A simple GUIDE TO HOME INSURANCE

Transcription

1 A simple GUIDE TO HOME INSURANCE

2 Inside THIS GUIDE What s in this guide?...5 Insurance How insurance works...6 Insurance lingo...7 Types of insurance...8 How often should you review your home insurance policy?...9 What s in your home insurance package?...10 What does your home insurance cover?...13 How do we decide your claim settlement amount?...16 Facts about water damage...17 Important information about sewer backup coverage...18 How much coverage do you need?...19 Home inventory how-to...20 How do we determine your insurance rates?...21 What did you think of this guide?...23 How to contact us...23

3 What s IN THIS GUIDE? The thing is, not a lot of people get excited about reading their home insurance policy. In fact, insurance can be downright complicated with all the fancy terms and jargon. We know there s obviously far more exciting literature out there; however, it s still important to know what your insurance policy covers. We created this handy little guide to give you a better understanding of your insurance policy and make it easy for you to find the most important information. You can tuck it away, and bring it out when it s time to change your policy or make a claim. Whether you have home, mobile home, condo or renters insurance, this guide is for you! What s not in this guide? We re giving you plenty of tips and advice on your insurance policy package; however, because this guide is not an insurance policy or a binding contract, you ll still want to give your policy a good read. An insurance policy can be a bit overwhelming, so don t feel like you have to read it all in one sitting. Read a little bit at a time, until you ve made your way through the whole document at least once. Then start again. We re kidding, once will do. Insurance 101 Making a claim can be stressful, time consuming and really isn t the best time to start figuring out your policy. That s why you really should know as much as you can about your insurance policy before you ever have to make a claim. Surprises are great for birthday parties, not insurance policies. There are different insurance policies for a house, mobile home, condo or rental. Your policy information will reflect the coverage you purchased for the type of home you have. 4 5

4 INSURANCE LINGO Insurance companies like to use fancy words when talking about your coverage. Near the beginning of your home insurance policy wording booklet, after the table of contents, you ll find an interesting section called DEFINITIONS. This section outlines some terms you ll want to know when reading your policy. We ve pulled some of the most common definitions you ll come across in the world of insurance. They ll help you better understand your policy. Where do I find my home policy wording booklet? We gave you a copy of your home policy wording booklet when you first bought your home insurance with us. After that, we ll only send out a new policy wording booklet when we ve made changes to the wording or if you request one. When you get your policy wording booklet, make sure you put it in a safe place where you can reference it. HOW INSURANCE WORKS Insurance is there to help you get your life back on track and replace your belongings in the event of a major loss. It ll protect you against sudden or accidental circumstances rather than events that are predictable or preventable. The insurance payments (premiums) of a whole bunch of people (including you) go into a large pool and pay for the losses of a few. That means there are always more people putting money into the insurance pool than people making claims and taking money out. When you have insurance and need to make a claim, you can be assured there will always be enough money to help you. Premium: The money you pay in exchange for insurance coverage. Deductible: The amount you ve agreed to pay in the event of a loss if you ever have to make a claim. The standard amount with AMA Insurance is $1,000 or $500, depending on the type of policy you have. You also have the option to increase your deductible, which may help decrease your insurance premium. Endorsements and floaters: An endorsement or floater changes your basic insurance policy wording by adding, removing or limiting coverage. You can choose to do this or sometimes your insurance company may do this to change the terms of your policy in special circumstances. For example, your home insurance policy covers your jewelry or electronics up to a maximum limit. However, if you have a valuable jewelry collection or super high-end electronic equipment in your house that s worth more than your Why do we use deductibles? policy limit will cover, a floater will give you extra protection Deductibles help keep annual insurance for your stuff. premiums at a manageable cost for everyone because people who make the claims help pay for their losses. Deductibles also discourage people from making claims for minor loss or damage. 6 7

