Insurance is not as cut-and-dry as the industry would like you to believe. In addition to the complicated terms and conditions used by many home insurance brokers, insurance agents are often very busy and unavailable to answer every single one of your questions. Because of this time crunch, Canadians across the country are turning to their friends and family for answers to their top home insurance questions. Unfortunately, this type of research does little to dispel some of the more popular home insurance myths. Here are the top myths surrounding home insurance.
Purchase price is all that matters
One of the biggest myths people believe when buying home insurance is that their coverage needs to be equivalent to the purchase price of their home. This is untrue. Instead, you should be covered for the amount it would cost to rebuild your home. Insurance companies have databases and tools used to automatically calculate your rebuild cost. However, ask your broker to verify these figures annually to make sure your coverage stays up-to-date.
You’re covered for flood damage
Despite what you might have heard, most home insurance policies in Canada do not cover water damage from floods. Instead, insurance coverage for water damage is only applicable if a pipe bursts or, in some cases, if a sewer overflows. After the 2013 Alberta floods, certain home insurance companies began offering flood insurance to customers. Talk with your broker or provider to learn whether you're covered.
All personal property is covered by home insurance
Another popular myth about home insurance is that all of your personal property is covered under a standard home insurance policy. While this may be the case for many people, homeowners with expensive property: valuable art, jewelry and collectables might require their own, additional insurance coverage.
Not buying home insurance is against the law
Home insurance is not mandatory. Although lenders will usually require home insurance as a condition for granting a mortgage, mortgage-free homeowners are under no obligation to buy home insurance.
Everyone lies on home insurance claims
If the worst should happen and you need to make a claim, many people will tell you to lie about what you owned and what damages you suffered. This, however, is not just unethical; lying on a home insurance claim comes with the risk of your claim being denied and your home insurance policy being cancelled.
My condo board insurance covers me
If you own a condo, you might be in the majority of people who believe that the condo board insurance also covers you. This is a big myth, and one that could have dangerous and expensive consequences. Condo board insurance covers the common areas of the condo building, but usually does not cover your specific condo or damaged caused to the condo building by you or your guests.
This list of myths is by no means exhaustive. However, these six myths are a good start towards correcting some of the most pervasive tales about home insurance. A little bit more knowledgeable, you can now intelligently discuss policies with your home insurance broker to make sure you end up with the coverage you need.