What to Look for When You Buy Home Insurance

Kevin

POSTED BY

Kevin McLean

Shaw Sabey & Associates Ltd.

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‘Water is the new fire’ says the Insurance Bureau of Canada (IBC)*

Whether you own a detached home, a townhouse, row home, condominium or a rental property, there are both common and unique risk exposures to be faced depending on the type of property you own (or occupy, if you are a renter). According to the IBC, the rise of water damage losses is the overall leader in cost of claims in Canada, which means that you should give due consideration to your exposure to water and all the other forms of loss that can occur as well.

Keeping on top of your insurance needs can be a three-fold challenge – insurers developing new covers like enhanced water coverage, new exposures such as cybersecurity and privacy risks with increased personal drone usage, not to mention the insidious creep of rising replacement costs for items insured. Have you taken stock of what is in your closets recently and the cost to replace it all if you had to do so all at once?

Some points to consider when buying Homeowners, Condo/Strata, Rented Dwelling and Tenants Insurance:

DID YOU KNOW – PERSONAL PROPERTY

Homeowners

Homeowners insurance policies typically cover you for:

■ Dwelling: Based on an evaluation, your home is insured for the cost to rebuild in the event of a loss due to an insured peril

■ Detached Structures: Covers sheds, fences or other structures not attached to your dwelling but on your property. This coverage is based on a percentage of your dwelling’s value and automatically included in your policy

■ Personal Property: Your belongings are insured on a ‘Replacement Cost’ basis, meaning that if you suffer a loss, you will receive a replacement with items of like kind and quality. This coverage is also based on a percentage of your dwelling’s value;

• Some items may only be covered up to a certain amount. Special limits often apply to items such as jewellery, bicycles, computer software, sports cards, securities, watercraft and collections. Additional coverage can be purchased by scheduling these items.

• Fine Art can be protected via specialized coverage issued on an ‘Agreed Value’ basis

■ Additional Living Expenses: Provides cover for the additional costs over and above your daily cost of living in the event of a loss, such as increased transit expenses, meals and accommodations      

■ Liability: Protects you against lawsuits for bodily injury and property damage caused by you, family members, or pets

There are many optional coverages offered by homeowners insurers, including:

■ Sewer Backup and Water Damage: Many insurers now offer overland water, groundwater coverage and coverage for your water service lines

■ Earthquake: Keep an eye on the deductible applicable – do you know what the % amount means in dollars?

■ Mechanical Breakdown: Addressing equipmentspecific perils

■ By-law Coverage: Covers the increased cost of rebuilding your home to comply with new by-laws

■ Identity Theft: Covers the costs associated with repairing credit if you fall victim to identity theft

Condo/Strata

Condominium/Strata corporations have insurance to cover the structure and common areas. However, as a unit owner within the building, you need a condominium unit owner policy to cover you for personal property and liability exposures – same as the covers afforded under a homeowners policy – plus some condo-specific exposures;

■ Loss Assessment: Covers your share of a loss to common property within the condominium structure

■ Deductible Assessment: Covers your share of the condo corporation’s deductible for a loss to the structure, if assessed

■ Improvements & Betterments: Covers any upgrades to your unit over and above the standard construction of a typical unit

Rented Dwelling

When you own a rental property, a rented dwelling policy includes coverage for the structure and detached structures, if any, plus personal property you may own within the building (i.e. appliances, furnishings, etc.) and liability coverage. Another key consideration for a rental property is:

■ Rental Income: Covers loss rental income in the event of an insured loss where the tenant is unable to occupy the home and rent is not paid

Tenants

Tenants insurance covers you for personal property, liability and additional living expenses. While it is nice to have personal property covered, the biggest benefit of a tenants package policy for renters is the personal liability coverage. If you damage the space you’re renting, you’re covered to the limit of Personal Liability, typically $1,000,000 or $2,000,000, afforded by the policy on a worldwide basis. So, if you cause damage by hitting an errant golf ball while on vacation …you have coverage!

Closing thoughts…

Regardless of the form of dwelling you live in, it is important to have insurance. Life is constantly changing and it behoves us all to speak with our insurance broker whenever change happens. Some items your broker should be apprised of immediately are:

■ Changes in occupancy such as vacancy, short-term rentals or additional occupants/families

■ Change in heating, such as installation of a wood stove

■ Presence of a home-based business including daycare operations, Incidental office use, including work-from-home days

■ Planning major renovations

The rise of personal drone usage, the Internet of Things (IoT), cyber security and earthquake deductible buy-down covers are areas where the pace of change in policy wording is rapid. Depending on the scope of your travels kidnap & ransom cover may bring peace of mind to your loved ones. For travel outside your home province, emergency excess travel medical cover is a must! The world is not getting any less complex but time invested reviewing the nuances of your particular personal insurance policy(ies) can bring peace of mind.

If you have specific exposures you’d like to speak about, please contact us. We can be reached at kmclean@shawsabey.com Tel 604.699.2240 Shaw Sabey & Associates Ltd. (a member of the Axis Insurance Group)

Kevin McLean is a Senior Account Executive with Shaw Sabey & Associates. The views expressed are those of the author and not necessarily those of RGF Integrated Wealth Management Ltd., which makes no representations as to their completeness or accuracy.

*https://www.thestar.com/news/canada/2018/03/05/water-is-the-new-fire-says-the-insurance-bureau-of-canadaas- researchers-point-to-development-as-major-cause-of-basement-flooding.html