5 You can buy floaters for jewelry, electronics, tools, watercraft, collectibles (such as fine art collections or sports memorabilia) and other belongings. You can even get a floater to cover hearing aids and contact lenses. Limit: The maximum amount your insurance company will pay out if you make a claim. We outline the limits for your insurance policy on your Personal Property Declaration page. What s your limit? Your coverage limits depend on the type and level of insurance you purchase (homeowner, mobile home, condo, renters) and how much it would cost to replace your home and all your stuff in the event of a claim. Loss or damaged not insured: These are the events or scenarios that insurance doesn t cover if you experience loss or damage. In general, insurance doesn t cover general wear and tear or deterioration of your home. Peril: An event, such as a fire, theft or vandalism that results in a loss damage to your property or belongings. This is also called a cause of loss. TYPES OF INSURANCE There are two different types of insurance coverage. It s important to know what type of coverage you have so that you know exactly what s covered. Insurance coverage is either All Risk or Named Peril. Coverage for each works differently. 1. All Risk coverage is just like it sounds you re covered for all risks (or perils) unless there s a specific exclusion or limitation in your policy. 2. Named Peril coverage only provides insurance for those causes of loss that are specifically named in the policy. If it s not specifically included, then it s not covered. What s not covered? Be sure to read the LOSS OR DAMAGE NOT INSURED parts in your insurance policy wording booklet. It s just as important to understand what isn t covered as it is to understand what is. We offer a variety of coverage levels, mixing and matching all risk and named perils insurance. From very basic insurance with lower limits and fewer scenarios covered to more comprehensive packages that offer higher limits and cover more scenarios. We sell three levels of coverage for your home, mobile home, condo or rental: Basic insurance The name says it all. This is the most basic type of insurance you can purchase. It s a policy that covers your home and personal property (contents) only for named perils (specific causes of loss). If you have an Essential policy with AMA, you have basic coverage. Broad form insurance This type of insurance provides all risk coverage on your building, but only covers damage to your personal property (contents) caused by a named peril. If you have an Enhanced policy with us, you have broad form insurance. Comprehensive insurance This type of coverage offers the best protection for homeowners or renters it s also the most popular type of insurance we sell. It covers all risks for your building and property. If you have an Excel or Exclusive policy with us, you have comprehensive insurance. HOW OFTEN SHOULD YOU REVIEW YOUR INSURANCE POLICY? It s a good idea to review your policy once a year. Every year we ll send you an updated Personal Property Declaration page as a renewal offer. Take your time reviewing your policy coverage and let us know if you ve made any major improvements to your property (home renovations, a new garage, a new art collection) they may require additional coverage. Additions such as swimming pools or trampolines could also change your coverage needs. 8 9

6 What s IN your HOME INSURANCE PACKAGE? Here s a review of the documents you ll get when you buy a new home insurance policy with AMA. POLICY WORDING BOOKLET This is one of the most important documents in your insurance package. Your policy wording booklet, together with your Personal Property Declaration page, is your binding insurance contract. Your policy wording booklet describes what your policy does and doesn t cover, the things you agree to and the things your insurance company agrees to. YOUR INVOICE This one is pretty straightforward. It shows you how much you ll pay for your insurance, the dates of your policy term (typically one year), and additional banking information that outlines your payment schedule if you ve chosen one of our payment plans. APPLICATION FORM This is a record of the information you provided to get your insurance policy. If you purchase your insurance over the phone, we ll send you two copies: one to sign and send back to us, and one to keep for your records. PERSONAL PROPERTY DECLARATION PAGE Besides your actual policy wording booklet, this is the most important document in your package. It s a summary of your insurance coverage and limits, packaged in a quick and easy-to-read format. It also tells you which coverage in the policy wording booklet applies to you. The policy wording booklet outlines a wide range of coverage that can apply to you, while the Personal Property Declaration page is the checklist of coverage you ve chosen. This page includes your property location information, the policy term (typically one year), your mortgage company, your insurance premium and any discounts that apply. It also lists any limits that may apply to your policy and information about any endorsements or floaters you may have on your policy

