Insurance gaps form when lifestyle changes, sometimes seemingly inconsequential, are not reflected or updated in your home insurance policy. Completing an annual review ensures you close these gaps, which will minimize the chance of declined claims in future. Did you recently buy the new big screen TV you had been eyeballing for months? Maybe you decide to renovate your kitchen or you fancy a swimming pool in the backyard?

These are fairly common decisions for homeowners, but how many think about how these decisions impact their insurance coverage? These decisions are usually not made lightly, yet are often overlooked. This results in insurance gaps and severe shortfalls in compensation when filing a claim.

COMPLETE AN ANNUAL REVIEW OF YOUR HOME INSURANCE POLICY COVERAGE

Much like you have yearly check-ups for your health, we recommend everyone complete a home insurance policy coverage review annually. Even seemingly small changes in your routine, like a changing work location, can leave gaps in your coverage eligibility.

BENEFITS OF AN ANNUAL HOME INSURANCE POLICY REVIEW

A home insurance policy review gives you peace of mind that the belongings you treasure most have adequate protection. This protection would be useful in case something happens unexpectedly, like a fire, theft or weather event. A review could also result in a potential reduction in your insurance costs. For example, your agent may discover that you’re eligible for discounts or require less coverage than you did previously.

During an insurance review, you should evaluate your home insurance (or renters insurance), car insurance and any other policies you have in your name. In just a year, many things can happen, as we have seen since the start of the COVID-19 pandemic. Changes in residence, occupation and schools have forced us to pivot and adapt to new circumstances. These life-changing events can happen outside the typical annual policy timeframe. This is why it’s a good idea to take stock of all that happens while doing your insurance review.

Some things we recommend you think about when reviewing your coverage are:

1. HOME INVENTORY

Think about all the expensive devices we use on a daily basis. Things like your TV, cell phones, tablets and video games are all costly, and you’ll want to ensure you have coverage for loss or damages. That’s where an update in your home inventory list comes in handy. Make sure to keep all documentation of your purchases, including receipts, photos and model numbers.

Keeping an up-to-date inventory of your belongings yearly will ensure you have the appropriate coverage. Special events, such as birthdays, anniversaries or even Black Friday splurges, will affect your inventory’s total value. This inventory will also act as proof of personal items during a claim, and will make it easier for you to provide information to your insurer. So, keep these records somewhere safe!

2. SCHEDULED ITEMS

Did you know that there are special items that many of us own that aren’t fully covered under your home insurance? That is unless you specifically schedule them under a “floater”. On your policy, there may be some items with special limits, meaning you have coverage, but maybe not to the full extent of their value. This includes items such as bicycles, watercraft, jewelry and watches or silverware. Again, you can buy extra insurance for these, either with your primary insurer or a third-party insurer.

Other items in your home with special limits include:

  • Sporting goods: Golf clubs, fishing equipment, hockey equipment, etc.
  • Musical instruments: Guitars, drums, classical instruments, etc.
  • Medical aids: Wheelchairs, hearing aids, dentures, contact lenses, etc.

Items of jewelry, like engagement rings, valuable watches or diamond earrings, need separate coverage. If your jewelry items are irreplaceable, then you should insure them with separate jewelry insurance. A stand-alone jewelry policy would fill in the gaps left behind by your home insurance policy in terms of protecting your valuable item.

3. RENOVATIONS

With Canadians stuck at home during the pandemic, insurers made note that more people were staying home and using vacation funds to update and improve ‘staycation’ dwellings.

Any type of upgrades, from finishing your basement or adding on an addition, will affect the overall value of your home. So, as renovations cause an increase in home values, the cost of home replacement has also gone up with it. Upgrades to your home typically affect your home’s value. Because of this, you’ll want to ensure that there is a reflection of this in your insurance coverage. You will also want to ensure that the proper permits and inspections are done so any future losses are eligible for coverage.

Your home insurance rate is based on the level of “risk” to which your home is exposed. It also factors in how much it will cost to repair damage if something were to happen. If you don’t disclose to your insurer that work has been done to your home and an accident occurs, your claim may be denied for material misrepresentation.

4. HOME VALUE

Housing prices across Canada are set to keep rising throughout 2022. Royal LePage’s latest “House Price Survey” found the average price for a home in Canada has seen an increase of 17.1 per cent year-over-year in the fourth quarter of 2021. The average price has hit $779,000!

It’s common for home owners to wonder ‘How much is my house worth?’ Your home value depends on the type of valuation because homes are valued in different ways and for different reasons. There’s appraised value, assessed value, fair market price, replacement value and actual cash value. These different types of home valuations vary by who conducts them, why they’re essential, and how they affect your home insurance rates and coverage. In case of any loss, you would want to ensure that your coverage reflects fair market value for you and your family.

5. HOME LIABILITY LIMITS

When people add on structures, like a pool, deck or tree house, it is important to address how this may increase the liability of their property. Personal liability limits should be a consideration. Insurers say that most people buy policies with $100,000 in personal liability insurance, which tends to be inadequate. The amount could easily be used up due to medical expenses and possible lawsuits if someone suffers an injury in or around your home.

With that in mind, insurance experts recommend limits of at least $300,000. The amount of medical payment coverage you can buy varies by insurance company, but at least $5,000 is the usual recommendation. If you have assets above $500,000, you should see whether a separate umbrella policy would make sense for you.

Did you know that you might need extra home insurance coverage if you have a pool or hot tub? Pools and hot tubs may increase the risk of a flood in your home. Ask your isure insurance broker about additional umbrella liability coverage for flooding. Uncovering gaps in your coverage is important to ensure that at the time of a loss, you and your loved ones receive proper compensation.

So now that you’re ready to take stock of your assets and review your home insurance coverage, give us a call!

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