Why do I need Liability Coverage?
You can get liability insurance for your car or your home, or to cover actions you take in the course of your profession. Liability polices are sometimes called “third-party policies.” You might need liability coverages to provide compensation to third parties who are injured or whose property is damaged due to the fault of the insurance holder. Liability coverages also provide coverage for your legal defense costs should you be named in a lawsuit.
Does my homeowners policy cover my home-based business?
The property pertaining to your business may be covered by your home insurance, subject to policy limits, but normally only while the property is on your premises. Your homeowner’s liability, however, will not cover your business operations, a separate commercial policy would be required for that.
Why is the value (selling price) of my home different from the insured amount?
The selling price of your home is based on what you or someone else deems as “valuable” based on quality, appearance and maintenance, as well as other factors. The replacement cost also known as the “dwelling” amount or “insured amount,” is the actual rebuilding cost based on historical data for replacement of homes of like kind and quality. Our evaluation software generates estimated replacement costs of residential dwellings and is used in over 1500 brokerages, credit unions and insurance company offices across Canada. We will periodically re-evaluate your home based on information that we already have on file to ensure that the insured amount for your home has kept up to date with the rising costs of building materials.
Why does my home insurance premium increase every year?
Every insurance policy increases on an annual basis due to inflation. This increase is an ongoing policy feature every year but is not accounted for until the renewal. Canadian insurance companies may also implement rate increases for some of the following reasons:
- The amount charged for insurance has not kept up with the increasing cost of claims which has outpaced inflation by almost two to one.
- Reinsurance costs have risen sharply due to major disasters such as September 11th
- Insurance fraud now totals $ 1.3 billion a year in Canada – $1 for every $10 of claims paid.
- Insurance coverage has become more comprehensive over the past five years; this allows more claims to be paid and increases costs.
Since premiums are set by the insurance companies, we have no control over them. We do however encourage you to be sure you have applied for all applicable discounts. Some companies offer discounts on premiums in certain situations for example:
- Individuals who are over the age of 50.
- Individuals who are mortgage free.
- Individuals with an alarm system for burglary and/or fire, particularly those monitored 24 hours by a central monitoring station.
- Individuals who have been claims free for at least 3 years consecutively
What is the difference between the Broad form coverages & Comprehensive form coverages?
When a property insurance policy is written on a Broad form, you only receive coverage for your items if they are damaged by a covered cause of loss listed on your insurance policy. These are classed into 15 causes of loss:
- Fire or lightning
- Falling objects
- Impact by aircraft, spacecraft or land vehicle,
- Vandalism or malicious acts
- Water escape, rupture, or freezing
- Windstorm or hail
- Breakage of glass
- Theft including damage caused by attempted theft
- Weight of ice, snow or sleet
- Collapse of a building or any part of a building
If the damage to your home is caused by something other than those 15 things, there will be no insurance coverage. In addition, it is important to check your policy for the definition of those 15 causes of loss because the insurance company can limit or exclude how the insurance applies. For example, if your home is damaged because you didn’t maintain your sprinkler system properly there would be no coverage; however, if a fire causes the sprinkler system to go off, the policy would pay to repair the damage caused by the sprinkler.
Note that with Broad forms the insurance company has the duty to specifically include coverage. If it’s not included on the list, it’s not covered.
Another common property insurance form is the Comprehensive form, formerly referred to as “all risk.” When a property policy is written on a comprehensive form, the insurance company has a duty to specifically exclude coverage. Simply put, if the insurance company does not exclude coverage in writing, the damage to your property will be paid for. There are many common exclusions, for example: government action, nuclear hazard, war and military action, water damage (e.g. flood), fungus, and pollution. At the end of the day, however, the comprehensive form gives you much more comprehensive insurance protection than the broad forms.
Why are some things excluded from insurance policies?
Insurance policies do not cover everything. Certain situations, perils and property are excluded which are either classified as uninsurable, such as flooding or nuclear accidents, or which are covered under more specialized policies, (e.g. a homeowners policy will not cover an automobile or an aircraft). Coverage for perils or property that is normally excluded by the policy can sometimes be added to a policy in the form of an endorsement or floater.
While there are some variations depending on the type of policy you purchase, generally, no policy covers the following perils:
- Damage caused by wear and tear, rust, corrosion, or gradual deterioration, like a leaking roof or a rusty oil tank that springs a leak because it hasn’t been properly maintained.
- Damage caused by vermin, rodents, and insects.
- Damage caused by flood.
- Damage from volcanic eruption.
- Damage caused by earth movement, including earthquakes, landslide, and mud flow (earthquake coverage is available, but it doesn’t come cheap).
- Damage caused by water seepage, through the foundation or an open window, for example.
- Water damage caused by pipes freezing if you are away for more than four consecutive days (unless you have someone checking your house on a daily basis, or the water system has been shut off and completely drained).
- Loss or damage occurring after your dwelling has been vacant for more than 30 days (not just because you’re on vacation, but because you have moved and do not intend to return).
- Intentional loss by, or at the direction of, an insured; in other words, fraudulent claims.
- Damage caused by Grow Operations which are illegal cultivation activities usually involving marijuana or other controlled drugs/substances.
