Every insurance company has their own set of exclusions that could limit your coverage or completely void your policy. Having your policy voided or limited is something that a lot of people fear could happen to them. If you forget to disclose a certain detail, you incorrectly filled out the insurance application, or maybe you’re worried about coverage while you’re away from home. These could be reasons for your policy not to pay out in the event of a claim, but it’s our job as insurance brokers to make sure these types of things don’t happen, and that the product you’re paying for actually helps you when you need it the most.
Standard exclusions aren’t always immediately clear. However, there are some general limitations and misconceptions home owners should make themselves aware of.
30 Day Vacancy Rule
The term vacancy in the insurance industry means that the occupant(s) have left the premises with no intent to return, regardless of the presence of furnishings. This can happen if you’re a property owner whose rented house remains vacant while you’re trying to find new tenants, or if the home owner has passed away and the home is up for sale. Insurance companies will give you 30 days to notify them of the home vacancy, failure to do so could technically void your policy.
Owners can still obtain what’s called a vacancy permit from their insurer so the coverage never ceases after the occupants have moved out. However, this add-on, which must be purchased within the 30 days, is typically limited to exclude malicious acts and vandalism, and your premium will increase. That’s one of the more frustrating things to understand while your home is vacant, you’ll be getting less coverage and a higher cost, because when nobody is living in the house the possibility for a claim is much higher.
Limits on Jewelry and Rare Items
Not all the contents in your home are covered to their full value, there are limitations. Many policies have set out sub-limits for particular items like jewelry (usually $6,000), stamp collections (usually $1000), and coin collections (usually $500). It’s important to know your policies sub limits, and in the event that your items exceed your policy coverage to list them separately as extensions or floaters. Having your items listed separately could also provide broader coverage and reduced deductibles.
Sewer Back-ups not Automatically Covered
Sewer back-up coverage is not typically included in your home insurance policy. This coverage is typically listed as an endorsement or an extension to your policy, but up until a few years ago that wasn’t the case. This coverage used to be apart of your basic policy with a relatively low sub-limit. However, due to the rising number of water claims in Canada and the amount of people finishing their basements, this had to change.
Overland flooding is also another misconception to this coverage. Sewer back-up coverage will not cover your home for overland water damage, flooding, tsunamis, seepage from your foundation walls, etc., it is only triggered when their is a plumping malfunction. Until recently overland flood coverage wasn’t even available for anyone in Canada, but that too will be changing.
The intention of insurance isn’t to pay for your claims that resulted from poor upkeep. Though some natural hazards can’t have been avoided, other problems could have been taken care of in the first place. For example, if there are cracks in your foundation or you haven’t replaced your shingles in over 30 years, this could result in a water claim. That would be an maintenance issue, not an insurance issue.
Renovations or Upgrades
If you decide to renovate your home or install upgrades exceeding $10,000, it’s a good idea to notify a HMS broker so we can re-evaluate your home. Extensive alternations can change the policy classification, bump up the replacement cost of your home, or lower premiums. Also, in the event of a claim if the insurance company discovers that you have a much bigger or better home than you said you did, this could be classified as a change in risk. This could result in the claim not being paid, your policy being cancelled, or a reduced settlement.