Adjective
com·pre·hen·sive | ˌkäm-pri-ˈhen(t)-siv
Definition: A type of home insurance policy that offers coverage for loss resulting from any peril except those perils specifically excluded by the policy.
The damage to Rose’s home was covered by her home insurance because she had a comprehensive policy.
Comprehensive insurance policies offer the broadest protection. They protect against any peril unless the policy wordings specifically exclude that peril.
Peril is insurance jargon for the cause of damage or loss. Examples of perils include fire, wind, hail, theft, or earthquake.
The other common insurance policy types are named perils and broad form. Named perils policies are the opposite of comprehensive policies: they only insure the perils listed on the policy (hence named perils).
You can find a full explanation of named perils policies elsewhere in our Insurance Glossary.
There’s also an entry for broad form policies, and we’ll touch on them again further down the page.
For now, let’s focus on comprehensive home insurance policies.
Comprehensive policies cover everything by default. A comprehensive policy insures your house and your possessions against any peril, except those few that are specifically excluded.
For that reason, it’s easier to ask what comprehensive home insurance doesn’t cover.
Every comprehensive home insurance policy includes a section that lists everything that’s excluded from coverage. Different policies and different insurers will exclude different things. If you have a policy from Square One, you’ll find the exclusions in section 7.
The exclusions section explains when coverage does not apply. If something isn’t listed in the exclusions section, it’s covered! With comprehensive policies, the burden of proof is on the insurance company; in order to deny a claim, they must demonstrate that the type of claim is listed within the policy’s exclusions.
Named perils coverage differs, in that the burden of proof is on the insured. Because named perils policies only provide coverage for perils that the policy lists explicitly, the policyholder has to prove that their loss was caused by one of the listed perils.
While exclusions differ between different insurance providers, several exclusions apply to most (if not all) comprehensive home insurance policies:
Maintenance-related claims. Things like corroding pipes, termite infestations, or a rotting roof aren’t covered. These things should be addressed through routine maintenance before they lead to big losses.
War and terrorism. These events would be extremely destructive and impossible to predict. Insurance actuaries can’t quantifiably predict these types of losses, and so they are excluded.
Many large-scale natural disasters. Catastrophic natural events like tsunamis, earthquakes and floods are often excluded, especially in regions where they’re likely to occur. Many home insurance providers offer coverage for perils like earthquake or inland flood on an optional basis. Square One automatically includes earthquake and inland flood coverage for the majority of its customers.
Anything covered by other insurance. Your car has its own insurance policy, so home insurance policies will not cover any damage it suffers. The same thing goes for commercial activities or anything else that’s better covered by a separate, dedicated insurance policy.
In the same vein: nuclear disaster. The federal Nuclear Liability and Compensation Act makes nuclear operators responsible for covering damages caused by nuclear incidents. Therefore, home insurers exclude nuclear incidents from their coverage.
Fraudulent or intentional losses. If you burn down your house on purpose, your insurance won’t cover it. Insurance policies always exclude fraudulent activity.
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Broad form home insurance policies are hybrids; they’re part comprehensive, part named perils. Most often, broad form policies provide comprehensive protection for the home itself (known as a dwelling or building), whereas they provide only named perils coverage for contents (personal property, or anything movable).
Example
Karim and Judy are neighbours. They each have a homeowner’s insurance policy for their house: Karim has a comprehensive policy, while Judy has a broad form policy. One day, a power surge causes fire damage and blows out appliances throughout their neighbourhood.
Karim’s comprehensive policy covers damage to both his house and his electronics, since his policy doesn’t list power surges as being excluded. His insurance company covers the cost of repairing the scorched walls, and replacing his electronics.
Judy’s experience isn’t quite as good. Her broad form policy offers comprehensive protection for her building, and it doesn’t name power surge as an exclusion; her insurer pays to fix her scorched walls. Unfortunately, that same policy only provides named perils coverage for her contents, and power surge is not one of the perils that it names. She has to replace her damaged electronics on her own dime.
You can see from this example how comprehensive vs. broad form insurance differ for the same loss event. To oversimplify it: comprehensive insurance protects everything from everything; broad form insurance protects your house from everything and your possessions from some things.
As with anything insurance-related, make sure to read your own policy wordings to find out what your home insurance covers and what it excludes.
Actual cash value is the monetary worth of an item, which factors in the item’s age and condition.
It is determined by calculating the cost of replacing the item then subtracting the amount the item’s value has depreciated during its lifetime.
Insurers will use actual cash value to decide how much to pay when an insured chooses not to replace lost or damaged items, and chooses a cash settlement instead.
Looking for another insurance definition? Look it up in The Insurance Glossary, home to dozens of easy-to-follow definitions for the most common insurance terms. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
About the expert: Daniel Mirkovic
A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.
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