- Damage caused by mould or contamination.
If my sewer backs up, would my basement be covered?
Your homeowners policy may not cover damage caused by sewer back-up. It is important to read your policy wordings to be aware of any restrictions and limitations pertaining to water damage. In many cases additional coverage for sewer backup can be added to your policy for an additional premium. Premiums and eligibility are often dependant on the area in which you live as well as sewer backup protection in place in your home.
What is an Independant Broker?
A person who represents a variety of insurance companies and who will assess your needs and develop an insurance plan tailored to meet your needs.
What is a deductible?
The amount you agree to pay per claim or accident toward the total cost of your insured loss.
What is a peril?
Causes of losses are known as perils. Your policy will list perils you are covered for – such as fire.
What if I hit my dock with my boat... is my boat covered?
Whether you hit a dock, a rock or another boat, your boat would not be covered unless you had additional watercraft insurance. Your homeowner’s policy would only provide you with limited coverage. Additional coverage is available at a cost dependent on the age and the size of your boat and the power and type of motor.
Ask us about additional watercraft coverage.
How do insurance companies decide what to charge for home insurance? My rates have gone up considerably, and I haven't even had any claims.
They calculate the price according to a number of “risk factors” – the criteria by which insurance companies rate your property.
Risk factors may include: construction materials (brick and stone houses are usually cheaper to insure than frame houses because of the greater risk of fire damage to frame houses); whether the owner lives in the house (owner-occupied houses are considered a better risk); and the location of the house (whether it’s within 1,000 feet of a fire hydrant; rural homes more than five miles from a fire hall may be very expensive to insure, because the longer it takes firefighters to reach your house, the greater the potential for loss).
In pricing your policy, insurers will also consider the presence of any safety features, like burglar alarms, smoke detectors, and fire extinguishers. Most companies will offer a discount to homeowners who have installed this equipment.
Safety issues prove to be a major concern for heating systems involving wood. Strict regulations are enforced regarding use and installation of wood stoves. All units must have a CSA, ULC or Warnock Hersey label to be approved. The installation must be in accordance with the manufacturer’s specifications.
Strict compliance is required with the installation of heat shields and clearances from combustibles. Insurers insist that a questionnaire be completed and photographs provided. If the information does not meet their criteria, they will either not accept the risk or demand that the unit be disconnected and removed entirely.
The price of your insurance will also reflect the type of insurance policy you choose. The broader the coverage, the more you will pay for it.
If I have several claims on my homeowners policy, will I be penalized by the insurance company?
Most companies offer a “Claims Free Discount” on policies that have been claims free for a number of years. When you put in a claim, you will often lose that claims free discount until you have been claims free for that number of years again. Additionally, if you have multiple claims in a 2 or 3 year period, or a history of many claims, you may not be eligible for the best rating group.
Insurance is there to protect you from the financial hardship of a major loss, If the claim is relatively small, it might not be beneficial to you to put in a claim.
The insurance company cancelled my home insurance. Is it allowed to do this?
Yes, it is allowed, under certain conditions. But first, note that there is a difference between canceling your policy part-way through its term, and simply choosing not to renew it when it comes due. If you have too many claims and at least by the insurance company’s standards they may decide not to renew your policy.
Cancellation of your policy before its expiration date is another story. Although the insurer is not required to give any reason, it would likely cancel a policy for either of two reasons: you have not paid your premium; or you have withheld information from the insurance company about the property it was insuring.
If the insurer cancels your policy, it is legally required to give written notice, either delivered in person to your last-known address, or sent by registered mail to the post office nearest you. If the notice is personally served, the cancellation takes effect five days after it has been delivered to you. If it is sent by registered mail, as most insurers choose to do, the cancellation becomes effective 15 days after the day it is delivered to your post office. If you don’t pick it up from the post office, the cancellation will still take effect. The insurer must also refund your money on a pro rata basis for the amount of time remaining on your policy (as long as you paid your premium in the first place). In other words, if you paid for your policy for one year, and had six months remaining when your policy was cancelled, the insurer must refund you one half of your annual premium.
If your policy has been cancelled for non-payment, but you have a reasonable explanation for the mishap (maybe you thought your payment had been made but there was a mixup ) you can ask the insurer to resume your coverage. The insurer might be willing to do so if it believes you made an honest attempt to pay the premium.
Whatever the reason for it, a cancellation is not to be taken lightly; more than likely, the company that cancelled you will submit that information to a database used to track property claims history, so it will follow you to the next insurance company you apply to. If that company is willing to insure you (and there’s a good chance it won’t) it will likely be at a much higher rate. You may even have to turn to one of the so-called “non-standard” or “high-risk” insurers to obtain coverage, at an increase in premium of two to three times what you paid in the past.
Also, company that you have been a client for an extended period of time is more likely to work with you when considering cancellation.
I live with two roommates. Do we need separate home insurance policies?
Check with your insurance provider. Usually the companies limit two unrelated persons to be covered under one policy. However, individual policies protect you only and you alone are in control of submitting claims. A policy in two names would have a negative effect on both parties with respect to claims experience even if the property claimed for belonged to only one of the named parties. Remember, if only one of you purchases the policy in his or her own name, the other two will not be covered.