7 Does the Property Declaration page sound important? That s because it is. Any changes made to your insurance policy will appear on this page. We ll send you out a new Personal Property Declaration page every time there s a change. You ll want to keep the current copy of this page on hand for reference and as proof of insurance if you need it. Where do policy changes appear? If you invest $50,000 into a basement renovation, you may need to increase your building limit coverage. When you do that, the new coverage limit amount will appear on your Personal Property Declaration page. STANDARD MORTGAGE CLAUSE This is a standard agreement between your insurance company and your mortgage lender that protects your mortgage lender in the event of a major loss. For example, if you happen to lose your home in a fire and decide not to rebuild or do something that voids your insurance policy, this agreement allows your mortgage company to recover the outstanding mortgage amount on your home. This is why your mortgage lender requires proof of insurance when you buy a home. ENDORSEMENTS AND FLOATERS As outlined in our Insurance lingo section, endorsements and floaters change your basic insurance policy. You ll find policy wording for the most common types of floaters in the back of your insurance policy wording booklet. If you ve purchased a floater that isn t listed and described in the back of your wording booklet (most common ones are), we ll include that wording as a separate document in your insurance package. WHAT DOES YOUR HOME INSURANCE cover? There are a lot of details in your home policy wording booklet. That makes it even more important that you take the time to get the whole scoop on what your home insurance does and doesn t cover. This booklet covers the basics for you and offers a starting point to understanding your policy. If you have any questions along the way, we re always just a phone call away. Here s what a typical home insurance policy covers: THE BUILDING Applies to home and mobile home insurance This is your actual home. Your insurance protects the physical structure and interior finishes of your home from loss or damage, including your roof, exterior and interior walls, flooring, kitchen cupboards and bathroom fixtures. What about condo owners? Your condo association is responsible for buying insurance coverage for the building, but you need to look after the interior of your unit. Your condo policy protects improvements or renovations made to your condo, such as installing new flooring or updating the kitchen cupboards pretty much anything above the original condo specifications. PERSONAL PROPERTY Applies to all home insurance policies (home, mobile home, condo and renters) This is also called contents coverage. This provides coverage for your personal belongings including clothing, electronics and furniture. This part of your insurance also covers damage to your landscaping up to a certain limit

8 DETACHED PRIVATE STRUCTURES Applies to home and mobile home insurance This part of your home insurance policy covers structures that aren t attached to your home, including a detached garage or a shed. ADDITIONAL LIVING EXPENSES Applies to all home insurance policies (home, mobile home, condo and renters) This covers expenses associated with living elsewhere if something covered in your policy (such as a house fire) makes your home unfit to live in or if you have to move out during the repair process or in the event of an evacuation. An example is the cost of staying in a hotel. It s important to remember this coverage doesn t reimburse you for all expenses just ones that are over and above your normal cost of living. ADDITIONAL COVERAGES Applies to all home insurance policies (home, mobile home, condo and renters) There are a lot of other things that may be covered by your policy, such as fire department charges, identity theft expenses and food spoilage. Condo insurance policies also provide coverage which protects you if your condo association needs to collect a special assessment from owners if they don t have enough insurance to cover a loss to the common property owned by the condo association. Check out this section of your policy wording booklet to get all the details for your type of insurance. WHAT S NOT COVERED BY YOUR HOME INSURANCE POLICY? When it comes to insurance, there are some misunderstandings. Insurance is meant to cover damage that is sudden and accidental. It won t cover every problem you encounter and it s not a maintenance contract. Each section of your insurance policy has a part called LOSS OR DAMAGE NOT INSURED, which outlines scenarios that aren t covered by your insurance policy. You ll want to read through this information so there are no surprises if you have to make a claim. LIABILITY Applies to all home insurance policies (home, mobile home, condo and renters) Liability coverage provides worldwide financial protection if you re found legally responsible for unintentional injuries to other people or damage to their property. For example, if a delivery person slips on your sidewalk and is injured, your liability coverage would offer protection from any related expenses. There are no deductibles associated with your home s liability coverage

