Home Insurance Myths

Home insurance can be confusing. The following are some of the most common misconceptions about home insurance in Canada to help you weed through what’s fact and what’s fiction.

You have to have home insurance

Not necessarily. If you have borrowed money to buy your home, chances are your lender will require that you purchase home insurance coverage and maintain coverage for the length of time you owe them money. However, if you own your home outright, you are not obligated to have coverage. Not having home insurance however, is risky and could be financially catastrophic should something terrible happen like a fire.

All homeowner’s insurance policies are the same

False. According to the Insurance Bureau of Canada, there is no such thing as a “standard” home insurance policy. While policies across companies may have overlapping or similar coverage options, there is no one policy that is considered “standard”. As a result, coverage may vary significantly from one insurer to another.

Damage caused by an earthquake will be covered

Maybe. Homeowner’s insurance policies do not automatically include earthquake coverage. You can however, have this coverage option added to your policy. If you live in a part of Canada that is prone to earthquakes, like some areas of Quebec and British Columbia, you will need to speak with your insurer to request this additional coverage be included in your policy.

Damage caused by a flood will be covered

Afraid not. Flood damage is not covered under your home insurance policy. What may be covered, if you have opted to include it in your policy, are back-ups into the house originating from sewers, septic tanks, eaves troughs or downspouts. Leaks or seepage through the foundation of your home are not.

If your television is stolen, the money you get back from a claim will cover the cost to replace it

It depends. If your policy insures your contents for replacement cost, then yes. If your policy insures your contents for actual cash value, then depreciation will be factored into the amount you get towards buying another television.

If your television is stolen, the money you get back from a claim must go towards buying another television

Nope. You can spend the money you get back from your claim any way you see fit.

Damage caused by insects or rodents will be covered under your home insurance policy

Unlikely. Most policies do not provide coverage for damage caused by termites, squirrels, mice, rats and even raccoons. Keeping these pests out of your home and away from damaging it, falls under maintenance and is preventable. Your home insurance will not likely cover damage caused by any of these critters.

Damage to your lawn or garden is covered under your homeowner’s policy

Probably not. Most home insurance policies will not provide coverage for the loss of plants or your lawn. Homeowner’s policies typically only cover structures and content.

Jewelry is covered under your homeowner’s policy

Yes and no. Most homeowner’s insurance policies include coverage for jewelry and other valuables like furs, art and electronics, however there will be a policy limit. A common limit is $5,000, although limits do vary from company to company. If you have valuables that are worth more than what your policy allows consider “scheduling” these items into your policy.

Home businesses are covered through your home insurance policy

Depends. Does your insurer know you operate a home-based business? Many people have the mistaken belief that a home-based business is insured under the liability and contents coverage of a home insurance policy. It is not, unless your home insurer knows you operate a business out of your home. While an extension on your home insurance policy to include your business is better then no coverage at all, a business insurance policy is really the way to go.Get a business insurance quote.

The belongings of a roomer or boarder are covered under your home insurance policy

Not necessarily. If you have people living with you like a roomer or boarder, do not assume their belongings are automatically covered under your policy. Chances are it is not.

Home insurance rates will be the same, regardless of the insurer.

False. Home insurance rates vary considerably from company to company. That’s why it is important to shop around and compare home insurance quotes. Not only will you find a policy that provides you with the coverage you need, but you’ll get it at the best available price.

Looking for more information on buying a home in Canada or home insurance?

Check out the following Kanetix® home insurance articles:

• 2009’s least expensive provinces to buy a home in Canada
• 2009’s most expensive provinces to buy a home in Canada
• Insurance tips to help you save when buying a home
• Buying a new home? 8 things to consider when it comes to home insurance

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