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Home Insurance Q&A – Part 1

Home insurance is no joke, but here is an insurance pun just for fun – “I got camping insurance but apparently if someone steals my tent in the middle of the night I’m no longer covered”.

A big part of buying a home is making sure you and your belongings are protected. Calgary is no stranger to extreme weather conditions and of course, accidents do happen. We asked a local expert, Jadyn Agnew of Agnew Insurance Ltd., Co-operators a few questions to give you some insight on important factors to consider when buying a home.

Q: Is there any due diligence I can do prior to looking at homes to know if I am covered?

A: Inspections and listings will tell you what the type of plumbing, electrical or other areas of the home that could pose risk when insuring the home. It is important to explore what type and age of plumbing, electrical, roofing, heating source prior to purchasing a home. It is always a good idea to obtain a home insurance quote on the property prior to purchase to ensure that you can afford all expenses required to own the home and ensure you can receive proper coverage overall.

Q: What kind of water damage is covered in home insurance?What isn’t covered? What about homes in the flood zone?

A: Water damage coverage will really depend on your specific policy and what types of water damage coverages are offered and at what limits. The typical home insurance policy will typically include basic water damage coverage for sudden and accidental water escape, rupture, freezing from plumbing, heating, sprinkler systems (all subject individual policy wordings). The continuous or repeated leakage or seepage of water or sewage will likely be excluded. In addition, many policies explicitly exclude damage or loss caused by flood, sewer back-up, surface water, rising of the water table under the water peril (cause of loss).

After the tragic flood in Calgary in 2013, with many homeowners without coverage for loss caused by flood or sewer-back up, providers began developing specialized water damage endorsements that could be added on to policies (or included automatically, depending on the provider) for loss or damage caused by flood, sewer back-up, rising of water table, surface water. The piece that is very important to note, is that while flood, or sewer back-up may be covered under your policy, the limit of coverage offered and what the coverage insures can vary greatly provider to provider.

For example, a typical water claim due to sewer back-up can reach $75000 and beyond if your personal contents, flooring, drywall, electrical, furnace, appliances, doors etc. are damaged. Plus, you have to consider the cost to tear out the damaged materials and remediation. If your policy only covers you for $50,000 worth of sewer back-up damage, you could be looking at a large bill coming out of your own pocket to cover the difference.

It is highly recommended that you review your water coverage with your insurance provider and consider the following: What causes are covered? What are the limits for coverage for my belongings and property? What limits can other providers offer to ensure my family and I are fully protected from water damage to our home.

Q: If I live in the flood fringe, can I still get insurance for flooding?

A: The areas in which flood coverage is offered will vary provider to provider. There may be areas in which certain providers do not insure due to the risk. That being said, some providers will offer coverage with some exclusions and/or most definitely at a higher premium. If your home is at a higher-risk for flood damage, the premium will increase to ensure coverage for that risk. If you are considering a home near a body of water, we recommend obtaining a quote to ensure you are comfortable with the cost in that area.

The Co-operators water coverage, called Comprehensive Water, is automatically included in all of our policies whether you own or rent, condo, seasonal property or primary property. This coverage was created after the Calgary Floods as we watched so many Calgarians without coverage for Flood. Co-operators was one of the only companies that covered many clients during the floods with sewer back-up coverage. But that wasn’t enough, the Floods showed just how limiting the water coverage on many policies is. Comprehensive Water will cover clients for sewer back-up, flood from overflow of natural or man-made body of water, rising of water table, surface water, storm surge. It provides protection for your home AND belongings often up to substantial limits based on the replacement value of your home. This limit of coverage under Comp Water will include a single limit for personal property, buildings, clean-up and debris removal, and loss of use of your dwelling during repairs. The deductible on this coverage is flexible. Rather than paying a flat dollar amount, you would pay a percentage of the claim amount. The coverage is very unique to the marketplace in terms of its coverage limits. We see several companies only covering clients for up to $50,000 in sewer back up or flood coverage and this typically does not include your personal property within this limit. If you think about a sewer back-up claim in today’s inflated market to replace the damaged property and your belongings, $50,000 is not going to take you far. As mentioned, the premium attached to the coverage will be determined by water zone in the home resides in. Coverage limit can also be adjusted to manage the premium based on the risk. Based on experience, it is very difficult to compete with Co-operators water coverage.

