item. Additional insureds are usually added as an endorsement and it may cost money to add them to your home insurance policy. They also have more power in relation to the policy than an additional interest. Unlike an additional interest, who will simply be notified if changes are made, additional insureds have the right to make claims under the policy. Please note that additional insured endorsements or most commonly added to commercial property policies or commercial auto insurance policies rather than the average homeowners insurance policy.
Additional interest on homeowners insurance
In the realm of home insurance, there are several reasons that a policyholder may want or be required to add an additional interest to their policies. The first and most common reason is if you bought your home with a mortgage. If you have a mortgage loan, then your mortgage lender could request that they be added as an additional interest on your homeowners insurance policy. Mortgage lenders almost always require policyholders to purchase home insurance as part of the mortgage contract, and many go a step further by stipulating that they must be added as an additional interest on the policy. Why? Lenders have a financial stake in the properties they provide loans for. In fact, the lender technically owns the home until the mortgage loan has been paid off in full. Therefore, they want the reassurance that, in the event of a loss, they aren’t left unpaid.
Additional insured on homeowners insurance
Additional insured on homeowners insurance may be worthwhile in certain scenarios. For instance, if you own a home with multiple people, such as a vacation property or shared family home, it is generally wise for each owner to be listed as an additional insured on the policy. Otherwise, if a loss occurred, the owner who took out the policy would be covered but no one else would be, and yet as owners, they could be held liable. This would mean having to pay for the costs of the lawsuit out of pocket. As an example, if several siblings shared ownership of a family cabin and a guest was visiting and injured themselves, they would be within their rights to sue every family member who has ownership of the cabin. But if only one family member is listed on the homeowners insurance policy, the rest of the members wouldn’t be covered, leaving them to pay for medical expenses or legal costs on their own. However, if everyone who has an ownership stake in the property was added as additional insureds, they would be covered.
Another example of when adding an additional insured to your home insurance policy might be wise is if you buy a home with a partner that you are not legally married to. In this scenario, one partner would buy the homeowners insurance policy and would then add the other part as an additional insured to that policy.
Additional interest home insurance cost
The good news is that adding an additional interest, such as a mortgage lender, to your home insurance policy, is typically free of charge. To be sure, we recommend contacting a BrokerLink insurance advisor or reaching out to your insurance provider directly.
It is also worth noting that while adding an additional interest to your policy may be complimentary, adding an additional insured usually is not. That said, adding an additional insured endorsement to your policy typically isn’t expensive. Fees vary between insurance companies and may also depend on your coverage levels but they are often nominal. When adding an additional insured to your policy, there are a few factors to consider that relate to your premium. First, since adding another person to your home insurance policy who can file a claim increases your risk of reaching your coverage limit, you may need to increase your limits. Further, an additional insured could impact your insurance rates down the line, especially if they choose to exercise their right to file claims on your policy. If, between the insured party and the additional insureds, you end up filing claims more frequently, this could lead to a higher premium come renewal time. To learn more about the potential consequences of adding an additional insured to your home insurance policy, including how doing so can impact your rates, contact BrokerLink. A BrokerLink home insurance specialist can also offer tips to lower your premium if necessary.
The importance of additional interest home insurance
Ultimately, when purchasing any insurance policy but especially a home insurance policy, it is crucial that you understand the benefits of additional interests and how they differ from additional insureds. Anytime you make a major purchase, like buying a home, you will likely need to add an additional interest - most commonly, your mortgage lender. Additionally, if you make this major purchase with a partner, friend, or another family member, it might be wise to add them as an additional insured to ensure they benefit from the same protection as you do.
How to add an additional interest on your home insurance policy
Are you interested in adding an additional insured or additional interest to your home insurance policy? You’re in luck because BrokerLink makes it as easy as can be. BrokerLink is a full-service insurance brokerage that specializes in property insurance. We know everything there is about home insurance and can help with tasks like finding basic coverage or updating your policy to the more complex process of adding an additional insured or additional interest to an existing property insurance plan. Keep reading for a step-by-step guide to adding an additional interest to your homeowners insurance policy with BrokerLink:
1. Speak with a licenced home insurance broker at BrokerLink
Step one is to reach out to BrokerLink and speak directly with one of our home insurance specialists. Getting in touch with us couldn’t be easier. We can be reached online, over the phone, or in person. We have over 200 locations across Canada, which means you should have no trouble locating a branch near you. When you contact us, you will be assigned a dedicated BrokerLink insurance advisor to guide you through the process of adding an additional insured to your home insurance plan.
2. Provide information on the person or organization you wish to be added as an additional interest
The next step involves you providing BrokerLink with some basic information on the person or organization you want to add to your home insurance policy as an additional interest. A BrokerLink advisor will likely ask for the full legal name of the person or entity, their contact information, such as their mailing address, and any specific requests or requirements made by them.
3. An additional interest is added to your homeowners insurance policy
After providing the necessary information, the final step to adding an additional interest to your policy involves BrokerLink contacting your insurance provider and requesting the additional interest. Adding an additional interest to an insurance policy usually takes no more than one to two business days. Note that if you are adding an additional insured rather than an additional interest to your insurance policy, the information needed will probably be similar, except you may have to pay a fee. In addition, your insurance company will likely provide you with a certificate as proof of the endorsement.
Contact BrokerLink for more information on additional interest home insurance
Want to learn more about additional interest home insurance? Get in touch with BrokerLink and ask for additional interest coverage today! We have an entire team of dedicated property insurance advisors eager to help you in any way they can. So if you have questions about additional interests or additional insureds, you can come to us. A licenced BrokerLink insurance advisor can explain the advantages of adding an additional interest or additional insured to your property, and can even review any relevant contracts to let you know whether you are required to add an additional interest to your homeowners insurance policy. Of course, we can also walk you through the entire process of doing so. Beyond these services, BrokerLink is pleased to help customers across Canada find the best possible home insurance coverage for their needs. We can make coverage recommendations and give advice on how you can save money on property insurance. Get in touch with BrokerLink today by phone, email, or in person.
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FAQs on additional interest home insurance
Can an additional interest file a claim on my home insurance policy?
No, an additional interest on a home insurance policy cannot file a claim. They are not covered by the policy in any way and therefore do not have the same rights as the policyholders, such as filing a claim. In fact, they do not have the power to make any changes to the home insurance policy. Rather, they will simply be notified if any changes or cancellations are made by the policyholder.
Can an additional insured file a claim on my home insurance policy?
Yes, an additional insured on your home insurance policy can file a claim if they are subject to a third party lawsuit. While additional insureds are covered under your home insurance policy, it is important that all additional insureds understand exactly how they are covered as not all covered may apply. Read the terms and conditions of the policy carefully to learn about any relevant exclusions and limitations for additional insured.
How much does it cost to add an additional interest to a homeowners insurance policy?
Adding an additional interest to a homeowners insurance policy is typically free of charge. However, we recommend confirming the cost with your insurance provider directly. If there are no additional interests on your home, there may be a discount as you are considered to be financially stable and have the means to maintain your home.
How much does it cost to add an additional insured to a homeowners insurance policy?
Unlike additional interest, you might be charged for adding an additional insured to your homeowners insurance policy. The exact cost varies but may be roughly $50. Depending on the company, this fee could be per additional insured or a one-time flat fee for the privilege of adding as many additional insureds as you want. Keep in mind that this fee must be paid by the policyholder and is not the responsibility of the additional insured.
If you have any questions, contact one of our local branches.