Everyone Wants a Cozy Home
Recently, we have seen a flurry of news stories about a house fire that occurred last year just before Christmas. House fires are traumatic events and in this case while there were some severe injuries, thankfully there were no fatalities. This tragic fire however, highlights a very important aspect of your homeowners, condo, or tenants insurance policies; Contents coverage.
What are contents? Everything you own that is not part of the house. Furniture, clothing, electronics, collectibles such as coins, stamps, paintings, ceramics and other kinds of antiques, dishes, shoes are all considered contents to a home.
Related Read: 5 Tips to Winterize Your Home
Insurance policies are there to indemnify a person’s or company’s losses in a claim, such as fire, which means that they are brought back to the way they were before the fire or claim happened. The problem is not all insurance policies are the same when responding to a claim. Unfortunately in this cited instance the issue now is the amount of money the insurance company, Johnson Insurance, offered (or is offering) to pay the family for their contents.
Generally, insurance companies offer a percentage of the rebuilding cost of the home to go toward covering contents. That can be 70% or up to 85% of the rebuilding cost. That can be a significant number. It is up to you to prove you owned the items to be replaced and determine their value along with the loss Adjuster. You also need to be aware of whether your property policy offers replacement cost (in the event of fire, repairs or replacement will be made with material of like kind without cost to the insured for depreciation or betterment) or actual cash value (The fair market value of property taking into account factors, such as depreciation, that might reduce the value of the property in question).
In a fire like this, can you prove what you owned?
How do you know if your contents are insured properly? You are encouraged to take inventory of your home’s contents (Want a home inventory sheet? Download Erb and Erb’s Home Inventory sheet here and print as many as you need and have copies stored away from your residence) This can be accomplished prior to taking out an insurance policy, and reviewed on a regular basis. Your policy anniversary date is a good time to tackle this project. Couches, fridge, stove, beds, all of these are standard fare in insurance and are rarely a point of concern during settlement disputes. But specialty items, rare items, and high value items almost ALWAYS have restrictions on coverage and a complete list can be found under Special Limits of Insurance in your policy wording.
Have a special collection?
A reputable insurance broker will help you ascertain which contents in your home need to be specially listed on your policy to receive full coverage, in some instances this may require a collectable, art or jewelry appraisal to lock in a price you know will be paid out. Some Ontario insurers also provide enhanced contents packages you can add to your policy to increase the amounts paid out for items that fall under certain categories (e.g. jewelry, sports apparel, camera equipment etc.)
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While auto insurance in Ontario is regulated, meaning every single policy contract is identical, home insurance is whole different ball game. Each company can write their own rules regarding how they treat collectibles, high value items, and how they would payout in the event of a claim. Purchasing insurance from a direct writer or bank means that you are buying insurance from the same company you want to pay out during a claim. There is no one to go to bat for you if a dispute comes up, its you and a huge insurance company, and lawyers and paperwork.
Brokers are expected to act in their client’s (that’s YOU) best interest, and are required by law to act in good faith when helping your procure insurance. A few more questions could have been asked along the way to avoid any confusion for the Brown’s regarding the value of their contents. Do you think your insurance provider should take the time to do this with you?
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