What is the difference between comprehensive and broad home insurance?

If you are in the market for home insurance, then you might have some questions. One of the main questions BrokerLink’s licenced insurance advisors often get asked is, “What is the difference between comprehensive and broad home insurance?” Thus, we seek to answer those questions today and give you some further insight into these two popular types of home insurance coverage.

Broad form home insurance defined

Broad home insurance refers to home insurance that covers your property in the event it is damaged or destroyed. However, the coverage only protects the contents of your home (i.e. your personal property) if it is damaged or destroyed by a peril that is named in your policy. For example, if a fire broke out on your property and destroyed your home and the items inside of it, but fire was only a named peril in your dwelling coverage and not in your contents coverage, the insurance company would pay to rebuild the structure under the dwelling coverage portion of your policy, but it would not pay to replace the personal belongings lost in your home under the contents coverage portion of your policy. Thus, broad home insurance coverage offers more protection against damage to the physical structure of your home than to damage or losses relating to your home’s contents. Most broad home insurance policies typically cover damage to your dwelling that is caused by fire, theft, smoke, lightning, explosions, falling objects, and aircraft or vehicle impact. For more information on the specific structures covered by home insurance, contact BrokerLink.

Comprehensive home insurance defined

Moving onto comprehensive home insurance. Comprehensive home insurance is commonly referred to as all perils insurance. Unlike broad home insurance, comprehensive home insurance covers both your home and your personal belongings in the event of damage or loss. Using the example above, if a fire broke out in your home and damaged the physical structure of your property, along with everything inside, a comprehensive home insurance policy would not only cover the cost of rebuilding the structure but also of replacing the damaged items in your home. Examples of damaged personal belongings that may be covered include clothing, furniture, electronics, appliances, sporting equipment, and more. Comprehensive home insurance may also cover your property even if the physical structure of the home didn’t suffer any damage. For example, with comprehensive coverage, you could be reimbursed for the cost of personal belongings stolen by a burglar.

Named perils home insurance defined

One last type of home insurance worth explaining in the context of comprehensive vs. broad home insurance is named perils home insurance. Named perils home insurance exclusively covers the perils named in your policy. As mentioned above, examples of perils that insurance companies may cover include fire, theft, explosions, falling objects, lightning, smoke, and more. When you opt for this type of home insurance, you get to choose exactly which perils you want to be protected against. However, the flip side is that every peril not named in your policy will not be covered by insurance. For example, if you purchased a named perils home insurance policy with protection against fire and theft, but your home ended up being damaged by lightning, you would not be covered for it.

In addition, with named perils home insurance, you can choose to have specific items, like appliances or electronics covered by specific perils. So for example, if you chose to cover the appliances and electronics in your home against theft, but a burglar broke into your home and stole furniture or clothing in addition to electronics or appliances, your insurance company would only reimburse you for the cost of the stolen appliances and electronics since the other two categories of items were not named in your policy. Generally speaking, named perils home insurance is cheaper than broad or comprehensive home insurance because it does not provide as much protection. The good news is that changing home insurance is possible. Thus, if you decide to start with a named perils policy but end up wanting broader coverage, you can speak with a broker about upgrading to a comprehensive or broad form insurance policy.

One final note on broad home insurance, comprehensive home insurance, and named perils home insurance is that while the definitions above are common, some insurance companies may define each category of home insurance differently. Therefore, it is important to speak with an insurance broker or insurance agent and ask them to explain each type of policy to ensure you understand the terms and conditions of your selected coverage.

What is not covered by broad home insurance or comprehensive home insurance

Home insurance doesn’t cover everything, even if you purchase a comprehensive home insurance policy. The following is a list of scenarios that you are unlikely to be covered for, no matter what type of home insurance policy you choose:

• Damage caused by something within your control, such as a flood caused by frozen pipes because you did not maintain a high enough internal temperature or water damage resulting from a tap you left running.
• Damage caused by animals, whether they be pets or pest infestations.
• Damage caused by natural disasters like floods, avalanches, earthquakes, or landslides. You would need to purchase additional coverage, such as overland water coverage or sewer backup coverage, to be protected against these.
• Damage caused by war or terrorism.
• Damage caused by your own illegal activity.
• General wear and tear or damage due to your own neglect or lack of home maintenance.
• Damage that occurs during the course of home renovations, unless you purchased renovations insurance.
• Damage that occurs while your home is empty or vacant for more than 30 days, unless you purchased vacant home insurance.
• Damage that occurs due to home sharing, unless you added a rental property endorsement to your policy.

Should I choose broad home insurance or comprehensive home insurance?

Typically, if you are looking for the greatest protection, comprehensive coverage is the way to go. While broad home insurance has its advantages, it does not stack up against comprehensive home insurance in terms of coverage. Especially when you consider that the cost of broad home insurance is usually not vastly different from the cost of comprehensive home insurance, the latter makes sense as it offers significantly greater financial protection. As a reminder, comprehensive home insurance will reimburse you for the cost of replacing the contents of your home in the event it is damaged by a named peril whereas broad home insurance coverage will only reimburse you for the cost of repairing your physical property. Therefore, if you choose broad over comprehensive coverage, you need to be confident that you can afford to replace all the personal belongings in your home if they are destroyed. Keep in mind that after a total loss, the cost of replacing such items could be tens of thousands of dollars, if not hundreds of thousands of dollars if you have high-value items.

If you still aren’t sure which type of home insurance is right for you, consider the following. Comprehensive home insurance is particularly well suited to homeowners that have many expensive items inside their homes. This may include vintage wine, antiques, family heirlooms, fine jewellery, musical instruments, or artwork. Given how much such items would cost to replace, having more coverage is better. On the flip side, if you are purchasing a first time buyers home insurance policy, broad home insurance coverage might be enough, especially if you haven’t amassed many valuables yet. However, once you start acquiring expensive belongings, like electronics or collectibles, switching from a broad home insurance policy to a comprehensive home insurance policy might make sense.

