Homeowners Insurance Protects More than You Think
Your home insurance policy protects you and your stuff in emergencies, from fires to theft and vandalism. However, as brokers, we have heard the phrase from our clients, “What does my policy even cover?” Well, it covers a lot more than you might think; however, the golden rule to keep in mind when considering your insurance is this: your insurance is designed to provide financial coverage to put you, the insured, back in the same position you were before your loss. Here are some of the mystery coverages included in your wording to help achieve this:
Definition of Insured
Ever wonder what the most common question our advisors get asked is? It’s: “Is _______ covered underneath my policy?” You can fill in the blank however it applies to you; it can be your common law, your grandparent, your child, your cousin, etc. So, what is an insured? The definition of insured is the person(s) named on your policy and the following unnamed person(s) living in the same household:
- The spouse of the person(s) named on the policy. This can include common law partnerships if they’ve been continuously living together for 2 years or if they are the natural or adoptive parents of a child and have been living continuously together for 1 year.
- The relatives of any of the above.
- Anyone in the care of any of the above.
- Any unmarried student(s) attending school and residing away from home whose dependent on the person(s) named on the policy for financial support.
- Any spouse, mother, father, grandmother, grandfather or child on the person(s) named on the policy while residing in an approved nursing or care home.
Additional Living Expense
More often than not, you’ll see this coverage indicated on the cover page of your policy if it’s applicable. However, in most homeowners insurance cases, this coverage gets included as part of the bread and butter of your policy. The bread is your house and belongings, the butter being additional living expenses. In a nutshell, what this coverage does is in the event of a covered loss, additional living will pay for you to maintain your standard of living if you are prevented from staying at your current home.
Hold on; we can break this down some more! Take, for example, if you have a fire at your home and perhaps it burns down half the house. No one is expecting you to stay in the charred remains of your home, and the fire department certainly won’t let you stay there. What you need is a hotel to stay in. What about food? If there’s no access to a kitchen, you’ll have to start eating out. For example, you can claim the hotel and the food receipts under additional living expenses while undergoing your claim.
Remember, coverage for additional living expenses on your home insurance policy can only be triggered by a covered claim. In other words, your insurance policy cannot pay for temporary housing if you simply decide to update your kitchen and want to escape the temporary clutter. But if your home is damaged due to a covered peril and becomes temporarily unlivable, your home insurance policy helps ensure a safe landing in temporary living accommodations. This coverage can cover a broad range of living expenses, including housing, meals, storage, mileage, or even pet boarding.
If your house or outbuilding is damaged by a covered claim and must be rebuilt, there may be extra expenses you didn’t account for when adhering to local codes and bylaws. If a structure is being rebuilt, building bylaw coverage protects the homeowner from any increase in the cost of repairing or rebuilding due to the minimum requirement stated by any bylaw regulation, ordinance or law which regulates such repairs.
The coverage protects you by covering additional work or material costs to bring the structure up to the current building code. Of course, like any insurance coverage, there are always provisions to using it, so check out your policy wording for the restrictions applicable. For example, one provision states that bylaw coverage can only be used if the original construction (and any subsequent renovations) complied with the building codes and bylaws at the time of construction or altercation.
Urban and suburban areas often change their bylaws to protect their citizens and buildings from losses better. These changes can be summed up as:
- New Safety Standards such as sprinkler systems, carbon monoxide monitors, and flame retardant panels protect people and property.
- Updated Best Practices, such as hard-wired smoke alarms versus traditional battery-operated alarms, that increase safety for occupants.
- Changing Features of cities and towns. For example, the city now requires underground electrical connections to service the house.
- Homes are Aging. Many Canadians do not live in newly built homes. As homes age and municipalities continue to update and create bylaws to protect people, it affects how much work will need to be done to a home if a loss occurs.
Pairs & Sets
This coverage pertains to belongings and unique items such as antiques or jewellery. A pair is a set of two things used together or regarded as one unit; earrings are an excellent example. The rule regarding a pair is: if there is a loss to half of a pair, your insurer will pay for the complete pair. A set is defined as a collection of distinct objects that are conceived as a whole. For example, if a chair were destroyed, the policy would respond by replacing it but not pay for the matching sofa unless it was damaged.
Bet you’re thinking, “Well, what is a set then?” A fine example would be those outdoor seating sets that are so popular that are made up of individual pieces that form the couch as a whole. For example, if the end piece is damaged, you can no longer form the whole couch. The entire set would then need to be replaced to make the couch whole again.
Stuff in Storage
The second most popular question our advisors get is, “Is there coverage for my stuff while it’s in storage?” This is a great question, with a rather simple answer: YES! But what is defined by ‘storage’ on your policy? Your belongings coverage can be extended to include the following:
- Item kept in a safety deposit box.
- Belongings in a commercial storage facility or occupied private dwelling.
- Your stuff while you move to a new location in Canada for up to 30 days from the day you start the move covering them while they are at your current premise, in transit, and at your new premise.
There are more instances than the three I’ve listed above, so check out your wording booklet underneath the Belongings coverage section to learn more. Keep in mind there are some limits on the kinds of belongings your insurance company will cover and the amount that can be paid. For example, there are typically limits on items such as bicycles, jewellery, furs, etc.
Not all home insurance policies cover the same risks. However, there is a lot of overlap, and most of the most significant risks are covered regardless of your policy type. Discuss your coverage options with your advisor or broker. You can customize your coverage to invest your premiums where you need the most protection. Do you want to connect with a team member to discuss your policy coverage?