Residential property Insurance is an important part of a financial plan and required by banks if you have a mortgage. It’s meant to help people recover from the hardships of fires, burglaries, wind, lightning, and, for the first time in Canada, floods among other perils.
When Canadians are struck with a catastrophe insurance is meant to put them back to the way they were before their loss. An insurance broker’s job is to not only make sure their client is protected with the best coverage available, but to also make sure their client knows what’s covered and what isn’t. A broker is also by your side to advocate on your behalf in the event of a claim, and guide you through this process.
Many people think that home, condo, or tenant’s insurance is a catch all policy designed to cover everything. While insurance is a very competitive industry, with insurance companies adding many special features and coverages to their products, no insurance policy covers every possible scenario. All home insurance, tenants insurance, or condo insurance policies have exclusions. It’s important for consumers to be aware of what some of the most important exclusions are in a standard homeowner’s policy and, more importantly, what they can do to avoid an unhappy surprise at the time of a claim.
What are Some Surprising Exclusions?
Some exclusions we hope will never have to be exercised. These deal with exclusions for damage caused directly or indirectly by war, invasion, or an act of a foreign enemy, or damage from any nuclear incident. Damage by terrorism is also excluded on standard residential property insurance policies.
What are Some Common Exclusions?
Some exclusions are perfectly understandable, like damage to belongings due to normal use like scratches, wear and tear, damage to any property illegally acquired or kept, or damage to sporting equipment where the cause is due to its use. Damage caused by an intentional criminal act by an insured person is also excluded. For example, a homeowner setting their home on fire is arson, a criminal act, and thus their policy will not respond. Damage caused by a grow-op is similarly not covered.
The real issues come from exclusions that arise out of normal every day actions on our part. Damage caused by pets, or by birds and rodents and the like are not covered. Damaged property while it is being worked on is not covered. For example, there is no coverage for a homeowner who breaks a faucet while trying to repair it.
Vacation’s and Insurance
The biggest assumption is that going on a vacation means all coverage will always be in place. In fact, going away during the heating season means you need to a) have someone check your home on a daily basis if you are away more than four days, b) turn off your water main, or c) have a heat alarm installed. Why? This will ensure you have coverage if a water pipe bursts while you are away.
Related Read: Water, Home Insurance Exclusions, and You
The base policy does not cover earthquake or other earth movement (mudslide, landslide) damage, sewer back-up, rising water, and does not cover damage from continuous or repeated seepage or leakage of water ie. cracks in basement walls.
Can I Get More Coverage?
Of course, in some instances you can. Your broker will advise you what endorsements, add-ons to your base policy, are available. These endorsements protect you from sewer back-up, earthquake, overland water (flood link), identity theft and others to ensure you have the best coverage possible. Knowing what your options are, even if you don’t purchase them, is important because it allows you to make informed decisions for your family and your home.
Related Read: Think You're Safe From Fraud?
Insurance is constantly changing as insurance companies update their policies. Call your broker if you want to know more about the exclusions on your policy and about what add-ons you can purchase to further provide peace of mind.
Visit these pages if you want a second opinion on your home insurance, tenants insurance or condo insurance.
Have any questions? – We’d love to answer them. Thank you for reading.
Back to the Fall 2015 ProvERB Insurance Bulletin.