9 How DO WE DECIDE YOUR CLAIM SETTLEMENT AMOUNT? We look at a few different things. If you have a claim, depending on the level of coverage you purchased, we ll determine your settlement amount based on guaranteed replacement cost, replacement cost or actual cash value. Guaranteed replacement cost Guaranteed replacement cost, which is the most comprehensive option, only applies to the building. If your home does experience a loss or is damaged and you meet the requirements of our Home Replacement Cost Guarantee, guaranteed replacement cost coverage ensures your home will be repaired or replaced to its original state without deduction for depreciation. One thing to note: guaranteed replacement cost is only available with comprehensive insurance policies. Guaranteed replacement cost example If we ve estimated your home will cost $300,000 to rebuild and it ends up costing $320,000, guaranteed replacement cost means we ll pay the extra amount. Replacement cost If you have replacement cost coverage and experience a loss, your building or property will be repaired or replaced without deduction for depreciation, up to the limits on your policy. Actual cash value coverage If you have actual cash value coverage and experience a loss, your settlement will be subject to depreciation and will only pay the actual cash value of the loss. Facts ABOUT WATER DAMAGE Weather can be tricky. In fact, over the past few years, the weather in the Prairies has become more extreme, particularly during the summer hail and rain season. We ve seen an increase in property claims during these months which has raised a lot of questions about what kind of water damage is covered by a home insurance policy. It s important to know that overland flooding, which happens when water overflows onto dry land and causes damage, is generally not covered by residential property insurance policies in Canada. Why not? Because insurance companies would have to charge more than most individuals could afford in order to maintain a healthy enough money pool to cover damage associated with flooding. WATER DAMAGE WHAT S COVERED? Some types of water damage typically covered by home insurance policies include: Damage caused by indoor plumbing, heating, sprinkler or air conditioning emergencies are usually covered, as long as the damage isn t the result of a long-term problem such as repeated leaking or condensation. The cost of repairing the original problem isn t covered. Damage caused by the malfunction of appliances such as washing machines, dishwashers, waterbeds or aquariums is usually covered, although the cost to repair the appliance that caused the problem is usually not covered. Damage from a broken water main, which covers the escape of water from a public water main whether it occurs in or outside your home. Wind and hail damage to your home s exterior, interior and your personal property. Damage to your home s interior has to be from water entering through openings created by wind or hail

10 WATER DAMAGE WHAT S NOT COVERED? When it comes to water damage, here s what your insurance policy doesn t cover: Basement seepage (water from below the surface of the ground through your foundation walls, basement floor or windows). Damage to the outside of your house caused by melting snow or ice. If you have sewer backup coverage, here s what s covered: Damage caused by sewer backup, which is the backing up or escape of water from a sewer, sump or septic tank. Sewer backup damage adds up fast The average claim to get a minimally developed basement back to normal after sewer backup is about $15,000 for emergency cleanup and restoration. A leaky roof due to preventative wear and tear. Damage resulting from the freezing of indoor plumbing if damage happens while you re away and you didn t have someone check on your home. IMPORTANT INFORMATION ABOUT SEWER BACKUP COVERAGE Sewer backup is the backing up or escape of water from a sewer, sump or septic tank. Condo and renters insurance policies include sewer backup coverage. AMA home and mobile home insurance policies offer sewer backup as add-on coverage. Because sewer backup coverage is so important, we automatically add it to most home and mobile home policies and give our customers the option to remove it. Sewer backup coverage limits depend on the type of policy you have and factors such as where you live, the risk of sewer backup in your area and whether or not you ve had previous sewer backup claims. Home check-in If you re away from your home for more than four consecutive days during the regular heating season (when you re typically running your furnace), AMA policies require you to either drain your pipes and turn off your water or have someone check your home every day. If you re away from your home during the non-heating season, it s a good idea to have someone check on your home regularly. Here s what s not covered: Damage caused by sewer backup (the backing up or escape of water from a sewer, sump or septic tank) if the damage is a direct result of overland flooding. Homes have changed a lot over the past 20 years. Basements that once stored canning and holiday decorations now house modern furniture and high-end finishes and electronics all of which can be costly to replace if water damage occurs. We encourage you to do a quick basement inventory to ensure you have the right amount of sewer backup coverage for you and your family. Depending on your policy, you may be eligible to purchase additional coverage. HOW MUCH COVERAGE DO you NEED? It depends on how much it would cost to rebuild your home and any buildings on your property such as a garage or shed and replace everything you own (clothing, furniture, electronics, etc.). Your insurance advisor will ask you several questions about your home and belongings to help determine the level of coverage you ll need. Our goal is to make sure you re well protected. Home and mobile home insurance policies include a set amount of coverage for personal property a percentage of your building s value, which is typically enough coverage for most people. With a condo or renters insurance policy, you ll need to have a good idea of how much it would cost to replace everything you own in order to help an insurance advisor determine your coverage limit. Remember to ask your insurance advisor about extra coverage for special collections or high-priced items such as jewelry

