Regarding home insurance in Canada, we've separated the myths from the facts. Home insurance is a complicated topic, and if you don't read the fine print, you could be making coverage decisions based on widely held insurance fallacies. Let's dispel some home insurance myths and get the facts straight !
MYTH: Homeowners Insurance is Required
FACT: Is home insurance a legal requirement? Home insurance, unlike motor insurance, is not mandated by the government. If you inquire, "Is home insurance required for a mortgage?" you will receive a different response. If you own the property and have a mortgage on it, your bank or lender will almost always need you to have an active home insurance policy with them named on it. If you rent a home rather than own it, your landlord may require you to get renter's insurance !
MYTH: My House is Insured If I Go On Vacation
FACT: You are not always covered if you merely go on vacation without taking measures. If you leave during the "normal heating season," you must either: turn off the water supply and empty all pipes or take steps to ensure that the home's heating is maintained. You may not be safeguarded against water damage caused by frozen pipes that burst if you don't follow one of these two procedures. Check with your provider to see how long of a vacation you'll need to take extra precautions, such as having someone visit your home regularly while you're gone. Different policies may dictate different visits, but they are generally scheduled every three to seven days !
MYTH: I'm Insured If I Have Valuables
FACT: Your personal belongings and most valuables are covered by a typical house insurance policy up to the insurance amount you choose. It's worth noting that sub-limits frequently apply to specialty items like jewellery and furs. You can choose to add coverage for these products to your insurance. You will often be required to present proof of value (e.g. an appraisal or a receipt) !
MYTH: My Home Insurance Premiums are Unaffected By Current Events
FACT: They certainly can. When the initial COVID lockdowns took place, there was an uptick in burns and claims. There was speculation that this might result in a jump in the cost of home insurance, but this did not appear to be the case (luckily). On the other hand, climate change has had and will continue to have an impact on your home insurance rates. Premiums are charged to reflect the increased risk of extreme weather events caused by climate change (such as flooding and fires) in certain parts of the country !
MYTH: I'm Covered Against Sewer Backup If I Have Homeowners Insurance
FACT: Sewer backup damage happens when sanitary and storm sewer systems cannot handle large amounts of water, causing water to back up into your property through toilets and drains. Most providers offer some optional sewer backup protection, much as they do with freshwater flood protection, but it is rarely included in regular insurance plans. Only a few companies offer it as part of their basic house insurance coverage !
MYTH: Flooding is Covered By My Insurance
FACT: Does home insurance cover flooding ? It is dependent on the sort of coverage you have. In most cases, a house insurance policy will protect you against the unexpected entry or release of water in your property (e.g., burst pipes). A regular homeowner's policy may not cover "overland flooding," which occurs when water rushes over normally dry land and enters your home through doors and windows, such as when a river overflows its banks or snow melts. Here's something interesting: Flood insurance was not available to Canadians until 2015. Instead, homeowners and renters had to rely on the government's catastrophe financial aid programs. Most home insurance companies now give freshwater flood insurance as an option !
MYTH: My Homeowners Insurance Solely Covers the Construction Of My Property
FACT: Home insurance coverage cover both the construction and the contents of your home. Any constructions on the property (your shed, detached garage), additional living expenditures you may pay if the house becomes uninhabitable, and personal liability risks you may face are all covered by insurance. Condo policies also cover unit owner upgrades and some condo corporation assessments imposed against you. Make certain you have a solid comprehension of all it covers !
MYTH: My Homeowner's Insurance Covers my Home's Market Worth
FACT: Home insurance only covers the cost of rebuilding or replacing your home, not its market worth. The goal of home insurance is to cover the costs of rebuilding your home to its previous condition if it burns down. Because it excludes the value of the land, rebuilding value is often lower than market value. In the case of your house burning down, the land is still there, so your insurance company does not have to "replace" it. Clean-up expenditures, such as those incurred after a fire, are frequently covered by insurance policies !
MYTH: Earthquake Coverage is Included in Homeowners Insurance
FACT: If you acquired an "earthquake rider" on your home insurance policy, it solely covers earthquake damage. In British Columbia and Quebec, these are particularly significant. Some companies, such as Square One Insurance, incorporate earthquake coverage as a standard in their policies !
MYTH: For Older & Less Expensive Homes, Insurance is Less Expensive
FACT: Insurance for older homes is usually more expensive. There is a greater possibility that something will go wrong, and the insurance will have to pay more to rectify it. In addition, many older houses' components, such as plumbing, are more prone to fail than newer houses with improved pipes and materials !
MYTH: My Condo is Covered By The Condominium Corporation
FACT: Condominium corporation insurance covers the general structure of the building, as well as the external finishes, roof, windows, and common facilities such as elevators and corridors. It does not cover the contents of your personal condo, improvements, or third-party liabilities if you cause damage to other condo units (i.e. via flooding) !
MYTH: Insurance Premiums are Same With Every Insurer
FACT: Home insurance premiums differ from one provider to the next. That's why it's a good idea to evaluate your alternatives when looking for insurance to ensure you're getting the best coverage at the best price. This is where your insurance agent can assist you. Insurance brokers scour the market on your behalf to bring the best coverage for your specific needs. They'll make sure you get the coverage you need at the best price, and they'll work with you to answer your questions, provide you with honest advice, and always put your needs first !
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