10 common home insurance myths debunked
- MYTH: My home’s insurable value is based on its market value. FACT: The market value and the insurable value of a property are two very different estimates. Market value is the estimated price which your property could sell for. Insurable value is an estimate of the costs that would be required to completely reconstruct and replace your property in the event of a total loss. Unlike market value, insurable value does not include the cost of acquiring the land, but rather calculates the amount required for the materials and contractors necessary to completely rebuild your home. Therefore, it is not uncommon for the insurable value of a property to be lower than the market value.
- MYTH: Flood damage is always covered by my home insurance policy. FACT: It depends on the cause of the flood, and what your insurance policy coverage options are. Many homeowners are unaware that overland flooding, such as water swells from nearby rivers or lakes, is not covered under a standard home insurance policy. Though in most cases, it can be purchased and added to the policy. A home policy typically provides coverage for sudden and accidental bursting of plumbing pipes and appliances, however, water damage due to sewer backup is only covered if specific coverage has been purchased. Be sure to review your insurance policy and contact your broker if you’re unsure about your current water damage coverage.
- MYTH: All of my valuables, including jewelry, are covered under my home insurance policy. FACT: In the unfortunate event of an accident or theft, most home insurance policies will provide coverage for valuables such as jewelry, art and electronics, but this coverage has a limit. If the worth of your valuables exceeds the amount of coverage your special policy limit allows, you should consider scheduling these high-value items on your policy. Scheduling an item means that it will have its own deductible and insured amount (limit).
- MYTH: My home insurance policy covers earthquakes.FACT: Most home insurance policies do not automatically provide coverage for damage caused by earthquakes. If you live in a part of Canada that is at-risk for earthquakes, you should consider adding an earthquake coverage option to your policy. It’s a good idea to speak with your insurance broker about earthquake coverage, especially if your home is in an earthquake-prone area, such as Southern Ontario, Southern Quebec or the southwest coast of British Columbia.1
- MYTH: My home insurance policy covers damage caused by insects or rodents. FACT: Typically, home insurance policies do not provide coverage for damage caused by insects, squirrels, mice, rats, or raccoons. Review your insurance policy and speak with your insurance broker to confirm these details.
- MYTH: If I’m a renter or tenant, I don’t need insurance because my landlord’s policy will cover everything. FACT: If you do not have a tenant or renter’s insurance policy and a disaster were to occur in your building, there would be no coverage for your personal belongings. The physical structure of the building, as well as appliances, may be covered through your landlord’s policy, but your personal possessions would be left unprotected. Additionally, if an accident was to originate in your unit, such as a candle left burning, or a tap left on, you could be liable for damages to other units. Your landlord’s insurance will not be able to cover you if someone is injured in your unit. An accident, such as a slip or fall by another person that results in medical expenses, lost wages, and legal fees could be left at your expense. In addition, if you are unable to live in your building due to an insured peril, such as a fire, your tenant insurance would provide coverage for you to live elsewhere while the building is being repaired. If you are renting and do not currently have insurance coverage, consider a tenant insurance policy. Having your own tenant’s insurance policy would provide you with liability coverage to protect you and your belongings from these liability exposures.
- MYTH: If I have a roomer or boarder in my home, their belongings are covered under my home insurance policy. FACT: Similar to the myth debunked above, if you have a roomer or boarder in your home, their personal belongings are most likely not covered under your policy. Moreover, if you do rent out a room or rooms in your home, you’ll need to ensure that your insurance broker is aware, so they can confirm you have adequate coverage.
- MYTH: My home business is automatically covered through my home insurance policy. FACT: A home-based business is not automatically insured under the liability and contents coverage of a standard home insurance policy. If you do have a home-based business, you’ll need to let your insurance broker know so that you can discuss your insurance options together. Your broker will help you find the best coverage option, such as a home business extension to your current policy or a separate home-based business insurance policy, to make sure that both your home and your business are adequately protected.
- MYTH: My home insurance policy includes coverage for maintenance and upkeep to my home. FACT: Home insurance policies do not offer coverage for home maintenance or upkeep. For example, if your roof is old and in need of repair or replacement, it is your responsibility to cover this expense.
- MYTH: Home insurance rates are standardized, and will not change regardless of which insurer I choose to purchase a policy from. FACT: Home insurance rates vary from provider to provider. That’s why, when shopping for insurance, it's a good idea to compare your options to guarantee you're getting the best coverage at the best rate. This is where your insurance broker can help. Insurance brokers shop the market and work on your behalf to help you find the right coverage to suit your needs. They will ensure that you have the coverage you need at the best possible rate, and will work with you to answer your questions, make honest recommendations and to always put your interests first.
If you have any questions about your home insurance policy, or are currently shopping for home insurance, contact your OTIP insurance broker at 1-866-561-5559 to discuss your home insurance options.
1. Natural Resources Canada