Insuring Your Acreage: What You Need To Know

If you own a house and a plot of land, you may be wondering if you need to insure the land in addition to your home. Vacant land insurance is a type of liability coverage that protects landowners financially if someone is hurt on their property or sues them for injuries. While it is not a legal requirement, it can help landowners avoid high medical costs and lawsuits. For example, if someone falls into an unmarked hole on your land and breaks their ankle, you could be held responsible for their medical bills.

Additionally, if you are building an addition to your home, such as a garage or shed, you will need to review your insurance policy to ensure that your home and the addition project are adequately protected. Standard home insurance covers detached structures such as pools, gazebos, and fences, but there may be exclusions for certain structures like above-ground pools and farming activities.

What is vacant land insurance?

Vacant land insurance is a form of property coverage that covers claims of bodily injury or personal property damage if a third party has an accident on your property and you're found to be at fault. It also covers legal fees in the event of a lawsuit.

While it might seem unnecessary to insure vacant land, it's important to remember that when you own vacant land, you're responsible for what happens on it. For example, if lightning strikes dry grass on your land and starts a fire that spreads to a neighbouring property, you could be held liable. Similarly, if someone gets injured on your land, even without your permission, you could be held responsible. Vacant land insurance covers your liability for what happens on your property.

Vacant land insurance is typically a liability-only policy, meaning it won't cover any damage that occurs to your land. However, it will protect you financially if others are injured on your property. This type of insurance is especially important if you plan to allow people to use your land for activities such as hunting or hiking, as you could be held liable for any injuries that occur.

The cost of vacant land insurance will depend on factors such as the size, location, and use of the land. However, it is generally relatively inexpensive, with policies starting at around $27 per month for a $1,000,000/$2,000,000 general liability vacant land policy.

If you already have a homeowner's insurance policy, your vacant land may already be covered under the liability section of your policy. However, it's important to confirm with your insurance agent, as some policies may not cover vacant land or certain activities such as farming. In that case, you may need to extend your homeowner's policy or purchase a separate vacant land insurance policy.

What does home insurance cover?

Home insurance provides financial protection against damage to your house, home loss due to natural disasters, theft, and other accidents. There are four standard areas covered by a regular homeowner's policy: the physical structure of your home, your personal belongings inside the home, liability protection, and coverage for additional living expenses.

Home insurance covers the cost of repairing or rebuilding your home after a covered event, such as fire, hurricane, vandalism, or theft. Many policies also cover detached structures, such as garages, sheds, fences, or gazebos. If your home is uninhabitable, your insurance will pay for your living expenses up to a certain limit while it is rebuilt.

Home insurance also provides liability protection if someone is injured on your property or if you or a family member injure someone or damage someone else's property. This includes damage caused by your pets. Liability protection also covers medical expenses for individuals (but not immediate family members) injured on your property.

In addition to the standard coverage, you can purchase optional endorsements to increase coverage limits or protect against specific risks, such as earthquakes, floods, or sewer and water backup. It is important to understand the limitations of your policy and consider any necessary add-ons to ensure you have adequate coverage.

When insuring your home, it is crucial to note that standard policies do not cover damage caused by floods, earthquakes, routine wear and tear, or insufficient maintenance. Additionally, certain valuable items, such as jewelry, artwork, or collectibles, may have limited coverage and require additional insurance to be fully protected.

What is other structures coverage?

Other structures coverage is a type of home insurance that covers detached structures on your property. This includes sheds, barns, garages, gazebos, and fences. It also covers in-ground swimming pools, although some companies classify these under dwelling coverage if they are attached to the home by a walkway or enclosure.

Other structures coverage typically protects against damage from disasters that your main homeowners' policy covers, such as fire, hail, wind, and vandalism. It does not cover damage from flooding, earthquakes, general wear and tear, or pests.

The limit for other structures coverage is generally set at 10% of your dwelling coverage limit. For example, if your dwelling coverage limit is $400,000, your other structures coverage would be $40,000. If this is not enough to cover the replacement cost of your other structures, you can increase your coverage by adding more coverage or an endorsement to your policy.

Other structures coverage is not legally required, but most mortgage lenders require borrowers to have homeowners insurance, which usually includes this type of coverage. If your mortgage is paid off or you own your home outright, you may choose to forgo this coverage, but doing so carries the risk of having to pay for repairs or replacements yourself if your detached structures are damaged or destroyed.

How much should I insure my house for?

When it comes to insuring your house, there are several factors to consider to ensure you have adequate coverage. Here are some key points to help you determine how much you should insure your house for:

• Rebuilding Costs: The primary purpose of home insurance is to protect you financially in case of disasters such as fire, lightning, hail, explosions, floods, or earthquakes. Ensure your insurance coverage limit is high enough to cover the cost of rebuilding your home in case of extensive damage or total loss. The rebuilding cost may differ from the price you paid for the house or its current market value.
• Local Construction Costs: The cost of rebuilding your home can vary depending on local construction costs, including labour and materials. Consider factors such as the square footage of your home, the type of exterior construction, the style of the house, the number of rooms and bathrooms, the type of roof, and any special features like fireplaces or custom-built sections.
• Additional Structures: If you have other structures on your property, such as a garage, shed, or fence, you will want to insure them as well. Make sure your policy covers the cost of repairing or rebuilding these structures.
• Personal Possessions: Most homeowners insurance policies include coverage for your belongings, typically ranging from 50% to 70% of the insurance on your dwelling. However, you may need additional coverage for expensive items like jewellery, collectibles, or electronics, as standard policies have coverage limits for these items.
• Liability Insurance: Consider purchasing liability insurance to protect yourself from lawsuits if someone is injured on your property or if you or your family members cause property damage or bodily injury to others. The minimum recommended coverage is $300,000 to $500,000 worth of liability insurance.
• Additional Living Expenses: If you need to temporarily relocate due to insured disasters like fire or severe storms, additional living expense (ALE) coverage will pay for hotel stays, restaurant meals, and other living expenses while your home is being rebuilt.
• Regular Reviews: It is essential to review your insurance policy annually and whenever you make structural changes or renovations to your house. This ensures that your coverage limits are up-to-date and adequate for your home's current value.

What is property insurance?

Property insurance is a broad term for a series of policies that provide either property protection or liability coverage for property owners. It is designed for individuals and businesses, and both buildings and personal or business property can be covered, depending on the type of policy. Property insurance can include a number of policies, such as homeowners insurance, renters insurance, flood insurance, and earthquake insurance.

Property insurance provides financial reimbursement to the owner or renter of a structure and its contents in the case of damage or theft, and to a person other than the owner or renter if that person is injured on the property. The three types of property insurance coverage are replacement cost, actual cash value, and extended replacement costs.

Perils covered by property insurance typically include select weather-related afflictions, including damage caused by fire, smoke, wind, hail, the impact of snow and ice, lightning, and more. Property insurance also protects against vandalism and theft, covering the structure and its contents.

Property insurance doesn't cover certain types of damage, with or without any significant peril occurring. For example, it wouldn't cover damage from termites, insects, rodents, or acts of war or terrorism. Additionally, a property insurance policy wouldn't cover the regular wear and tear that the property undergoes as it ages. Certain items of high value, like jewelry, artwork, and antiques, also have lower coverage limits in a typical homeowners policy, unless additional coverage is purchased.

Frequently asked questions