Ask a broker #2 – Home insurance special Q&A 1

Answer: When you call your broker for a quote on home insurance, they’ll need close to 50 different bits of information about you and your home in order to get you a quote. Some of this information may already be in your file if you are an existing customer, but your broker will need:

• Info about you, like your name, gender and contact info
• Info about the home, like the address, when it was built, what it’s made of, details about wiring, plumbing and heating, and details about features that could prevent claims, like sprinklers, fire extinguishers and monitored alarms.
• Info about your insurance record, like how long you’ve been with your current insurer, whether you’ve made claims, and whether you’ve ever been cancelled or refused insurance.
• Info about the level of coverage you want, including deductibles, and whether you want to take advantage of certain discounts.

If you live in a condo or apartment, your home insurance will only cover your own unit and your stuff, so the broker will also ask you to estimate the cost of rebuilding the inside of your unit and the value of your possessions.

Ian Mewhinney – Account Manager at Mitch Insurance

Answer: It depends on how the water gets into the home. Sewer backup, overland water and groundwater are three examples of how water can enter the home, and each is treated differently under a home insurance policy. Depending on your insurance company and the location of the home, your policy you may have coverage for one or all of these types of water damage.

• Sewer backup covers losses for water coming back through the sewer or septic system into your home.
• Overland water covers damage caused by actual flood water outside the home that enters through windows and doors.
• Groundwater covers damage when water comes through the foundation walls.

Make sure to ask your broker which of these coverages you have, as they’re not always standard. Most insurance companies offer sewer backup and overland water coverage as endorsements. Very few offer groundwater coverage, and even if you do have this coverage, it will only cover damage from a one-time occurrence. If you have a crack in your foundation and your basement gets wet every time it rains, that’s never covered.

All of these endorsements exclude damage caused by salt water entering into the home.

Learn more about water damage and insurance

Shane Rosenberg – Account Manager at Mitch Insurance

Answer: Yes, you do, and if you have a mortgage on the property, your lender will insist on it.

When renting out your condo unit, there are three types of insurance you need to be aware of:

1. The condo corporation has a business (commercial) insurance policy on the building itself. This covers the structure. The concrete and the drywall. It may cover some of the features of the unit, like cabinets, toilets etc., but it seldom covers floors, and never covers improvements or betterments to the unit. If you upgrade counters, lighting or plumbing fixtures, that’s not covered. Regardless, deductibles are very high for these policies. Maybe $25,000.
2. You, the owner of the unit, need insurance for your personal liability (say someone gets hurt in the unit), possibly for floors or any betterments or improvements you’ve made to the unit, and perhaps any of your property that is housed there (if you rent the unit furnished, for example).
3. The tenant also needs insurance to cover their own liability, as well as their contents.

Ian Mewhinney – Account Manager at Mitch Insurance

Answer: Yes, you need tenants insurance. If something you do causes damage to another unit in the building, you could get sued for thousands of dollars. Also, even if you don’t own much, could you afford to replace it all at one time if you had a fire?

Reasons I’ve heard why people don’t get tenants insurance: I don’t own much, I can’t afford it, I never thought of it.

Then when fire hits, they wish they had it. How many times do we hear of people losing everything in a fire? You may only own $30,000 worth of stuff but when a fire takes it all, do you have $30,000 to replace everything?

When you say you don’t have much: Canada has 4 seasons of clothing per person in the home, furniture, pots, pans, cutlery, place settings, linens, beddings, electronics, sports equipment, tools, small appliances (microwaves, blenders, coffee makers, toasters), children’s toys etc. It adds up fast.

Not only can you get contents insurance for as little as $20/month. It can sometimes pay for itself if you bundle it with your auto insurance. Worth asking your broker.

Tracey Gilmore – Account Manager at Mitch Insurance

Answer: All electronics carry a certain degree of fire risk, especially as they get older, charger cords become bent or frayed etc. When a phone is charging, it can produce a certain amount of heat. If you’re using it while it’s charging, it can heat up even more. The real risk is if the phone becomes wedged under pillows or blankets, and the heat has nowhere to go. The safest way to charge your phone is to use an approved charger on a counter or table with lots of open space around the cord and the phone. It’s tempting to keep using a charger that’s bent or frayed, but that can be the biggest risk of all. It’s also safer to avoid charging overnight.

Tracey Gilmore – Account Manager at Mitch Insurance

Advising your insurer or broker that you have oil heating in your home will probably increase your premium because of the risk of an oil leak. Cleaning up a spill from an oil tank can cost as much as $500,000.

Your insurance representative will also ask you additional questions to determine the level of risk:

1. Is the tank double bottomed and double walled?
2. Is the wall of the tank at least 2.2 mm thick and free from corrosion and pitting? Your insurer may insist on an annual inspection.
3. Is the oil tank made by an approved manufacturer? One big manufacturer in particular (DTE) went bankrupt, and so if there is a problem with the tank, your insurer wouldn’t be able to go after that company for losses.

Shane Rosenberg – Account Manager at Mitch Insurance

Answer: Unsurprisingly, many people do not know the age of their hot water tank, and some are curious why we would ask this question. Insurers want this information to determine the risk of water damage to the home if the tank ruptures. A newer tank is less likely to rupture, and so will get a better rating, and a lower premium.

Shane Rosenberg – Account Manager at Mitch Insurance

Answer: Yes, it can. Almost no home insurance policies cover losses related to a home business, especially if you don’t let the insurance company know about the business before a loss happens.

Some businesses have a very low risk of loss, and your insurer may simply add a note to your file. There may be a small change in the premium.

On the other hand, many people believe there is no issue with selling Avon, or pampered chef products, or even their own homemade products such as soaps or candles, as “everyone does this kind of stuff”. This kind of business, where you are distributing products that can be eaten or applied to the skin, has a considerable risk of leading to lawsuits, if someone has a negative reaction to the product.

You should always let your broker know if you are running any kind of business from your home. They will advise you as to whether you need a separate insurance policy to cover the additional risk. If you don’t tell your broker or insurer and they find out, that could lead to cancellation of the policy for misrepresentation, which will definitely affect your future premiums.

Shane Rosenberg – Account Manager at Mitch Insurance

Answer: If you’re going to be away for more than 4 consecutive days during the freezing season, you should take the following precautions:

• Arrange with a capable and responsible person to check in on the home every 3 days to make sure the heat is working; or
• Before you go, shut off the main water supply and make sure the pipes and toilets are drained, or
• Connect your heating system to a centrally monitored alarm system that is monitored 24 hours a day.
• If you don’t take these steps and your pipes freeze, your claim could be denied.

You might want to draw the curtains and have someone pick up your mail too, to make the home look occupied.

Jeanette Duncan – Account Manager at Mitch Insurance

Answer: Your personal property (your stuff) is covered by your home insurance policy anywhere in the world, meaning that being out of the country doesn’t affect your coverage. However, high-value items like cash and jewellery are only covered up to a certain amount under a standard policy, typically $4,000 or $6,000. If your ring or other possessions are worth more than the limit, you would need to pay extra to “schedule” these items under the policy, and only then would they be fully insured.

Shane Rosenberg – Account Manager at Mitch Insurance