The Top FAQ s on. Home Insurance. Will my Homeowner s or Tenant s insurance in Calgary cover damage caused by a flood?

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1 A PUBLICATION BY: GODFREY MORROW GODFREY INSURANCE MORROW AND INSURANCE FINANCIAL AND SERVICES FINANCIAL LTD. SERVICES LTD The Top FAQ s on Home Insurance Will my Homeowner s or Tenant s insurance in Calgary cover damage caused by a flood? Caused by melting snow or heavy rainfall, floods can occur at any time of year and have the potential to cause major damage to your home and your belongings. Despite these risks, home insurance policies do not include coverage for flood damage, and flood insurance is not available under Homeowner s insurance, Tenant s insurance, or Condo Unit Owner s insurance in Calgary. Floods are one of the most frequent natural hazards in Canada, and to make premiums affordable, insurance companies need to spread risk across their policy holders when they underwrite insurance policies. Even when flood risk is spread across all of a company s policy holders, underwriting flood insurance would make premiums unpalatable; thus, coverage for flood damage does not exist, either for residential insurance policies or rental property insurance policies in Calgary, or anywhere in Alberta. GODFREY MORROW INSURANCE 1 P age

2 A PUBLICATION BY: GODFREY MORROW GODFREY INSURANCE MORROW AND INSURANCE FINANCIAL AND SERVICES FINANCIAL LTD. SERVICES LTD While you can t insure your home or rented dwelling against damages caused by a flood, there are important steps you can take to help minimize the risk of damages: Never store valuables in a basement; keep them on an upper floor of your home Ensure floor drains are kept free of obstructions Hire an engineer or surveyor to make sure the grading around your home directs water flow away from your house Prevent backup of sewage into your home by installing a back-flow valve You may be able to cover your home for damages caused by a sewage backup as part of your house insurance policy. Speak with a representative for home insurance in Calgary to find out. You may also be eligible for a discount on your home insurance policy if you have a sewer back-flow valve installed. Most residential insurance policies cover other types of water damage. For example, if a pipe freezes and bursts, your insurance may cover damages if your home was occupied at the time the damage occurred. Please speak with your home insurance representative to make sure you have as much protection as possible. When is my home considered vacant? Your home is considered vacant when the people are gone and the contents of your home have been moved out. How are insurance rates determined for homeowners? The rates for your Calgary home insurance are generally determined by the coverage requested, location of the home, and the value of the home being insured. As with other types of insurance, rates are determined by the results of a pooling of risks. Your insurance history and prior claims may also affect your rates. There may be higher mandatory deductibles, restrictions on your coverage, and/or premium surcharges if your home is vacant, the area surrounding your home is considered at high risk for certain losses, or if a significant number of claims have been made in the area where your home is located. What is the difference between unoccupied and vacant? If your home contains its contents but no human beings, it is considered unoccupied. For example, your home is considered unoccupied when you leave on vacation; persons are only temporarily away from the home. This is distinguishable from a home being vacant, because in vacancy, the contents have been moved out and the people are gone, leaving nothing but the building. This is an important distinction because if your home is vacant, your home insurance coverage is lost. GODFREY MORROW INSURANCE 2 P age

3 INVESTOR A PUBLICATION NEWSLETTER BY: GODFREY ISSUE MORROW N 3 GODFREY INSURANCE MORROW AND INSURANCE FINANCIAL AND SERVICES FINANCIAL LTD. SERVICES LTD. FALL How is the limit of my contents, or personal property and the value of my home s content determined? Generally, your contents limit is calculated based on a percentage of the total replacement cost of your home. It s always a good idea to review your contents limit with your Calgary home insurance representative to ensure your coverage is adequate. You need to make sure the contents of your home can be identified for replacement by your insurance company if a sudden, accidental, or unforeseen event occurs. It is important to document high-value items in your home either with a written description of each item, or with pictures and video. It is recommended to record make, model, and serial numbers whenever possible. A Home Inventory Checklist will assist you in filing a claim with your Calgary Home Insurance Representative Create an inventory checklist of all your valuable items and keep it with your documentation. A home inventory checklist records the contents of your home, and provides your insurance representative with a valuable tool in the event you need to file a claim. It s a good idea to store your checklist and supporting documents in a secure location, away from your home. Your checklist should include all your high-value items such as jewellery, electronics and appliances, special equipment and tools, furniture and lighting fixtures, patio furniture, yard and lawn tools and equipment, and any other high-value items in and around your home. Recording the price paid for each item will help your Calgary residential insurance representative when you file your claim. According to the Insurance Information Institute, taking inventory and creating a list will help you: Ensure you purchase adequate home insurance coverage Have an insurance claim settled quickly and efficiently Verify your losses for income tax purposes (for items excluded from your home insurance policy, you may be able to recover some of your losses) If all the contents of my home are at risk, why are there exclusions? The wording of insurance policies regarding risk was introduced to make policy coverage broader and easier to understand. However over time, exclusions evolved to minimize the exposure to risks insurance companies experience, such as depreciation, normal wearand-tear, and gradual deterioration of materials. Remember, your Calgary house insurance policy covers sudden, accidental, and unforeseen losses. Replacement costs consist of the amount it takes to replace items of like kind and quality. GODFREY MORROW INSURANCE 3 P age

