Your home is probably your single greatest asset. Is this asset properly protected if a catastrophe, like a fire or an earthquake, occurs? When was the last time you reviewed your home insurance policy?
In this article, we provide a simple checklist for reviewing your policy quickly.
You should review your home insurance policy annually with your insurance provider. Your situation may have changed since you initially took out your policy, and an annual review will help make sure that you continue to carry the right coverage, at the right price.
The first thing to check is what type of home insurance policy you have.
There are several types available, but the most common are named perils, broad form, and comprehensive. In that order, they range from the narrowest coverage to the widest. To learn more about these types of policies, check out our guide to home insurance types.
Some important things to look for when reviewing your policy are:
Earthquakes aren’t an equal risk everywhere. In Canada, earthquake risk exists mostly along the west coast, and southern Ontario and Quebec. For anyone living in earthquake-prone areas, it’s important to ensure that your home insurance policy includes earthquake coverage—it’s not usually automatic.
Most insurance companies can add earthquake coverage to your policy for an extra charge.
Most insurance policies include some form of water damage protection. However, it can be quite limited, and often excludes water backup. This coverage can sometimes be added for an extra charge.
Furthermore, water damage comes in many forms, from burst pipes to failing sump pumps. It’s important to know exactly which forms of water damage your policy insures against.
Square One automatically includes protection against most types of water damage in all of our policies.
Until a few years ago, most Canadian home insurance providers didn’t offer inland flood damage coverage. Insurance providers like Square One decided to change that; we’re proud to automatically include inland flood protection for 94% of our customers.
Inland flood insurance covers losses caused by water that enters or damages your building over land, such as water from overflowing rivers and streams, or heavy rain. Without this coverage, you would likely be on your own for losses of this nature. Ask your home insurance provider if your policy includes this coverage, and how to purchase inland flood coverage if it’s currently missing.
It’s worth noting that inland flood coverage doesn’t apply to flooding from coastal waters; such events are rarely covered by home insurance.
If you own a house, then guaranteed building replacement cost coverage guarantees that your policy will pay to rebuild your house, even if doing so costs more than the coverage limit.
With market fluctuations, and catastrophic events such as wildfires and earthquakes, the cost to rebuild your house can increase dramatically from the amount you originally insured it for. At Square One, we include Guaranteed Building Replacement on all of our policies, except mobile home properties. This ensures that you don’t end up paying out of pocket if you unexpectedly can’t rebuild your home for the amount of coverage carried on your policy.
Your policy may alternatively have extended replacement cost coverage. This is similar, but not as extensive as its guaranteed cousin. Extended replacement cost coverage will cover extra costs to rebuild or replace the home, but only up to a certain percentage.
In the event of a loss that requires physical reconstruction, your house will suddenly become subject to present-day building codes and bylaws.
The bylaws in your area may have changed since your house was built, or may require that you rebuild your entire house even if it’s only partially damaged. Either situation probably means significant additional costs. Without bylaw coverage, you would have to pay out of your own pocket for the overages.
Bylaw coverage is another optional add-on available from most home insurance providers. Square One automatically covers the cost to upgrade your building after an insured loss to comply with current mandatory codes or bylaws—with no limit. This is a very important coverage that is often overlooked. Without it, you could be out thousands of dollars.
Condo owners have additional unique insurance needs.
For example, improvements/upgrades coverage to protect changes to the unit since it was originally constructed. The condo building’s master policy will pay to rebuild the building, but any improvements an owner makes to their own unit are not covered—their personal policy needs to pick up the gap, and will only do so if that coverage is in place.
Another important condo coverage is for condo property deductible assessments. This covers the costs if the condo board charges you with a portion (or all) of their deductible.
And, coverage for condo property or liability damage assessments to protect you if you’re assessed for a portion of any loss the condo building suffers for which they don’t have adequate insurance.
Traditional insurance policies provide a specified amount of coverage for certain specialty items, whether you own any or not. These items include sporting equipment, bicycles, computers, cell phones, jewellery, silverware, and collectible items.
It’s important to review your policy to see how these specialty items are covered, whether they are subject to sublimits or excluded entirely.
For example, Square One policies exclude a number of specialty categories by default. When you buy a policy, you can specify exactly the amount of coverage you need for each category of specialty property.
To make sure you have the coverage you need:
Knowing you’re paying a fair premium can be tough. If you feel like the grass may be greener elsewhere, there’s no harm in seeking other home insurance quotes. You may even find better coverage while you’re at it.
Want to learn more? Visit our Home Insurance Basics resource centre for dozens of helpful articles to guide you through the ins and outs of home insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
About the expert: Daniel Mirkovic
A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.
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