Valley First

Flood and fire insurance - Is your home properly covered?



Many Canadians don’t review their home insurance policy until disaster is at their doorstep. As a result, they have no idea whether or not they’re covered in the event of a fire or a flood. It’s only when we’re most likely to be affected that we have sufficient incentive to take action.

But when it comes to insurance, that’s too late.

When a fire breaks out, insurance companies aren’t allowed to sell insurance within a certain distance of the fire (25 or 50 kilometres, depending on the company).

It’s a similar thing when there’s a flood. If there’s an imminent threat of a flood, a state of emergency or an evacuation order, companies won’t write (even if your particular area is fine).

“Don’t rely on government relief programs to help you after a flood or fire disaster,” says Donna-Leigh White, Senior Insurance Advisor at Valley First Insurance. “The Disaster Financial Assistance program responds when insurance coverage was not available to you. If it was and you opted out of it, you will be footing the bill on your own.”

Learn more about how overland flood policies affect Disaster Financial Assistance eligibility

What that means is that British Columbians need to be proactive about reviewing their home insurance policies and making sure they have appropriate coverage before disaster strikes.

Here are some of the common gaps customers aren’t aware they might have in their policies when it comes to natural disasters with specific insight on how to fix them.

Protecting the new home you just bought

When you buy a new home, you typically can’t purchase insurance more than 30 days before your closing date.

You could end up in a tricky position if a disaster were to hit the area. As insurance companies can’t write new policies, you wouldn’t be able to obtain insurance and therefore your mortgage funds wouldn’t get released.

There are two steps you can take to protect yourself from this stressful possibility:

  1. Talk to your realtor about adding an insurance condition clause;
  2. Get the coverage when you’re able to.

Protecting your Corvette or ATV

Vehicles that you store in your garage or carport are not covered by your home insurance policy. “A lot of people don’t know this,” says White. “They think that if they store their ATV or their Corvette in the garage then it counts as contents.”

Everything else in your garage: your tools, your fishing equipment, your treadmill and weight rack, all are covered as contents. But not your stored vehicles, campers and motorized toys (ATVs, dirt bikes, snowmobiles, jet skis, etc.)

The car that you drive is protected whether you park it on the street or in your garage if you have comprehensive coverage.

But any vehicle that is being stored — whether it’s a recreational vehicle (campers, ATVs, dirt bikes, snowmobiles, jet skis, etc.) or a leisure car that you only drive for a couple weeks every year — requires storage insurance.

Tenant Insurance

Approximately half of renters in BC don’t carry any home insurance.

“This is a commonly neglected category of insurance,” says White. “Many tenants simply don’t realize that their landlord is not required to cover their contents or put them up in a hotel if a claim occurs. On top of that, a tenant could be personally sued for any injuries that occur on the property or for any damage that they caused, even if by accident (such as leaving a pot on the stove).

Replacement costs for even the bare necessities can easily reach $20,000. And that’s just the start of it. If your apartment building burns down, you’re going to have to live somewhere else and those costs can also start adding up quickly.

Plus, if you’re found to be negligent for a loss, whether it’s an injury or a fire, you are going to need personal liability to cover the court costs.

Simply put: if you’re a tenant, you need insurance. The $20+ a month it costs to insure the contents of the home you’re renting is a small price to pay to ensure your peace of mind.”

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Protecting your home from fire

Your basic home insurance policy will cover your losses from a fire and it’s pretty standard across all insurance companies.

White explains that all you really have to make sure is that you are honest when buying your policy. In other words, don’t bend the truth thinking you can save a couple dollars on your premium.

  • Are you operating a small business out of your home?
  • Do you have a wood stove?
  • Are there any short-term rentals, such as airBNB or VRBO anywhere on the property?

“Your broker is here to help protect what is important to you,” says White. “By not being upfront and disclosing important details about your home or activities on the property, you could be setting yourself up for a denied claim. Choosing not to be up front with your insurance is choosing to pay for something that will never pay for you.”

Protecting your home from flooding

Water damage is by far the most common property damage claim in Canada and it has been steadily growing. In 2008-2009, the average damage across country caused by severe weather was $100 million. Today, it stands at $400 million.

Not all floods are the same. There are four types of insurance coverage available to protect against water damage:

  • Service line, which covers damage that occurs when a municipal pipe bursts on your property;
  • Sewer backup, which covers the repairs needed when the sewer or septic system overflows;
  • Overland water, which covers damage due to fresh water flooding, which occurs when a river or a lake burst their banks and flood your home (fresh water flooding also covers you in case of a heavy rainfall that accumulates on the ground and enters your home);
  • Ground water, which covers the damage caused when water soaks into the ground and then enters your home through the walls or floor and from the rising of the ground water table by underground rivers or streams.

“Water damage now accounts for almost 50% of all claims in Canada,” says White. “We only have to look around to see how common this is becoming. The weather norms are changing and, knowing this, we all need to take precautions to protect our homes. These can include reviewing your home insurance, and installing items such as water sensors, backflow values and sump pumps. Just because you are in an area that hasn’t had flooding issues in the past doesn’t mean that you won’t in the future.”

Water damage affects everybody. It doesn’t matter if you live near a lake, a river or on a flood plain. You might have higher risks in some instances, but water affects everyone. A heavy rainfall could flood any home and easily cause tens of thousands of dollars’ worth of damage.

Make sure you:

  • Review your policy to understand what your insurance covers,
  • Get the full policy limit available.

Flood insurance when you live in a condo

When you’re living above ground in a condo, you may think that you don’t need to worry about flooding damage.

However that’s not entirely true. People often overlook the threat of electrocution during a flood. Anytime there is flooding, you might need to be evacuated. You might think that your property or its contents are not at risk, but you certainly are.

Evacuations are covered under your policy even if there isn’t a loss (damage to your stuff), providing policyholders with living expenses if they need to be displaced in an emergency.

Home Insurance: Facing Natural Disasters

When it comes to home insurance, cutting corners simply isn’t worth it. The cost of a claim and the impact it could have on your personal livelihood it could have are too significant to take lightly.

It is worthwhile to take a few minutes to:

  1. Review your existing home insurance policy and understand what it does and does not cover,
  2. Talk to your insurance broker to make sure you are properly covered for an emergency before it strikes,
  3. Keep a current home inventory checklist, make an emergency plan and assemble a disaster safety kit so you’re fully prepared in the event of an emergency.

The Insurance Bureau of Canada has terrific emergency preparedness resources, including a 72-hour emergency preparedness plan for you and your family.

Don’t wait to review your home insurance policy for when it’s more convenient. Not only will you end up with better coverage for your home, you will get peace of mind knowing that you are prepared to face whatever Mother Nature will throw at you.

“Most people do research before they make a large purchase,” says Donna-Leigh. “Insurance is now protecting those assets, so talk to your broker, ask questions and read your wordings. You want to know that your insurance will respond the way you expect it to should the worst happen.”

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