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 financially 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 provides coverage for your home and its contents for “named perils” (specific events that are listed and described in the policy), while broad form insurance provides all risk coverage on the building but provides named perils coverage on your home’s contents. Finally, there’s comprehensive insurance—the most common type—which provides coverage for all risks to both your home and its contents. Each of these types of insurance policies, whether “all risk” or “named perils”, will have exclusions, terms, and conditions that will impact your coverage. These will be listed in your policy.
HOME INSURANCE ISN’T A MAINTENANCE PLAN
Home insurance is meant to provide coverage for 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 isn’t covered in an insurance policy.
“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, you’ll see the word “perils” to describe events that are covered and “exclusions” for those that aren’t.
REPLACEMENT COST AND CASH VALUE COVERAGE AREN’T THE SAME
If you have replacement cost coverage, your home and contents will be replaced or repaired without applying depreciation after an insured loss, up to the limits of your policy. But if you have actual cash value coverage, your settlement is subject to depreciation. This means your insurer will pay the cost to repair or replace damaged property minus depreciation for an insured 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 the heating season (when you’re typically running your furnace), most policies require you to either turn off the water and drain your pipes and appliances, have someone check your home every day to ensure heat is maintained, or use a temperature sensor that is monitored at a central monitoring station. Failure to do so could leave you on the hook if your pipes freeze and 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 may only cover things like jewellery and collectibles up to a specified limit. So if you collect art, rare antiques or sparkly things in blue boxes, ask about purchasing additional coverage to ensure your precious possessions have sufficient coverage.
YOUR FOOD IS COVERED
If your appliances are zapped due to a freak lighting-strike, or there is a power outage, any food that spoils in your fridge or freezer could be covered by insurance. If you have that coverage, you can 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 continuing care facility, 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 can provide coverage for those missing items. You can even add coverage for your boat under your home policy. Just be sure to factor in your deductible before proceeding with a claim. Your policy can also cover landscaping, outbuildings and more, so be sure to read it. Your policy also provides liability coverage for unintentional bodily injury or property damage you’ve caused to another person, or if someone is injured on your property.
Ask an AMA Insurance advisor about preparing for the unexpected at 1-800-615-5897 or AMAInsurance.ca.