Ultimately, the choice between comprehensive and broad home insurance is yours. To help you make this decision, you may need a broker for home insurance. Luckily, BrokerLink has several home insurance specialists who can offer a professional opinion on which type of home insurance policy makes sense for you.

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Other important types of home insurance coverage

So far, we have covered broad and comprehensive home insurance coverage, both of which relate to dwelling and contents coverage. But what about other types of home insurance? Depending on your needs, it might be wise to add the following types of coverage to your home insurance policy:

Personal liability coverage

Liability coverage is a key element of any home insurance policy, whether you opt for broad, comprehensive, named perils coverage. This type of coverage protects you against liability claims, such as bodily injury or property damage claims. Under this portion of your home insurance policy, your insurance company will reimburse you for the cost of legal fees associated with a claim, as well as any applicable repair bills or medical expenses. Liability insurance can also protect you if your home accidentally causes damage to a neighbouring property.

Business coverage

Business coverage is a home insurance endorsement or rider that can be added to your policy. It is designed for policyholders who conduct business out of their homes, whether they run a company out of their homes or work from home regularly. Business coverage is especially important if customers or employees frequently visit your home or if you store expensive inventory or business equipment in your home. Without this type of coverage, your home insurance policy would not cover you for any damage that occurs to your home due to your business activities.

Equipment breakdown coverage

Equipment breakdown coverage is another home insurance rider or endorsement, and it specifically protects the equipment in your home if it is damaged due to a mechanical or electrical failure. Although contents coverage may cover equipment damaged due to perils like fire or theft, it doesn’t cover mechanical breakdowns, so that is what makes equipment breakdown coverage so important. Household equipment that may be covered by equipment breakdown includes dishwashers, laundry machines, refrigerators, ovens, and HVAC units, like furnaces, hot water heaters, and air conditioning units.

Sewer backup coverage

Sewer backup coverage is a type of flood insurance that offers financial protection in the event that your home is damaged due to a sewer backup. If your home has a basement, a sewer backup could lead to extensive water damage. Thus, sewer backup insurance is important.

Overland water coverage

Like sewer backup coverage, overland water coverage can protect your home from water damage, except in this instance, it protects it against water damage caused by rapid snow melt, heavy rainfall, or a nearby lake or river. Overland water coverage is ideal for homes located in low-lying areas, near major bodies of water, or in regions prone to heavy precipitation throughout the year.

How can I save money on broad or comprehensive home insurance?

Whether you purchase broad home insurance or comprehensive home insurance, everyone wants to save on home insurance premiums. Luckily, there are many ways to do so, and BrokerLink can help. The BrokerLink team has put together the following list of expert tips to help you save money on your home insurance policy. They are applicable to any type of home insurance plan, including broad and comprehensive home insurance:

Insurance premiums change from year to year

Therefore, before renewing, make sure you understand your home insurance changes. A broker can help you do this by reviewing your existing policy and your new rates and comparing them to other policies currently available on the market. In other words, a broker can ensure that renewing your policy makes sense, and if it doesn't, they will help you find a new one at a more competitive price.

Bundle insurance policies together

Types of policies that can be bundled include home insurance, auto insurance, and business insurance. You can even bundle two types of the same insurance. Plus, bundling means renewing home and auto insurance on the same date each year, which is simple and convenient.

Enquire about home insurance deductibles

Specifically, ask a broker about how changing your deductible will impact your premium. Many policyholders don’t realize how much a simple deductible change can affect your premium. For instance, raising your home insurance deductible by $500 or $1,000 could significantly lower your premium.

Pay for your home insurance policy annually rather than monthly

Doing so may allow you to save money on transaction fees that come with monthly or quarterly payment plans.

Take some time to learn about the various features of a property that have a big impact on home insurance rates.

For example, swimming pools are huge liabilities, which means homes that have pools often see higher premiums. Conversely, homes located near emergency services or even a fire hydrant can see much lower premiums. If you are planning to move or buy your first home, knowing what features impact home insurance costs can be useful.

Purchase and install a monitored burglar alarm system somewhere on your property

Not only do home security systems make your home safer, but they may allow you to qualify for a property insurance discount.

Install a sewer backup prevention device somewhere on the property

Such a device can detect a sewer backup before it happens, allowing you to take steps that mitigate a major disaster. Installing a sump pump is another option if you want to avoid serious water damage. If you choose to install either type of device, make sure you tell your insurance broker as they can save you money on home insurance.

Don’t hesitate to ask a BrokerLink insurance broker for ways you can save

Brokers have all kinds of first-hand insurance knowledge, and they will likely be able to provide even more tips on ways of cutting costs. For example, they can inform you about other home insurance discounts, like employment-based discounts, education-based discounts, or non-smoker discounts.

Contact BrokerLink to learn more about the differences between comprehensive home insurance and broad home insurance

Get in touch with BrokerLink for more information on the broad home insurance vs. comprehensive home insurance. Our insurance advisors are licenced and knowledgeable. They will happily explain the difference between these two types of coverage, as well as the differences between home insurance vs homeowners insurance. Beyond being a great source of knowledge, a BrokerLink insurance advisor can also help you purchase coverage and let you in on insider knowledge, like the mistakes to avoid when buying home insurance. Contact BrokerLink today to begin your home insurance journey. We can be reached by phone, email, or in person at any BrokerLink branch in Canada.

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Comprehensive and broad home insurance FAQs

If you have any questions, contact one of our local branches.