Published on 06.28.19
7 Home Insurance Myths Debunked
Home Insurance can definitely be tricky and difficult to navigate. Everyone’s insurance plan and provider is different and specific to their needs, making it hard to decipher rumors and suggestions from family members and friends. We’re here to debunk seven common home insurance myths to make getting the right coverage a little easier.
1) Myth: “Home insurance covers all my contents to the policy limits”
The Truth: Most all homeowners policies include contents coverage to a set limit as listed on the policy – or included in blanket coverages on the home. However, most insurance companies often use sub-limits for “special” items that are valuable such as jewellery, furs, collectibles, etc. to lower the coverage offered on these items for theft, mysterious disappearance or even any claim. They also exclude certain items such as automobiles, planes, certain watercrafts, etc. so it’s important to ask your insurance broker what special limits and exclusions apply when purchasing or renewing your home insurance policy. You may have the option of purchasing higher “special” limits, scheduling the item(s) with its own limit on the policy or insuring the item on its own policy altogether.
2) Myth: “Home insurance includes flooding coverages”
The Truth: You have to purchase additional coverages from most insurance companies to be covered for flood – if they even allow it in your area. A standard home insurance policy would cover sudden & accidental water damage – such as a pipe burst or hail/wind damage to the building allowing water to enter – but it would also exclude any “overland water” flooding caused by flash floods, snow melting or any water flowing over normally dry land.
Traditionally in Ontario, renters and homeowners alike rely on government-run disaster assistance programs, but in recent years these programs aren’t enough for the amount of damage flooding coverages and the insurance marketplace has had to stop in and offer additional “overland water coverages.” It’s important to review this with a broker and be certain your policy has the right water coverage for your needs.
3) Myth: “Home insurance covers the purchase price of my home”
The Truth: Home insurance only covers the rebuilding cost in the value of your home, along with set limits for detached private structures (like sheds & garages), additional living expenses during a claim, your contents and even additional costs such as debris removal. But, it does not consider the market value or purchase price of the home as the land itself will remain; therefore, the insurance company won’t have to replace any land – just the building(s) on it and their contents. As such, if you insure the home to the purchase price, you may be buying much more coverage than is needed.
4) Myth: “My home insurance is all risk; I don’t need to worry about earthquake coverage”
The Truth: Depending on your insurance provider and the province you live in, this coverage may not be included in your policy and may not even be offered. As earthquakes increase in magnitude across Canada, including Ontario, this becomes a more important coverage to consider adding to your policy.
Fact: Your home insurance covers earthquake damage only if you purchase an “earthquake rider” on your policy. These are mostly meaningful in British Columbia and Quebec. Some providers, like Square One Insurance, automatically include earthquake protection in their policy.
5) Myth: “If my home is covered, my home office is covered”
The Truth: This is only true if you are an employee or student. If the insurance provider is unaware of your home-based business, you may not be protected and could have any claims denied. To ensure you, your business and your home are fully covered, you need to discuss this with an insurance broker. Most policies allow for some home-based businesses to be covered, with little to no additional cost.
6) Myth: “I pay for building insurance with my condominium fees, so my unit’s covered”
The Truth: Although the maintenance fees may go towards the condominium corporation’s insurance, this building coverage package may have many gaps and exclusions. Not only would your contents not be covered, but any fittings, fixtures, upgrades and renovations would also not be covered. This also includes liability to others stemming from your negligence or negligent maintenance to the unit – as per the condo by-laws.
Furthermore, condominium corporations run a tight budget to prevent maintenance fees from increasing and lowering your property value. If any insurance claims arose they would bill the individual unit owners for their portion of the deductible. If it’s not fully covered, they’ll bill each unit owner their portion of the claim; whereas, your own condo unit owner’s policy would cover these costs. This becomes increasingly important if your condo building chooses to lower expenses by dropping their insurance coverage.
7) Myth: “I’m just renting so my landlord’s insurance covers everything”
The Truth: Landlord’s insurance does not cover tenant’s personal liability or property. If you’re a tenant, you can still get sued by your landlord, neighbours, guests or even trespassers if they’re injured on the property. Anything you’ve brought to the home, or improved upon, would not be covered under the landlord’s insurance either. Not only will a prudent landlord require you to carry tenants insurance for these things, you’ll also have liability coverage worldwide for negligence with most policies and you can even save up to 20% off your auto insurance by bundling.
It’s also important for landlords to consider the right coverage as well. Not all policies are equal and some do not include rental income coverages; some even go as far as excluding damage caused by tenants. It’s important to discuss the wording of your landlord’s policy with an insurance broker so you can be sure of any gaps in coverage.
At Foxquilt, we work with some of Canada’s leading insurance providers which means you actually have buying power and multiple options to choose from to find the right plan for you. We’re also more than your insurance broker, you’re a part of our Foxquilt community so we’re dedicated to finding the best, correct plan for you because we know how frustrating and confusing home insurance can be.