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What do people generally not know about Home Insurance that they should know?

Here's a list of things, as someone looking for house insurance, that you'll want to know:

1. What is Guaranteed Replacement Cost?
In its simplest terms, it means that although you have a defined limit stated on your policy, it is coverage that guarantees the home insured will be repaired to its full value at the time of loss, regardless of the amount of coverage carried.

2. Did you think home insurance automatically covers you for sewer backup?
Unfortunately, many insurers treat this as “Optional Coverage” which means you may not already have this on your policy. Sewer backup costs as little as $4 a month and can potentially save you from paying thousands of dollars from your pocket.

3. What’s Additional Living Expense?
Your house suffers fire damage and you lost everything. You are told your home will take 8 months to be rebuilt. Where do you go and who pays for it? Your homeowner’s insurance policy includes coverage (up to a specified amount, usually somewhere between 20-30% of your dwelling amount) for you to use to live elsewhere while your home is being rebuilt. For example, if your home was insured for $400,000, your Additional Living Expense coverage would provide for 20% of that amount (or $80,000) for you to use to rent a home while your insurance company rebuilds your home. This means you would have enough money, for example, to rent a comparable house which might cost you $3000 per month in rent.

4. What about all those Contents you lost in the fire?
Many people do not realize their insurance company automatically includes coverage for their contents. Again, it usually works on a percentage basis (around 70% of the building amount. If you look at the example above, that would mean the policy would have contents coverage available to the customer for up to $280,000.

5. Claims Protection for Property Insurance?
Did you know that some insurers have policies that would treat your first property claim as though it never existed? Talk to us! We can help get you the right coverage.

6. Interested in keeping a digital record of your most valuable contents but not sure how or don’t have the time?
Our brokers can come to your house to record your contents and provide you with a digital copy to keep in your safety deposit box.

Here is a list of some of the most common questions we receive about Home Insurance:

1. Why does it matter how old my roof is or when my furnace and hot water tank were last inspected?
This is a common question. The answer is: Most insurers are not concerned with roofs less than 20 years old. However, once a roof gets to be more than 20 years old it can start to deteriorate. Left unchecked, this may become the origin of water leakage, causing considerable damage and expense. Also, many property claims originate from some type of mechanical failure of plumbing, heating or air conditioning devices. Many insurers request customers to have their furnaces cleaned and/or hot water tanks inspected/serviced annually, as proper annual maintenance of these devices are important and easy ways to prevent claims from arising in the first place.

2. Some customers see the amount of contents coverage on their policy documents and say to themselves “ I don’t need this much contents coverage! I’m gonna call my broker and have this amount reduced so I can save money.”
Homeowners contents coverage is derived by applying a percentage (usually 70%) to the amount the home is insured for. Example: home is insured for $350,000. Contents limit on policy documents would show coverage for contents as $245,000. Customer may feel he/she is overpaying for this much contents coverage. Homeowners insurance doesn’t work that way. The premium is derived base on the actual costs of rebuilding the home and do not directly factor in the amount of the contents. Also, just because the contents limit shows coverage available up to $245,000 this doesn’t mean the customer has that much in contents as for all claims, the customer must prove their financial loss. It’s just the upper ceiling of what the insurance company is saying it will pay if the insured actually had that much in contents.

3. Why is there a difference between the amount the city says my home is worth and the amount I’m insuring my home for?
First difference is that city home evaluations include the land value in the total value of your home whereas home insurance only deals with the cost to rebuild your home, not your land. When calculating rebuilding costs insurers may have different variables they must factor in before they can determine the value and associated premium. Firstly, time is of utmost importance as they wish to put you back in your home as soon as possible. Therefore, they are constantly under pressure to rebuild your home in the least amount of time possible while also having to deal with contractors, supply of and cost of labor, materials, equipment, taxes, permits, architectural drawings and engineering fees to name just a few. From time to time, insurers are also faced with other challenges like real shortages of labor and materials. Add to this, the reality that market prices fluctuate substantially for things like the cost of drywall, plywood, lumber, copper and cement to name a few. Insurers are also challenged with the reality that they have to rebuild your home in more confined quarters than what you might have had when your home was first being built. It’s much harder and takes much more time to rebuild a home when you have neighboring houses located on either side than you do when you’re the only home on the block. Insurers also have to take great care with trying not to further damage existing landscaping, tall trees, bushes, fences, gardens etc. These are just some of the many considerations that insurers have when they are tasked with calculating rebuilding cost.

4. Is there anything else that you would like the visitors of your website to know about this category?
Just to send them the general message that this policy is really important! This purchase is usually the single biggest financial investment of their life and generally where they choose to store and keep all of their most valuable contents. This is why it’s so important to feel comfortable with your broker. Allow them to get to know you and the things that are important to you. For example: It would be wise to let your broker know you love to ski and always get away for 2 weeks to go skiing in Aspen. Your broker could then advise you on the proper coverage for your skis and ensure you have purchased travel insurance in case you meet with an accident while on the hill. Your broker will also advise you of your requirement to ensure someone is entering your house on a daily basis while you’re away and ensuring that the heat is on and sufficient for the temperature outside. This is important because many people don’t realize that in winter time, plumbing pipes in your basement will freeze and burst if the homes heat is not set at an adequate level. Many people think about turning the thermostat down when they leave for a winter holiday but don’t realize that they might come back to a wet basement with precious contents damaged.

Here’s a list of questions you might be asked when requesting a property quote or buying property insurance from us:

It is most helpful if the person calling in or coming by knows as much about the property as they can. Most of the information can be derived from either viewing the property in person, or discussing it with the realtor, or reviewing the realtors sales sheet on the house. That will contain most of the information we are looking for. We will need to know answers to many specific questions about the house that needs to be insured.

For example:

  • the exact address,
  • year built,
  • style of home (1 storey, 2 storey, bungalow, split level, bi-level etc).
  • Square feet of house? Main floor, upstairs, basement?
  • Is the basement finished or unfinished? Walkout or not?
  • What type of materials are used in the house? Carpet, Hardwood, Vinyl, Tile, Granite, Marble, Linoleum.
  • how many bathrooms (full and half),
  • what type of plumbing (copper or plastic etc)
  • Is the electrical 60 Amp, 100 Amp, 200 Amp
  • How old is the roof?
  • How old is the furnace? When was it last serviced?
  • Is there a Mortgage? What’s the name and address of the bank?
  • Name and contact information for lawyer handling the transaction

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