11 Home Renos Matter Home renovations add to the value of your home. If you re doing a major kitchen, bathroom or basement renovation, make sure you tell your insurance advisor, who may suggest you get additional coverage. This includes improvements to things such as flooring, countertops or cabinetry. HOME INVENTORY HOW-TO It s a good idea to create a home inventory list. This will help you determine how much personal property coverage you need for a condo or renters policy. And no matter what kind of home you have, it ll help you keep track of items you d need to replace in the event of a claim. Here s how: 1. Create a spreadsheet or use one of the software packages already available it ll make the job easier. The Insurance Bureau of Canada recommends knowyourstuff.org 2. Inventory one room at a time. List every item, the price it would cost to replace it and the date purchased. Include the brand, model numbers and serial numbers (if possible), along with today s replacement cost. 3. For a visual record, photograph or video record your stuff. When you re done, make copies of your inventory documents, photos and video and keep them in a safe place outside your home at a friend s or family member s place or in a safety deposit box. Keep your own copy and update your inventory at least once a year. HOW DO WE DETERMINE your INSURANCE RATES? It s based on two guiding principles: how likely it is that your home will suffer a loss and how much it ll cost to repair the damage and get you back on track after a claim. With those principles in mind, here s a look at some key factors that help us determine how much you ll pay to protect your home and all the fun stuff in it. Where you live Whether you live in a rural or urban area, homes in some areas are statistically more likely to experience loss due to crime (burglary, theft and vandalism), water damage or sewer backup (flood risk areas) and serious weather-related events (wind and hail). How close you are to a fire hall also plays a role. Age of your home If you have an older home, you ll likely pay more for insurance because there s a higher likelihood that your roof, plumbing or electrical systems will encounter problems. Renovations or upgrades to these systems or the overall condition of a home can help you save money on insurance premiums. How you use your home Whether you live or work at home can affect your policy. Having a homebased business may require more coverage for things such as office equipment and inventory as well as liability coverage if you have staff or customers visiting your home. If you rent out space in your home, having tenants will require you to purchase more coverage

12 What kind of home you have If your home has more than one contained unit (such as a basement suite) or more than one family living in it, it could be considered a multi-family dwelling. In that case, there will be more stuff to cover and a greater likelihood that a claim will be made. If you live in a small townhouse versus a large bungalow, insurance rates will differ based on the size of your home and costs for potential repairs. How you heat your home Homes with a wood-burning heat source cost more to insure because there s an increased risk of fire. How much coverage you need Most insurance companies offer different levels of protection for your home and belongings so your individual needs will help determine rates. Some people may want only basic coverage while others will need more comprehensive coverage for their home. WHAT DID you THINK OF THIS GUIDE? Be honest. Did you read it? Was it helpful? Is it something you d keep on hand for future reference or show to friends and family? We d love to know how we could make it better. If there are other things you think we should include in or remove from this handy little book for the next time we print it, please send us an at InsuranceAndYou@ama.ab.ca HOW TO CONTACT US Our insurance advisors are standing by and ready to tell you more about your policy. If you have any additional questions, you can visit any AMA centre and one of our knowledgeable insurance advisors will be happy to assist you. Or, just call us at How many claims you ve made We realize that things happen, but staying claims-free will help reduce your insurance premiums. Cost of your deductible Increasing your deductible (the amount you agree to pay in the event of a claim) will help reduce your home insurance rates. Your insurance premium increases after a claim because we want to be fair to all policyholders. We reward those policyholders who have not had a claim with our Claims Free Discount. If you ve had a claim, the discount no longer applies and your premium goes up as a result, typically for five years. Also, policyholders who have had a claim are statistically much more likely to have another claim and therefore are considered riskier than policyholders who have never had a claim

13 There WHEN you NEED US. If you have any questions about your home insurance policy, please call us. We ll be happy to review your policy with you, make suggestions and ensure you have the best coverage for you and your family. To speak to an insurance advisor, you can call us or visit us at any AMA centre. Insurance Sales & Service Making a claim It s not easy to remember what your insurance does and doesn t cover. If you re ever in a situation where you re unsure about whether to make a claim or not, we ll give you the guidance and support you need. 24-Hour Claims Service Subscribe to Connected, the AMA Insurance e-newsletter at ama.ab.ca/subscriptions for more insurance-related tips and advice. AMAInsurance.ca/Home HBHOME 100M 02/