Home Insurance FAQs

What exactly is an insurance broker?
An insurance broker represents a variety of insurance companies.  We will review your needs and help you choose an insurance package which can be tailored to meet your needs and risk tolerance.  An insurance agent or direct selling insurance company only sells their own product.

Why are insurance rates increasing?
The main principle of insurance is the premiums of many pay will pay for losses of a few. This allows the typical customer to protect their assets and safeguard against potential liabilities for a relatively low cost. The cost of claims for residential properties has been between $4 billion and $5 billion annually since 2008.  That’s about double what it was more than 10 years ago, according to the Insurance Bureau of Canada statistics.  The incidence of major events has increased dramatically, mainly driven by weather.  Adding to the cost of claims are the increased costs of rebuilding or repairing your home, it’s like inflation but often higher according to the construction price index put out by Statistics Canada.  To compound matters, low interest rates may be great for borrowers but they are bad news for insurance companies that rely on government bonds as safe places to put their premiums to meet future obligations.  With increased volatility in the stock markets it’s progressively more difficult to make an investment profit.

What is a deductible?
A deductible is the amount you agree to pay per claim or accident toward the total cost of your insured loss.  A standard home insurance deductible is $500; discounts are available if you choose to increase your deductible.  If you can save $150 per year by increasing your deductible to $1000, after 3 years you’ve saved almost enough to make up the difference if you had to make a claim.  If you are considering increasing your deductible you should be comfortable contributing the higher amount, such as $1000, towards an unexpected claim.

What is a rider?
You may have valuables which require increased limits beyond your package limits (such as jewelry, furs, fine art, bikes, etc.) You can amend your policy to suit your individual needs by adding a rider for an additional premium.  Riders often include a reduced or waived deductible and/or protection from additional perils as well.

What is a peril?
A peril is the possible cause of damage. A named perils policy will list what perils you are covered for - such as fire, theft or windstorm.  An all risks policy will list what you are not covered for; if the cause of the damage is not excluded you are covered.  An all risks policy will offer more protection.

What is an exclusion?
Your policy will include exclusions to indicate what is not insured.  There are exclusions for different types of property as well as different causes of damage (perils).  For example, most motorized vehicles are not insured and any loss or damage caused by rust, corrosion, condensation, or mold is not covered.  It’s important you review the policy wordings as this is where you will find the policy exclusions, exclusions are rarely found on your actual policy declarations (coverage summary).  Types of property excluded are generally listed under a section titled “personal property not insured” and causes of damage excluded will be found under “loss or damage not insured”.

What's the difference between Broad and Comprehensive policies?
A Broad form policy offers All Risks protection on your home (the building) and Named Perils protection on your contents (personal property).  A Comprehensive form policy offers All Risks protection on both your home and contents.  Both policies are subject to policy exclusions, limitations, and conditions.

What is Sewer Back-up Coverage?
Most residential insurance policies will not cover damage due to the backing up or escape of water from a sewer, storm drain, drain, sump, or septic tank unless you have purchased sewer back-up coverage as an additional coverage.  Premiums & available limits are determined by the area you live in, preventative measures you have in place (such as a back-up valve installed in your main sewer line, an automatic sump pump in a pit, a battery back-up for your sump pump, or sump pump pit water level alarm), and any previous sewer back-up occurrences.

If I have several claims on my homeowner's policy, will my rates increase?
In most cases several claims will increase your rates considerably; depending on the situation the insurance company may also choose not to renew your coverage when it comes due to renew.  Some claims just can’t be prevented, and sometimes they happen back to back.  Insurers will look at the cause of the claims before deciding if they will decline to continue insuring you or placing conditions or limitations on your policy.  Your policy is there to protect you and in many cases it’s worthwhile to make a claim.  When you experience a loss we’ll discuss it with you so you can make an informed decision. 

Why do I have to insure my home for more than it’s worth? 
The amount you paid for your home or could sell it for today is referred to as the Market Value.  The Market Value will take into account the age, condition, and size of your home as well as the value of your land (how desirable the location is and property size).  The value you insure your home for is referred to as the Rebuilding Cost; the estimated cost to rebuild a brand new home at the same location.   In most cases the rebuilding cost will exceed the market value.