Q: Can I get insurance on a house with Polybutylene (Poly B) plumbing? If so, how much more would it cost?

A: Due to its high tendency for leakage through connection and joints, many companies will not entertain coverage on a home with Poly B plumbing and it can be difficult for homeowners to receive coverage for. It is highly recommended that the Poly B plumbing is replaced prior to moving into the home, and as such many providers will require the plumbing to be replaced prior to placing coverage on the home.

There are companies that have access to providers that will take on these higher-risk homes, but coverage for damage due to the Poly B plumbing will be excluded. By placing your home insurance with these higher-risk, specialty markets, your premium could be more expensive than if insured through regular provider.

**Note from RiverLife – we do have other insurance companies that cover houses with Poly B including damage caused by Poly B. Ask us for more info.

Q: Can I get insurance on a house with aluminum wiring? If so, how much more would it cost?

A: The risk selection of each provider is very different. Aluminum wiring is a softer wire that expands and contracts at a much greater rate than copper. This results in the connections to outlets, switches, and fixtures to work themselves loose overtime. Aluminum wiring is also very susceptible to oxidation, increasing the resistance to the current resulting in heat generation. While it is not typically a strict no go for insurance companies, there is a chance the premium may be higher (all depends on other factors of the home that make up the premium), and the provider may require additional information including when the electrical was last inspected or if components and receptacles have been updated recently.

Q: Is there any due diligence I can do prior to looking at homes to know if I am covered?

A: It is highly recommended that when considering a home to purchase you look for signs of risky electrical including scorch marks on receptacle covers, burn marks on the walls, strange odors near the receptacles or switches, and periodic flickering of the lights. Reviewing the inspections, listing of the home carefully and obtaining an electrical report is highly recommended, especially if the home is built in 1960-1990s. While the home may have been renovated, it is crucial to inquire if electrical was also updated. Asking questions to your realtor to ensure the type of electrical is up to code, and safe is recommended as well. If not, it may be something to consider requiring to be upgrading prior to purchase.

Q: If I own a condominium, do I need my own insurance policy even though my condo fees cover the condo insurance? In what circumstances would I need to make a claim on my own insurance?

A: Yes. Personal condo insurance policies provide coverage that your condo board insurance does not cover. For example, your contents (furniture, clothing, personal belongings), any improvements you do the unit, the interest you hold in the unit itself and your personal legal liability is NOT going to be covered under a condo board insurance policy. Condo board insurance policies will typically only respond to loss or damage to common property (parking lots, hallways, lobbies) or those damages or losses to the areas in which they are responsible as per your condo board wordings.

In addition, in the event, the condo board suffers a loss and is assessed a deductible by their insurance company, they have the right to assess the condo unit owners a portion of that deductible up to $50,000 in Alberta. That means if you do not have a personal condo insurance policy you can be on the hook for paying that portion of the deductible out of pocket.

It is important to note the liability portion of a personal condo insurance policy. If you are found liable for damage to another unit, for example, you left on an element on your stove and a fire started in your unit, your liability coverage would need to respond to damages to other units. If you are not insuring your condo under a personal policy and relying on the board insurance, you would be expected to pay for these damages out of pocket.

Q: Are there any other factors that can affect your premium or that insurance companies will look at as too high risk? (ie. wood foundations, acreages etc?)

A: Certain physical risks like age and type of plumbing (Poly B, Kitec), electrical wiring (knob and tube), roof and heating (furnace, wood stove, oil stoves) can impact your premium and contribute to the level of risk. Additional other factors like occupancy type (rentals, vacancy), at home business exposure, poorly maintained premises, overloaded electrical circuits, farming activity, and swimming pools can affect premium or even the ability to insure the home at all. Elements of the home that are dated, including foundation, roof material, and other construction materials can change the premium or be cause for further Underwriting and it something to consider.

DISCLAIMER: Please refer to your policy for applicable coverage limitations and exclusions. © 2023 Co-operators General Insurance Company and Co-operators Life Insurance Company

Jadyn Agnew, Associate Insurance Advisor 

[email protected]

Agnew Insurance Ltd., Co-operators

Be sure to stay tuned for part two of this blog to learn some interesting facts about home insurance and tips to reduce your insurance premium!