Top 10 things you need to know about home insurance
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1. Renovations may not be covered by your current policy
If your insurance company doesn’t know about the renovation, you may not have enough coverage. If you’re doing fairly major renovations, with contractors coming in and out of your house, walls torn down, or part of the roof removed, your insurer may need to temporarily change some of the coverage on your home. In some cases, it may change from a regular home insurance policy to one for a building in the course of construction.
Some policies cover minor remodeling work, but even if you think the changes are small, always check with your insurance advisor to be sure.
If you’ve made those amazing changes, the improvements could have an impact on the valuation of your home. For example, if you expand your kitchen and add new appliances and granite countertops, you have added value to your home. The amount of your insurance should reflect those changes so that you have adequate coverage.
2. Your home insurance does not cover flood damage
Flood and other flood-related damage is a common exclusion in almost every home insurance policy. This exclusion also applies in other types of residential (condo, townhouses, tenants) policies. Insurance for flood damage is, however, available for commercial properties.
Those impacted by a flood may apply to the province for Disaster Financial Assistance (DFA) for losses which could not be insured. DFA program details and contact information can be obtained at the Emergency Management BC website.
3. Many BC homeowners are not insured for Earthquake, are you prepared?
Considering that for many their home is their largest financial asset, a large loss to that asset can be devastating. For many who also carry a mortgage on that home, the mortgage payments are still due after suffering a loss by earthquake. Standard insurance policies do not insure for earthquake unless coverage was selected. An additional premium is charged and damage is subject to a separate deductible. If your home suffered even partial damage from an earthquake, do you have the financial resources to repair the damage?
4. Market Value vs. Replacement Value: What’s the difference?
Too many Canadians believe that the coverage limits of their homeowner’s Insurance policy are linked to the market value of their home, resulting in more than ½ of Canadian homes being underinsured.
Market value is simply the price you paid for your home. Most often insurance agencies do not give market value consideration because the real estate investment market can fluctuate so greatly.
Insurance companies look at the cost of rebuilding the exact same home in the exact same location for a certain year. This is the definition of replacement cost. Replacement costs include things that may not be included in the resale value of your home, like the cost and availability of skilled labour, debris removal and extra expense due to more stringent building codes and by-laws. Upgrades, renovations and other improvements can also make rebuilding a home more expensive than was originally estimated in your insurance policy.
Trying to figure out the right amount of insurance coverage, however, is a tricky, frustrating process. Which is why every three years, your Schill advisor completes a Risk Review on your home policy, including a Building Replacement Cost Evaluation, Market Comparison and Personal Risk Review to ensure the policy you have is the right fit for you.
5. Why opting for a low price policy isn’t always the best choice
A good rule of thumb is to remember you don’t always get what you pay for. It can sometimes even mean foregoing critical coverage that you’ll hopefully never need—but that would sure be nice to have if you find yourself in need. Often, lower premiums mean higher deductibles as well. Be sure to check with your broker what exactly is covered and what your deductibles are – you must be comfortable and realistic about how much you could afford to pay in the event of a loss.
6. Going beyond the basics: Determining how much insurance is enough
Your insurance company will cover your personal belongings, but what about more unique, and expensive, items? For example, a diamond ring has been passed down to you from your late grandmother worth at least $10,000 that you cannot find anywhere. Will your home insurance replace it?
All home insurance policies have special limits on certain items like jewellery, bicycles and cash. Make sure you review with your broker what your limits are and where you may require more protection. Understanding the intricacies of a policy is best done with the help of an experienced and reputable broker.
7. You can save money on your policy by opting for a higher deductible
For many of us, the biggest monetary concern tends to be what comes out of our bank account on a regular basis (such as insurance premiums)… those ongoing costs that must be balanced with the household budget and family needs. Opting for a higher policy deductible is a good way to reduce your annual insurance premium. Of course, you must be comfortable and realistic about how much you could afford to pay in the event of a loss.
8. You can maximize your savings with available discounts
Are you fully taking advantage of the numerous discounts available from your insurer? Many insurance companies offer discounts for alarm systems, fire sprinklers, water sensors, newer homes, the age of the insured and if you are mortgage free, to name a few. Be sure to check with your insurance broker to find out if you qualify for additional discounts.
9. Not informing your insurance company about your rented suite could nullify your home insurance policy
When you rent out a unit in your home, you are obliged to inform your home insurance company – something that the vast majority of people fail to do. If anything were to happen, for instance if a fire starts in the rental suite, the insurance company may deny coverage based on the non-disclosure of material fact. Also, your tenants should be encouraged to purchase tenant insurance to avoid their loss becoming your loss.
10. A proactive approach to staying claims-free is your best bet
Claims are unwanted intrusions in our lives. Taking preventative measures to ensure a claim doesn’t occur will save you both time and inconvenience in the long run. Check out our resource centre for tips to help alleviate theft, water and fire damage risks.
Of course, we are always around to help. Don’t hesitate to contact us if you need a little more information or have any questions.