What Your Home Insurance Covers - And What It Doesn't
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.
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. There is NO insurance policy that covers ALL risks; every policy contains fine print and exclusions fall into two categories:
1. The first grouping is 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. The spirit of your insurance policy is to address things that happen suddenly and accidentally. 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: 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 decide to paint the living room wall. As you take on your debut 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 an exclusion for spilling paint! However, let’s assume the paint also splashed onto your sofa. Broad coverage will repair the flooring and completely disregard the damaged couch. Comprehensive includes the added benefit of accidental damage to belongings and would pay out both the floor and furniture claim!
I recommend you have a candid conversation with your insurance professional and confirm your coverage is the right fit for your lifestyle…that is unless you like speckled leather?