Let's Get You The Facts About Home Insurance Myths

Insurance can be complicated. Most of us know we need insurance, but when it comes to specific details, you may need clarification. Uncertainty can lead to misinformation, myths and misunderstandings - this is where our insurance brokers can help. Home insurance is critical when you own a property and ensuring you understand your coverage is vital. Our team of expert brokers has compiled ten myths they have encountered and answered for many of our customers. 

1. Is My Home's Insurable Value Based on Its Market Value?

Your home insurance should be based on its replacement cost, not market value. The replacement cost is how much it would cost to rebuild a home. The concept is to get you back to how you were before a loss. Your property coverage is a contract between an insured (a homeowner) and an insurer (an insurance company) to provide compensation in case of perils outlined in an insurance policy document in exchange for a premium. Guidance from an expert broker is helpful to ensure your home policy covers the correct risks.

2. Do I Have to Buy Home Insurance?

Ontario law does not require homeowners to insure their homes. That said, our homes are often our most significant financial investment, and it makes sense to protect them with insurance in case of unfortunate events. For example, if you have a fire in your kitchen and need to rebuild it, your policy provides coverage for fire, and the insurance company will financially compensate you for the loss. If you don't have the right coverage, you will have to cover the rebuild costs yourself. Further, the annual cost to insure your home will undoubtedly be far less than a kitchen rebuild. A homeowner's insurance policy typically covers 

• Dwelling
• Contents
• Liability
• Theft
• Fire
• Explosions
• Water Damage (Specific types)
• Natural Disasters
• And More

Several factors, including replacement cost, square footage, the age and construction of your home, and location, impact the price of your policy.

Also, financing your home with a mortgage will require you to have your home insured. A home policy provides financial protection for both the mortgage holder and the homeowner.

While purchasing home insurance may feel complicated, this process can be more straightforward once some research has been done. Many insurance companies have web pages that provide Q&As with experts to answer their customers' frequently asked questions—doing your research beforehand will give you the advantage once you sit down with your expert Morison Insurance broker. 

3. Does Homeowners Insurance Only Cover My Dwelling?

Homeowners insurance covers your dwelling and much more. Your insurance covers your property and your dwelling's contents. It provides personal liability protection in case of an accident in your home or property. It can also protect other structures on your property, such as a garage. Your home is a valuable asset that should be protected against fire, theft, natural disasters, etc.

You are not legally required to have insurance for your home, but mortgage lenders will almost certainly require it before you purchase a home. The insurance you will need for your home depends on your house, including where it is located, its size, age and other details. For example, if your home is over a specific value or includes special features, you may need high-value home insurance instead of a standard policy.  A standard homeowners policy covers perils like certain types of water damage, fire, theft, contents and liability coverage, including bodily injury and property damage liability coverage. There are limitations and exclusions to coverages depending on the type you purchase. Other coverage options are available to homeowners, including additional protection for water damage, sewer backup, and more.

The insurance for your home is not one-size-fits-all and goes well beyond covering your dwelling. Your insurance coverage should be tailored to your specific needs. A licenced insurance broker can advise you on insurance coverages and shop for several insurance companies to get you a competitive price for your spending.

4. Does My Home Policy Automatically Cover Valuables?

A home policy includes coverage for belongings in your dwelling, including valuables, but coverage is limited. A standard home policy may need additional protection for valuable items such as jewellery coverage, wine cellar insurance, luxury watch insurance or other items. For example, many home policies limit jewellery coverage to between $2,000 and $10,000 (less deductible), and some policies also limit the amount payable for any one item. Discuss the value of your belongings with an insurance broker to be sure you get proper protection for your valuables.

5. Does My Home Policy Always Cover Flood Damage?

Water damage is included in the home policy; however, it is essential to know that some types of water damage are covered and some are not. Depending on your situation, you may need additional water coverage to be protected.

Most home policies cover claims such as a burst pipe, a roof leak, appliance overflows, sump pump malfunction, and sewer backup. Many companies will also have additional coverages available to purchase, including groundwater and overland water coverage. 

Groundwater coverage protects you if water enters your home through a ‘pre-existing’ crack in a foundation or due to a sudden and accidental occurrence, such as a heavy rain storm. The key is ‘sudden and accidental.' No policy will cover leakage or seepage over time.

Overland water coverage refers to freshwater flooding when water enters your home from ground level (doors and windows) due to an event such as a sudden rainstorm or a spring thaw. However, overland water coverage may not be available if you live in a flood-prone area.

