Home Insurance 101

Making assumptions about what your home insurance covers is actually fairly common. The result is that many homeowners do not understand the terms of their coverage as well as they should, and could be unpleasantly surprised in the event of a claim. By taking the time to study your coverage terms, you will be better prepared should an unfortunate incident occur.

Popular Misconceptions

• Home insurance coverage is only good for protecting your dwelling and personal property.
  
  Actual Case: Protecting your dwelling and personal property are certainly important coverages — particularly with respect to potentially catastrophic events such as fire. However, your home insurance policy also provides you with liability insurance, which can be equally important given the potential for high-valued lawsuits, if you are legally responsible for damage to another person or their property.
  
  Additional Notes: In the case of property damage, most policies typically provide coverage for additional living expenses should your home be uninhabitable as the result of an insured loss. These additional expenses may be available to a policyholder during the repair or reconstruction process.
  
  
• Home insurance policies will cover water damage.
  
  Actual Case: Most policies include some coverage for water damage, but there are also terms, conditions, and exclusions that you should be aware of. A standard home insurance policy will likely cover water damage caused by a source inside your home, such as a burst pipe. However, coverage for damage caused by external sources is usually purchased separately as part of a total water damage protection package. This can include Sewer Backup coverage which provides protection when water enters your home from a sewer line or Overland Water coverage caused by overflow of a lake or river, heavy rain, or rapid snowmelt that enters your home from a point at or above ground level.
  
  Additional Notes: Purchasing a water mitigation device such as a sump pump or backwater valve may provide a discount on your home insurance premium. In some areas, certain types of water damage coverage may not be available. Ask your licensed insurance broker about the cost and availability of these valuable coverages.
   
• Home insurance policies provide coverage for everything you own, including valuables.
  
  Actual Case: Again, this is true to a point. Coverage for your personal property is subject to the limits, terms, conditions, and exclusions of your policy. Most policies will specify limits for certain types of personal property such as jewellery, cash, collectible items (including coins or baseball cards, and wine collections), bicycles and watercraft to name a few. Review your policy and be aware of these special limits of insurance. 
  
  Additional Notes: It may be necessary to obtain appraisals and purchase additional coverage for high-value or collectible items or to provide you with additional coverage above the limits outlined in your policy. Ask your licensed insurance broker for advice.
   
• When you purchase home insurance, your dwelling is always protected.
  
  Actual Case: Your dwelling is protected in accordance with the limits, terms, conditions, and exclusions outlined in your policy. For example, when you go on vacation, your policy requires that you take precautions to ensure your home remains heated during the winter to avoid frozen or burst water pipes. For this reason, many home insurance policies will require you to have a friend, neighbour, or relative check on your home at specified intervals to ensure the furnace is working and the heating is maintained.
  
  Additional Notes: Homes left unattended for extended periods can also become a target for thieves. Having people you trust check your home periodically, turn on lights, pick-up the mail, or shovel the driveway will help make your home looked occupied as this can help prevent a break-in. Anytime your home is left unoccupied for vacant you should report this to your  insurance broker.
   
• If there is an “Act of God,” my home insurance won’t cover it.
  
  Actual Case: There generally isn’t an exclusion for “Acts of God” and your home insurance usually provides policy coverage for most natural disasters such as wildfires, ice storms, and some types of windstorm or hail. However, some natural disasters such as flood, landslides, and earth movement are not typically covered, although some insurers will allow you to purchase earthquake coverage separately. 
  
  Additional Notes: The cost for earthquake coverage will vary widely across Canada, as certain regions are more prone to that type of risk. Ask your licensed insurance broker for a quote in your area.

Understanding your coverage is critical to ensuring the protection you expect is in place when you need it. It is important to review your policy and policy wordings and remember that your coverage is subject to the limits, terms, conditions, and exclusions of your insurance contract.

If you have questions or wish to discuss your coverage, please contact your Marsh’s Private Client Services licensed insurance broker..
 

^{This document and any recommendations, analysis, or advice provided by Marsh (collectively, the “Marsh Analysis”) are not intended to be taken as advice regarding any individual situation and should not be relied upon as such. This document contains proprietary, confidential information of Marsh and may not be shared with any third party, including other insurance producers, without Marsh’s prior written consent. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modelling, analytics, or projections are subject to inherent uncertainty, and the Marsh Analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Except as may be set forth in an agreement between you and Marsh, Marsh shall have no obligation to update the Marsh Analysis and shall have no liability to you or any other party with regard to the Marsh Analysis or to any services provided by a third party to you or Marsh. Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.}