5 Questions to ask your Insurance Broker
The right coverage will protect you and your home from sudden, accidental or unpredictable events
As the cleanup continues for thousands of people in southern Alberta after devastating flooding in the area, The Insurance Services Department of London Drugs is offering advice about protecting yourself and your property from future flood risks.
“Many people don’t fully understand their insurance coverage. They know they are required to have it but the important questions are usually triggered by unexpected and often distressing events – like the flooding in Alberta,” says Andrew Beaumont, Business Manager, Insurance Services and Warranty at London Drugs.
To be proactive about your insurance, Beaumont recommends asking your broker the following questions either at the time of purchase or at renewal:
- What kind of coverage do I have for water damage?
The Insurance Bureau of Canada estimates that 39 per cent of Canadians believe that their home insurance covers them for damage caused by flooding due to spring run-off. They’re mistaken. In Canada, property insurance does not include damage caused by water that comes in through doors and windows – known as “overland flooding”.
Water damage caused by the sudden bursting of plumbing pipes is covered by home insurance policies. Other water damage due to a sewer backup is also covered but only when specific sewer backup coverage has been purchased. This coverage is not mandatory, so check with your broker.
Why isn’t flooding covered in home insurance policies?
Predictable or preventable events are considered “uninsurable perils” and are not covered by any insurance policies. Damage caused by melting or moving snow is considered predictable, so it is an uninsurable peril.
- What exactly is my home insurance covering?
All comprehensive home insurance policies are very similar – they are meant to cover the financial consequences of sudden, accidental or unexpected events. There are differences from one company to another and from one policy to the next, so it pays to ask questions to find out the specifics of your policy. Many of the differences relate to coverage limits, claims process, coverage offering and insurability of the risk.
For example, coverage limits for valuables will differ from policy to policy and this could have substantial impact on consumers if they have large amounts of expensive jewellery. Another difference could be the earthquake deductible and pricing. The intended use of the property can also impact coverage. Some insurers will accept home based business while others will not.
Finally, if you rent out a basement suite or a room, it is important to know the differences in your coverage and the responsibilities you have as the policyholder when this happens.
- What damage could occur to my property that won’t be covered unless I opt for additional coverage?
Are you covered in an earthquake? What about a wind storm? What if a burglar or vandal causes damage to your home? Being aware of worst-case scenarios and fully disclosing the intended use of the property can help you understand how your policy will protect you in distressing times and ensure you get the right coverage
For example, if you are away from your home for 30 consecutive days without arranging for someone to check your home daily, damage arising from the freezing and bursting of indoor plumbing is not covered. Being aware of important exclusions will help you take the necessary precautions.
- Is there optional coverage available for damage not covered by my home insurance policy?
While losses that are predictable or inevitable are typically not covered by insurance, there are some optional coverage options to consider. For example, if you are worried about water damage from rainstorms, you might consider sewer backup coverage. If you are concerned about expensive items in your home being under-insured, you might purchase additional insurance that can reduce your deductible and insure your valuables correctly. Ask your broker which optional coverage you many need. Remember it is imperative that you disclose the intended use and risk factors to your broker so they can properly insure you with the right insurance company.
- What services and benefits does my insurance broker provide when it comes to making a claim?
Brokers serve as your advocate in dealing with the insurance company. That’s why it is so important to work with a brokerage that has the expertise, experience and, most importantly, the resources to assist you quickly. Ask for an outline of the claims process. Is it streamlined? Is there an online claim service? If a disaster or emergency ever occurs, you want to be sure they will be responsive and empathetic to your needs.