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What Your Home Insurance Covers - And What It Doesn't

What Your Home Insurance Covers - And What It Doesn't

Home Shield, Platinum Guard, Extra, Prestige, Dolce Vita, Advantage are just a few of the special terms made up by insurers to confuse their clients. How are you supposed to know if you are comparing apples to oranges when you get a competing quote for your insurance renewal?

The Canadian government ruled that in order to sell a home insurance product there are minimum requirements. They provide all risk or named perils coverage and are commonly referred to as broad or comprehensive (doesn’t sound nearly as glamourous as the naming conventions above).

Broad coverage provides all risk coverage on your dwelling and named perils coverage on your belongings. In plain language, all risk coverage means that whatever peril your home is presented with IS insured UNLESS specifically excluded in the wordings. (I am not a fan of the term all risk because there is NO insurance policy that covers ALL risks)! Every policy contains the hated fine print and exclusions fall into two categories:

  1. The first grouping are disastrous in scale and would bankrupt any private insurance company: acts of war, terrorism, nuclear attack, overland flooding, etc. are common exclusions and any financial relief would most likely come from the government in the form of emergency funding
  2. The second bundle of exclusions is considered maintenance issues (AKA the ‘joys of home ownership’). You must remember that the spirit of your insurance policy is to address things that happen suddenly and accidentally. Your home shifting over the course of years, resulting in crack in the foundation and water seeping through the same is not an insured peril of the policy. Like the tires on your car your shingles will eventually need replacement because of aging. Claims for wear and tear will be declined by your insurer.

Rather than cite the exclusions to the structure, broad form cites the inclusions for your personal effects. Recall the legislation so this content coverage is not skimpy: it includes fire, lightning, explosion, smoke, falling object, impact, riot, vandalism, water escape/rupture/freezing, wind, hail, glass breakage, transportation, theft, damage by bears, weight of ice/snow/sleet and collapse.  

Comprehensive coverage provides all risk coverage on your dwelling and belongings. What all this confusion boils down to is the added benefits of mysterious disappearance and accidental damage of your belongings! Mysterious disappearance is insurance lingo for ‘you lost something’ (the diamond falls out of your engagement ring) and accidental damage is code for ‘you broke something’ (dropped your new flat screen TV). Comprehensive coverage would respond to these claims whereas broad coverage would not.

For example, you purchase your first home and understandably explain to your partner that you cannot stand the colour of the living room wall. As you take on your first DIY project, you spill paint all over the floor! Both broad and comprehensive policies will repair the hardwood/replace the carpet as there is not exclusion for spilling paint! However, let’s assume the paint also splashed onto your new leather sofa. Broad coverage will repair the flooring and completely disregard the damaged couch. Comprehensive includes the added benefit of accidental damage to belonging s and would pay out both the floor and furniture claim!

I recommend that you have a candid conversation with your insurance professionals and confirm your coverage is the right fit for your lifestyle…that is unless you like speckled leather?

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