4 INVESTOR A PUBLICATION NEWSLETTER BY: ISSUE N 3 GODFREY MORROW INSURANCE AND FINANCIAL SERVICES LTD. FALL What are the other special limits of my Homeowner s insurance policy? Various insurance companies have different special limits; however, the following are the most common: Outbuilding Trees and shrubs Jewellery Sporting goods and equipment Stamp or coin collections How can I insure my high-value jewellery, collectibles, and sporting equipment? High-value items that aren t normally protected under your home insurance policy can be insured by adding special riders to your policy. Special riders are a special type of coverage and have separate premiums. The wording for this type of coverage tends to be much broader than that of a traditional home insurance policy. Generally, each item must be appraised and insured at appraisal value. In case of a loss, the appraised value is used to determine the amount the insurance company pays in the event of a loss. Who is insured under my Calgary Homeowner s insurance policy? A Calgary home insurance policy covers the policy holder and their spouse (including common law spouses) and persons under the age of 21, who are under their care. Relatives of the policy holder and spouse are also covered by home insurance policies. How can I reduce my Homeowner s insurance premiums? The best way to reduce your premiums is to increase the amount of your deductible. The larger the deductible, the less your premiums will be. You can also reduce your premiums by qualifying for discounts. Discounts range between 2-5 percent. Common discounts include: Combining your auto and house insurance policies Installing an alarm system Installing hardware for the prevention of water damage Remaining claims free Being mortgage free What is voluntary property damage? Just as the name implies, voluntary property damage covers damages you d like to pay for, but are not necessarily liable for. For example, your five-year-old is helping you install siding on your home. You look away for a moment to answer the phone, and your son or daughter damages your neighbor s siding with a hammer. At your request, a payment for repairing the damage or replacing your neighbor s property can be arranged. GODFREY MORROW INSURANCE 4 P age

5 INVESTOR A PUBLICATION NEWSLETTER BY: ISSUE N 3 GODFREY MORROW INSURANCE AND FINANCIAL SERVICES LTD. FALL What is a single limit policy? In some cases you can have a single limit, such as $1,000,000, rather than separate limits for your home, its contents, and insured outbuilding. This doesn t mean you ll receive $1,000,000 in the event of a total loss; however, you can use unused portions of certain other coverage in your policy to cover a shortfall of another limit. Will I pay lower premiums if I have more expensive long-wear roof covering installed such as tile, cement, or rubber? The short answer is no. In fact, when the replacement cost of your house is calculated, more expensive roof coverings can actually increase the amount of your premiums. Since a more expensive roof increases your replacement cost, a higher premium often results. How is the replacement cost of my home determined? The replacement cost of your home is calculated based on standard insurance industry forms. The questions on these forms help insurance companies determine replacement cost by identifying the type of home you own, its size and construction materials, and any customizations that have been built-in, or added after the home was constructed. Based on these forms, your replacement cost is calculated and the resulting value is the amount shown on your home insurance policy. This value determines the largest portion of your premium. The rest of your premium will be calculated based on coverage limits for your outbuilding, the contents of your home, and the additional living expenses you would incur in the event your home is destroyed. What happens if my house is destroyed, and the cost to replace it is greater than my policy limit? If your Calgary home insurance policy includes coverage for guaranteed replacement cost, the amount required to replace your home is guaranteed -- even if the actual cost to replace your home is greater than the value shown on your policy. However, coverage that includes guaranteed replacement cost is not available for most older homes. GODFREY MORROW INSURANCE 5 P age

6 A PUBLICATION BY: GODFREY MORROW GODFREY INSURANCE MORROW AND INSURANCE FINANCIAL AND SERVICES FINANCIAL LTD. SERVICES LTD If my home is destroyed, do I have to rebuild it in the same spot? Generally, you do have to rebuild your home in the same spot. However, some policies allow an exception that allows you to rebuild your home elsewhere. Be aware that in some cases, you may need bylaw coverage, because some bylaws may not allow the same construction methods and materials. Speak with your Calgary house insurance representative to make sure you have adequate protection and enough coverage to rebuild your home in the event it s destroyed. Why is my water damage deductible or limit different from the other coverages on my residential insurance policy? Water damage has become the number one cause of losses in Alberta and in Calgary, house insurance claims have risen dramatically. As a result, insurance companies that typically rated their home insurance premiums based on the risk of exposure to fire damage, now use various other methods to manage exposure to, and premiums for, water damage. This often results in differing water damage deductibles and limits when compared to other coverage in your Calgary house insurance policy. Will my rates go up if I have to file a claim on my Calgary home insurance policy? While your rates will not go up if you have to file a claim, your premium may increase due to a loss of your discounts. If a problem develops with claim frequency, it may become difficult for you to get house insurance through regular insurance markets and you rates will likely increase by as much as much as percent. If you need to purchase coverage through specialty markets, insurance companies charge significantly higher rates for far less coverage and protection. There are a variety of factors from your actual insurance history and your claims that can affect your insurance rates. See this article on how claims may affect your rate. This article in Canadian Underwriter Magazine provides information on how climate change may affect home insurance rates in the future. It s always important to read and understand your policy. Please speak to your Calgary Home insurance representative if you have any questions. GODFREY MORROW INSURANCE 6 P age