The term home insurance covers many different categories; whether tenant, condominium, townhouse, semi- or detached, home is where the heart is. There are many things to consider when insuring what could be the largest investment in your life. The question is: are you aware of what they are?
Well, the spring edition of the Insurance Corner will focus on the five things you should know about home insurance.
1. The value of your home for insurance purposes is not the market value! The value of your home is based on the cost to replace it in its current location, that is, the cost of supplies and labour required to rebuild your home exactly where it is. Under-insuring to save money is like purchasing a small parachute to save a couple bucks.
Tip: Confirm that your insurance agent/broker is asking all the right questions and checking in every year to inquire on any upgrades e.g., pool, deck, man-cave etc.
2. The value of your home also affects the other coverages on your homeowner’s insurance policy. Subject to different percentages, the value of your home affects subsequent coverages within your insurance policy. For instance, additional living expenses provide coverage for you and your family in the event of a claim that deems your home uninhabitable. The lower the value of your home, the less money is available for you and your family to live elsewhere until your home is repaired or replaced. This is just one of the many coverages that are affected by the value of your home.
Tip: Review your current coverage and focus on all coverage sections, not just the replacement cost.
3. Water is the new fire; due to climate change and increased floods, water claims have far out-numbered fire claims in the past few years. Insurance companies study these trends and are making drastic changes to their insurance offerings. Do you know what you are covered for? More importantly, do you know what is excluded? Living in Milton, most residents have sump pumps; are you aware of how this affects your insurance? Does your insurance expert? With so many questions relating to water, it is impossible to cover the answers without reviewing all variables with an expert.
Tip: Ensure that your insurance provider has taken the time to review these details with you. Each company has different details. Choose the right company for you with the help of an expert insurance partner.
4. Do you know that there are limits placed on the replacement cost of your valuables? The home insurance product is quite complex. Almost every item in your home is placed in a category with a limit associated to the maximum payout allowed. It is quite common to assume that your insurance contents coverage will be sufficient for all your personal property. This is not always the case. Know your limits to understand what you need to do to protect yourself.
Tip: Your insurance partner can provide you with the details within the wordings of your insurance coverage. Make sure you arm yourself with this knowledge.
5. When buying a home, your insurance provider requires many details about your home, such as square footage, year built, upgrades, etc. These details are typically part of the home buyer’s package provided by your real estate agent. What is commonly missed are the details regarding renovations. There are four main sections that are required for home insurance policies:
Electrical (i.e. breaker vs. knob and tube)
Heating (i.e. forced air vs. wood stove)
The objective is to determine when they were upgraded, and what they are. These details can greatly affect the cost of your insurance. If you have purchased an older home with knob and tube wiring, you may be declined for insurance by a handful of insurance companies.
Tip: Include these questions in the process of buying a home. A home inspection should cover most of these items.
Well there you have it: five things that you should know about home insurance. Make sure that your biggest investment is properly insured. An insurance broker can help walk you through these items. Licensed under the Registered Insurance Act of Ontario, independent insurance brokers are held to a unique code of conduct; for more information visit www.ribo.com and look for RIBO Code of Conduct.
So, I will end with the same question as last issue: Are you currently being provided an insurance policy, or an insurance experience? Challenge yourself to expect more, you might be surprised!
Sheldon D. Williams is a seasoned insurance professional. His goal for his clients is to provide exceptional service at competitive costs. Whether home, auto or commercial insurance, Sheldon can get you covered.