Homework for today: your home insurance

Sunday, October 26th, 2003

Ashley Ford

Home insurance is treated with about as much enthusiasm as a dental visit by most homeowners.

“We know we have to have it but most people treat it like a trip to the dentist — they just want get in and out as quickly as possible,” says Dennis Prouse, Government Relations Manager with the Insurance Bureau of Canada.

“A lot of people don’t know who their insurance company even is, and some don’t even know where their policy is kept in the home,” he says. But a series of natural disasters that have befallen B.C. of late — from forest fires to SARS and floods — are serving as a wake-up call for consumers.

Home insurance — the only subject this story deals with — is a relatively simple business in what is an extremely complex insurance universe.

Although the onus is on consumers to keep themselves informed, Prouse says it’s only after disasters strike that the phones start ringing in his office and those of the 30 insurance companies operating in B.C.

However, clearing away the trees to see the forest is not difficult. It simply requires a common sense approach. Insurance coverage of your home and its contents should begin the moment you become the legal owner or tenant and arranging coverage is relatively straight forward.

“Home insurance is a product like anything else and the primary rule is to ask lots of questions and know exactly what you are buying, what is covered and what is not.”

Read your policy. If it is too complex to understand help is available through IBC’s website at www.ibc.ca, or various publications and brochures it produces.

The second most important thing is to “shop around.” There is no such thing as a standard home-insurance policy. Conditions and premiums in the highly competitive industry vary from company to company, Prouse says.

Many people don’t understand what the overriding philosophy of insurance is, he says.

It is intended to put things back the way they were before the tree fell on your roof, an earthquake hit, a fire and resulting water damage or a sewer backup. It is not to make them better than they were before, he says.

Virtually any risk can be insured against except flooding, Prouse says. “The only natural major disaster excluded is water over land.”

The words “Act of God” are an enduring myth. “They do not appear on any Canadian policy but the phrase always arises when disasters like the latest floods happen,” he says. Water damage is a very complex matter and must be addressed with your company or broker, Prouse advises.

Such things as earthquake coverage are readily available but, surprisingly, only 60 per cent of B.C. residents opt for the coverage, despite the fact the premiums are very reasonable compared with earthquake-prone California.

On all policies the “exclusions” or areas not covered are clearly spelled out. For instance, one newer exclusion concerns illegal marijuana grow operations.

Once again know exactly what is covered and what is not, he says. For instance, jewelry is a difficult area that should be carefully covered. The insurance company may require a schedule of jewelry and its value.

“Our advice is if you can’t wear it, store it somewhere safely. Keeping it around the house is an invitation for difficulties,” he says.

Every homeowner should value their contents and record them and insure them accordingly, said.

“Many don’t realize just how much value is in their contents. We strongly recommend doing an inventory because it is very easy to become underinsured. It is also a good idea to keep it in a safe place,” he says.

And finally, a word of advice to snow birds and others who leave homes vacated. The coverage changes after a property has been vacant for 30 consecutive days.

Contact your insurance company or representative before vacating a home.

© Copyright  2003 The Province


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