Not all companies offer the same standard water coverage, so details are essential. Coverage offered is driven primarily by your geographic location and proximity to a body of water. The infrastructure of a location can also modify it - for example, the capacity of a city or town’s system to handle excess water or sewage. The best thing any homeowner can do is to discuss water coverage, in detail, with their insurance broker to be sure they have coverage for their specific needs and to do what they can to prevent basement flooding.

6. Does My Homeowner's Insurance Policy Provide Coverage for the Maintenance and Upkeep of My Home?

Maintenance and upkeep are the homeowner's responsibility and are not covered by insurance. Your insurance covers sudden and accidental occurrences, not losses due to wear and tear or lack of maintenance.

For example, a home with aged and deteriorated shingles may leak when it rains. Your policy does not cover damage caused by this. However, your home policy will respond if shingles are well maintained and a roof leaks during a damaging rain and wind storm.

Similarly, insurance would not cover repairs to a deteriorated fence that has fallen over due to lack of upkeep or wear and tear over time. Most standard home policies, however, will cover damage to a fallen fence due to an insured peril, such as a windstorm.

A well-maintained home generally has fewer losses and claims, and insurance companies may offer lower premiums to a well-looked-after home. Also, if you have no claims or a no-claim history, you may save some money with a claims-free discount.

7. Is My Home Business Automatically Covered Through My Home Policy?

A home business is not automatically covered through a home policy. A standard home policy provides limited coverage, such as if you have business equipment stored in your home. We recommend that the owner who operates the business from their home purchase a home-based business policy. Some insurance companies may require this type of insurance depending on the business conducted. Additionally, having no coverage for your home-based business could negatively affect your insurance coverage and how an insurance company will respond to a claim. Insurance companies can request a home-based business package or commercial insurance, depending on the business type. We recommend discussing the details of your home-based business with your insurance broker. 

8. Do Condominium Corporations Provide Insurance That Covers My Condo Unit?

No, condominium corporations purchase insurance for the condo building and common areas, but this policy does not cover individual condo units or owners' belongings in their units. A condominium corporation's insurance will cover the building and areas such as an entry, hallways, activity rooms, gyms and other amenities that are used jointly.

Condominium owners are not legally required to have insurance; however, mortgage holders usually require a condo owner to have condo insurance. The condo corporation may also require owners to have their own condo coverage. Condo insurance is also sound protection to protect the owner's financial investment. Your policy will cover your unit and items inside your unit, such as furniture, art, jewellery, appliances, computers and more. Your condo coverage also provides liability protection for insured damage or injury to others while in your condo. There are coverage limits, so give details of your items to a Morison broker to get the right coverage that fits your needs.

9. If I Am a Renter, Does My Landlord's Insurance Cover Everything?

No, a renter is not protected by their landlord's insurance. Landlord insurance protects the rental building, such as an apartment building, vacation cottage, or rented home. As a renter, you should have tenant insurance to protect your belongings against claims such as theft or accidental damage. Tenants' coverage can cover contents, including electronics, laptops, and cell phones and can also provide coverage for additional living expenses if you are required to live elsewhere following a claim. Covering all your physical items, your coverage also provides liability coverage. 

An additional benefit of tenant insurance is it can provide you with insurance experience, which can be helpful when you are ready to purchase a first home. For example, if you are already an insurance customer, you may qualify for several home insurance discounts, including claims-free and loyalty discounts. Some landlords require tenants to have renters insurance before moving into their units. We recommend tenants have enough protection to cover the value of their possessions and at least $1 million in liability coverage. The cost of tenant insurance varies depending on what you want to insure and if you bundle your coverage with other policies such as auto. Speak with a broker for more information. 

10. Are Home Insurance Rates Standardized?

Yes, rates need to be standardized. Your premium is specific to your home. Factors such as the age of your home, its size, particular features, location, age of wiring, heating and plumbing, and if the basement is finished are considered when determining your home policy premium. Details of the homeowner, such as the homeowner's age, the number of years they have owned their own home or rented as a tenant or if the homeowner is mortgage free, are also considered. Discussing your home with an insurance broker is the first step to getting your home insured. After a broker has details on the house, they can go through dwelling coverage options with you and get quotes from several insurance companies to ensure your policy is competitively priced and have access to discounts to help you save.

Ensure You Have The Proper Coverage

The ins and outs of insurance can be complicated - and myths don’t make it easier. Our experienced broker team knows the truth and is here to ensure you have the insurance protection you want when purchasing a policy. Speak to an insurance broker who will guide you through buying insurance to find the competitively-priced protection you require. We work with you through the insurance-buying process, making it quick and easy. If you'd like to know more, call our professional team of brokers at 1-800-463-8074 to get started. We are happy to help.