home insurance brampton

12 Home Insurance Myths (and Facts)

We invest a fortune in owning a home that is why it becomes equally important to protect the property and other assets inside the same against any unforeseen risks by opting for a good home insurance.

Home insurance protects against any damage to the property and its contents and saves you from having to shell out a huge amount at once to rebuild or repair the damages and all the same at a very difficult and emotional time.

Though home insurance is not mandated by law but insuring your house can give you peace of mind especially with modern day risk factors which are on the rise like severe weather, increasing crime rate etc. confirming accurate replacement value and keeping a current home inventory are important steps. Separate endorsements are also available for high-value items like jewellery, furniture or artifacts. While opting for home insurance; it is of utmost importance to understand the limitations in your policy. For example, additional living expenses are included if you are temporarily unable to live in your home due to an insured loss. Your Homeowners policy also generally provides your personal liability in case someone trips and falls on your property or in your home, or you damage a third party’s property accidentally injuring someone else.

So it is extremely important to read the details rather than relying on inaccurate myths to inform your coverage decisions.

1.MYTH: Home Insurance is mandatory.

FACT: The home insurance has not been made mandatory by the government. But generally, your mortgage provider, often, your bank or lender will require that you hold an active home insurance policy and name them on that policy. If the property is rented, the landlord may require that you have renter’s insurance.

2. MYTH: The house is covered even if the owner is away for some work or on vacation.

FACT: The house owner is supposed to take some precautionary steps before proceeding out of home for long period of time failing which the house insurance for that particular scenario will not be honoured. All these precautions and mandatory checks etc. are mentioned in the policy document For example, if you go away during the “usual heating season” then you usually need to either:

Shut off the home’s water supply and empty all pipes or take steps to ensure the home’s heating is maintained. If you don’t take one of these two precautions, then you may not be protected against water damage resulting from frozen pipes that burst. Check with your provider to determine what length of vacation requires you to take extra precautions, such as somebody visiting your place on a regular basis in your absence. Different policies may require different frequency of those visits, but in general it is every 3-7 days.

3. MYTH: All valuables in the home are covered in the standard home insurance policy.

FACT: A standard home insurance policy covers your personal property including valuables up to a predetermined limit which is mentioned in the policy document. In case some expensive item the price of which is over and above the limit specified in the standard policy needs to be covered like jewellery; then you need to apply for add-on policy to extend the sub limits to the standard policy.

4. MYTH: Standard home insurance policy includes sewer backup.

FACT: Sewer backup protection is not included in default standard insurance policies and needs to be opted in as an add-on insurance. However, a few insurance providers incorporate it in their standard home insurance policies. Please check the policy document for clarity on this rather than assuming anything.

5. MYTH: Flooding damage is included in the standard policy.

FACT: The standard policy does not provide coverage against the overland Flooding wherein water flows over normally dry land and enters your home through doors, windows etc. like in the case of river overflowing its banks or snow melting . However, a standard home insurance policy protects you against sudden and accidental entry, or release of, water in your home (e.g. burst pipes). Flood protection can be taken as an add-on protection.

6. MYTH: A standard home insurance provides protection to the house only and nothing more..

FACT: Generally the house and its contents are covered in the standard insurance policy and it also covers any detached structures on the property, additional living expenses you may incur if the house is uninhabitable, and personal liability exposures you may face.
For condos, the policies also cover unit owner improvements and some assessments made against you by the condo corporation.

7. MYTH: Home insurance covers the market value of my house.

FACT: Home insurance does not cover market value, but it is limited to only the rebuilding or replacement value of your house. If your house burns down, the purpose of home insurance is to cover the costs required to rebuild the house as it was before the loss. Rebuilding value is typically lower than market value because it does not include the value of the land.

8. MYTH: Home insurance covers earthquakes.

FACT: Your home insurance covers earthquake damage only if you purchased an “earthquake rider” on your policy. These are mostly meaningful in British Columbia and Quebec.

9. MYTH: Insurance is cheaper for older, less expensive homes.

FACT: Insurance is usually more expensive for older houses due to high risk that something will go wrong, and it will cost more for the insurer to fix it. Also, many older house elements, such as plumbing, are more likely to fail than plumbing in new homes that use upgraded pipes and materials.

10. MYTH: Insurance covers damages caused by termites and other insects.

FACT: These are generally not covered in the standard home insurance policy.

11. MYTH: Condominium corporations provide insurance that covers my condo.

FACT: Condominium corporation insurance will cover the overall building structure, its exterior finishes, roof, windows and common areas like elevators and hallways. It does not cover the contents of your condo, its upgrades and 3rd party liability should you cause damage to other condo units (i.e. via flooding).

12. MYTH: In case of a tenant, it is the responsibility of landlord’s insurance to covers everything.

FACT: No. Landlord’s insurance does not cover the tenants liability (i.e. if you flood your neighbours’) and your contents (if something is stolen from your unit). A landlord may require you to have a tenant insurance policy.

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