Do you value your home? You're not alone.

Many Canadian homeowners take every precaution to keep their property safe and sound — getting all risk home insurance is no exception.

Are you still on the fence about which type of insurance you’d like to get? Continue reading to find out if all risk insurance is the correct choice for you.

What is all risk home insurance?

For those that aren't familiar, all risks insurance (also commonly referred to as comprehensive coverage, open peril and all perils insurance) protects homeowners from a wide variety of what the insurance industry refers to as risks and perils.

“Risks and perils” is insurance jargon for unavoidable or unforeseeable accidents, but we'll touch on that again later.

Differences between all risk insurance and named perils insurance

There are two primary types of home insurance that Canadian homeowners can choose from: all risk insurance and named perils insurance. But, what's the difference between the two?

As mentioned above, comprehensive coverage protects homeowners from several different types of risks and perils. On the other hand, named perils insurance covers specific events. A typical example of this is overland water insurance, which solely protects homeowners from flooding.

Because of its specific nature, named perils insurance tends to be more affordable than comprehensive coverage. You should always assess and compare the total prices of potential policies before making a final decision.

When do you need all risk insurance?

Comprehensive coverage is undoubtedly beneficial; however, there are only a few instances where you need to get it.

A typical example is if you have a mortgage lender. Some mortgage lenders will not loan you money unless you agree to obtain comprehensive coverage. 

However, if you've paid off your mortgage, you have the freedom to choose the type of insurance you feel more comfortable with.

What is and isn't covered by all risk insurance?

Despite what the name may lead you to believe, all risk insurance doesn't technically cover all risks and perils.

What is covered by all risk insurance?

Comprehensive insurance covers a long list of common risks and perils.

Although every all risk home insurance policy is different, it's not uncommon for them to cover the following events:

• Frozen pipes
• Fire or smoke damage
• Lightning damage
• Heavy wind damage
• Interior water damage (burst pipe)
• Hail and similar falling objects that can damage the property
• Vandalized property
• Stolen property
• Damage caused by third-party vehicles or machinery
• Winter-related damage (ice, snow, sleet, etc.)

If you're worried about one or more of the perils listed above, then comprehensive coverage may be the correct choice. For a detailed list of all the risks and perils that your insurance provider covers, be sure to reach out to your agent. One peril that might be worth researching more would be pools and how they affect your home insurance.

What isn't covered by all risk insurance?

Unfortunately, it's not practical for insurance carriers to cover every potential risk and peril (your policy would look similar to a novel!).

If you're considering comprehensive coverage, be aware that the following risks are not covered:

• Typical wear and tear
• Nuclear damage, acts of war or acts of terrorism
• Vermin damage (animals, bugs)
• Unexpected damage to the foundation of the building
• Pollution
• Earthquakes
• Overland water damage (flooding caused by heavy rainfall or rising water levels)
• Damage caused by a riot

The majority of these perils are less likely to occur than the events listed previously; thus, they get excluded from most comprehensive insurance plans.

Can you adjust your all risk insurance plan?

In most cases, yes, you can adjust your comprehensive insurance plan. Many Canadian insurance companies are more than happy to provide additional coverage for specific risks and perils.

It's not uncommon for homeowners with comprehensive coverage to add perils like overland water damage or earthquake coverage to their policy. Doing this gives homeowners peace of mind, especially if they live in an area that is prone to specific natural disasters.

Just know that this additional coverage comes at a cost — contact your home insurance provider to learn how much additional coverage will cost you.

How does the location of your home influence your decision?

When determining if comprehensive coverage is the right choice for you, the location of your property should be a significant factor in your final decision.

Before making a final decision, you should assess the area that you live in. Be sure to consider the following factors:

Arid climate

Your local climate is one of the most critical factors that you want to assess.

If you live in a dry, arid climate, your community may be at risk of forest fires, which can lead to fire or smoke damage in the future.

Whatsmore, arid climates are more prone to drought. This can cause the local trees to become sickly or even die. In the event of a windstorm, one of these dying trees may fall over, resulting in damage to your property.

Nearby bodies of water

On the other hand, if you live in a cool, wet climate, you have a different series of issues to assess. If you live by a body of water, like a pond or river, then you may experience flooding from time to time. 

An unexpected flash flood can cause thousands of dollars worth of damage to your home. Not only can it destroy your personal belongings, but failing to deal with water damage swiftly can lead to severe issues like mold or structural issues.

Harsh winters

As Canadians, we know precisely how harsh the winters can be. Few things are more discouraging than a weather forecast that's clogged up with snowstorms.

If you live in a particularly snowy region of the country, you're at risk of experiencing issues such as snowstorms, ice storms and frigid temperatures. These natural events can cause serious damage to your property.

Homeowners that don't have comprehensive coverage have to pay for the damage out of pocket, leaving them in a challenging situation.

Is all risk insurance the right choice for you?

Now that you've familiarized yourself with all risk insurance, you can make an informed decision as to whether it's right for you or not.