There’s one constant in insurance and that is change. Insurance companies continually examine and re-examine their business to gain greater understanding of where we are, in terms of risk for property insurance, and where we are going. Throw in provincial, national and international trends and you can see how complex insurance is becoming.
Right now though for the best home insurance coverage, most insurance companies in Ontario use what’s called an All-Perils or All-Risk policy. Simply, this system says everything is covered unless it is specifically excluded. To know what your All-Risk policy excludes you just need to refer to your policy wordings.
What are perils? Fire, theft, lightning, wind, hail are a few examples. Everyone with an All-Perils homeowner’s insurance policy gets the same coverage. So, a person living in at the bottom of a hill has the same water coverage as someone living at the top of a hill even though the risk of water damage to the different homes is not the same.
Related Read: Future of Insurance: Telematics
A ‘by peril’ system looks at each kind of peril, fire, liability, wind etc, that could possibly damage your home or its contents as a separate variable. Each peril is rated separately and depends upon your home’s construction and location among many other variables. So those same homes above, one in the valley and one on the hill, might have drastically different water protection and wind protection rates. We see evidence of the beginnings of rate by-peril already in Ontario with some insurance companies amending water coverage where more flood-prone areas are seeing their sewer-backup rates double or triple.
Predictive Models – statistics and computer programs dedicated to determine how likely a claim may happen – are becoming ever more complex. As events happen, forest fires, tornadoes etc, the predictive models change. This makes it difficult to know how the price of property insurance will change from one year to the next.
At Erb and Erb Insurance Brokers Ltd. we still have plenty of options for home, condo or tenants insurance. With proactive home maintenance and repair you can reduce your chances of a claim.
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