Home insurance is a lot like one of those “break glass in case of emergency” boxes—you don’t expect to use it, but you’re happy it’s there when you need it. This powerful tool protects you, your property and your belongings in all kinds of ways. Here are some surprising facts about home policies—many of which you might not even be aware of.
NOT ALL POLICIES ARE CREATED EQUAL
A bargain-basement insurance quote often reflects what you get in return. For instance, basic insurance covers your home and its contents for “named perils” (specifically named causes of loss), while broad form insurance provides all-risk coverage on the building but covers damage caused by a named peril to your home’s contents. Finally, there’s comprehensive insurance—the most common type—which covers all risks to both your home and its contents. (Insurance covering “all risk” or “all perils” can still have exclusions, which should be listed in your policy.)
HOME INSURANCE ISN’T A MAINTENANCE PLAN
Home insurance is meant to cover damage that is sudden and accidental. That means if your shingles need replacing and your roof leaks during a storm, you’ll be paying for repairs out of pocket. Normal wear and tear and depreciation of your roof isn’t covered.
“ACT OF GOD” ISN’T A THING
Damage caused by a natural catastrophe, such as a hailstorm or extreme wind, is often described as an “act of God”. But fun fact: you won’t find that phrase anywhere in a Canadian insurance policy. Instead, we use the word “perils” to describe events that are covered and “exclusions” for those that aren’t. And hail and wind? Covered. In Alberta, you can even buy earthquake insurance.
REPLACEMENT COST AND CASH-VALUE COVERAGE AREN’T THE SAME
If you have replacement cost coverage, your home will be replaced or repaired without depreciation, up to the limits of your policy. But if you have actual-cash-value coverage, your settlement is subject to depreciation, with the insurer paying actual cash value for the loss.
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YOUR HOME NEEDS TO BE PART OF YOUR VACATION PLAN
No matter what the season, make your home look lived in: use a light timer and/or motion sensor lights, try to have someone pick up your mail on a regular basis, get a neighbour to park in your driveway—and don’t post vacation pictures to social media while you’re still away. If you’re away on vacation during heating season (when you’re typically running your furnace), most policies require you to either drain your pipes and turn off the water, have someone check your home every day, or use a monitored temperature sensor. Failure to do so could leave you on the hook if your pipes burst in your absence.
THE LITTLE THINGS MATTER
Do you live in a rural area? Is the nearest fire hall a long distance away? Does your neighbourhood experience high rates of crime? Do you have a wood-burning stove? Was your house built on a water table or flood plain? There are a ton of factors that affect what you pay for insurance. While some you can control, others are out of your hands (e.g., how often it hails in your region).
COLLECTORS NEED EXTRA COVERAGE
Your home insurance policy only covers things like jewellery and collectibles to a maximum limit. So if you collect art, rare antiques or sparkly things in blue boxes, ask about purchasing a “floater” to ensure your precious possessions are protected.
YOUR FOOD IS COVERED
If your appliances are zapped by a freak lighting-strike that also causes insurable damage to your house, any food that spoils in your fridge or freezer is also covered by insurance. So, buy those tenderloin steaks with confidence.
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YOUR HOME INSURANCE MAY BE EXTENDABLE
If you have a child living in a college dorm or a dependent parent in a nursing home, you may be able to extend a portion of your home coverage to cover their belongings. Ask your adviser if your situation qualifies.
HOME INSURANCE ISN’T JUST FOR YOUR HOME
Alberta has one of the highest rates of vehicle theft in the country. But if thieves steal your car with your laptop or other personal property in it, your home insurance will cover the cost of those missing items. You can even add coverage for your boat or RV under your home policy. Just be sure to factor in your deductible before proceeding with a claim. Your policy will also cover landscaping, outbuildings and more, so be sure to read the fine print, which often plays in your favour. Your policy also provides liability coverage in case someone gets hurt while in your home or if you unintentionally injure someone or damage their property.
Source AMA - sept 2018