Island Savings

Flood, fire and earthquake insurance - Is your home properly covered?

Many Canadians don’t review their home insurance policy until disaster is at their doorstep. As a result, they have no idea whether or not they’re covered in the event of a fire or a flood or an earthquake. It’s only when we’re most likely to be affected that we have sufficient incentive to take action.

But when it comes to insurance, that’s too late.

When a fire breaks out, insurance companies aren’t allowed to sell insurance within a certain distance of the fire (25 or 50 kilometres, depending on the company).

It’s a similar thing when there’s a flood. If there’s an imminent threat of a flood, a state of emergency or an evacuation order, companies won’t write (even if your particular area is fine).

After an earthquake, there is a 7 to 10 day suspension within 100 km of the epicentre of an earthquake measuring 3.0 on the Richter scale (5.0 for some companies) during which time insurance companies can’t write policies.

“A common misconception is that if I don’t buy this additional insurance, the government will help me because it is a natural disaster,” says Joy Slater, Senior Insurance Advisor at Island Savings Insurance. “In fact, if it is an insurable loss and coverage was available to you, it is not eligible for the Disaster Financial Assistance program with the government.”

Learn more about how overland flood policies affect Disaster Financial Assistance eligibility

What that means is that British Columbians need to be proactive about reviewing their home insurance policies and making sure they have appropriate coverage before disaster strikes.

Here are some of the common gaps customers aren’t aware they might have in their policies when it comes to natural disasters with specific insight on how to fix them.

Protecting the new home you just bought

When you buy a new home, you typically can’t purchase insurance more than 30 days before your closing date.

You could end up in a tricky position if a disaster were to hit the area. As insurance companies can’t write new policies, you wouldn’t be able to obtain insurance and therefore your mortgage funds wouldn’t get released.

There are two steps you can take to protect yourself from this stressful possibility:

  1. Talk to your realtor about adding an insurance condition clause;
  2. Get the coverage when you’re able to.

Protecting your Corvette or ATV

Vehicles that you store in your garage or carport are not covered by your home insurance policy. Slater explains that a lot of people don’t know this that they have the insurance they need to store their ATV or their Corvette.

Everything else in your garage: your tools, your fishing equipment, your treadmill and weight rack, all are covered as contents. But your stored vehicles, campers and motorized toys (ATVs, dirt bikes, snowmobiles, jet skis, etc.) are not.

The car that you drive is protected whether you park it on the street or in your garage if you have comprehensive coverage.

But any vehicle that is being stored — whether it’s a recreational vehicle (campers, ATVs, dirt bikes, snowmobiles, jet skis, etc.) or a leisure car that you only drive for a couple weeks every year — requires storage insurance.

Tenant Insurance

Approximately half of renters in BC don’t carry any home insurance.

“Regardless of where the loss occurred,” says Slater, “whether it’s your unit or another one in the building, if your contents suffer damages due to that loss, that is where insurance comes into play. If you don’t carry it, then you are on the hook to replace your contents and to find someone to stay with while they fix your building.”

“You can also be liable for any damage you may accidentally cause,” she adds.

Replacement costs for even the bare necessities can easily reach $20,000. And that’s just the start of it. If your apartment building burns down, you’re going to have to live somewhere else and those costs can also start adding up quickly.

Plus, if you’re found to be negligent for a loss, whether it’s an injury or a fire, you are going to need personal liability to cover the court costs.

Simply put: if you’re a tenant, you need insurance. The $20+ a month it costs to insure the contents of the home you’re renting is a small price to pay to ensure your peace of mind.”

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Protecting your home from fire

Your basic home insurance policy will cover your losses from a fire and it’s pretty standard across all insurance companies.

Make sure is that you are honest when buying your policy. In other words, don’t bend the truth thinking you can save a couple dollars on your premium.

  • Are you operating a small business out of your home?
  • Do you have a wood stove?
  • Are there any short-term rentals, such as airBNB or VRBO anywhere on the property?

“If you’re not upfront and disclose information on your insurance application, your insurance company could deny your claim,” Slater says. “Choosing to not be truthful with your insurance is choosing to pay for something that will never pay for you.”

Protecting your home from earthquakes

Earthquake coverage does not come with your basic policy but is offered as optional coverage.

It covers:

  • Your home (the physical building structure and any detached outbuildings) and
  • Its contents (your stuff)

Any earthquake insurance will cover the full cost of your home. When it comes to the contents, you can choose to insure anywhere from — depending on the insurance company — 0 to 100 percent of the value.

If you live in an area that’s susceptible to earthquakes, it is important that you make sure you have the coverage you need if the worst were to happen. If you choose not to purchase earthquake insurance, you will not be eligible for government assistance should an earthquake strike.

Protecting your home from flooding

Water damage is by far the most common property damage claim in Canada and it has been steadily growing. In 2008-2009, the average damage across country caused by severe weather was $100 million. Today, it stands at $400 million.

Not all floods are the same. There are four types of insurance coverage available to protect against water damage:

  • Service line, which covers damage that occurs when a municipal pipe bursts on your property;
  • Sewer backup, which covers the repairs needed when the sewer or septic system overflows;
  • Overland water, which covers damage due to fresh water flooding, which occurs when a river or a lake burst their banks and flood your home (fresh water flooding also covers you in case of a heavy rainfall that accumulates on the ground and enters your home);
  • Ground water, which covers the damage caused when water soaks into the ground and then enters your home through the walls or floor and from the rising of the ground water table by underground rivers or streams.

Water damage affects everybody. It doesn’t matter if you live near a lake, a river or on a flood plain. You might have higher risks in some instances, but water affects everyone. A heavy rainfall could flood any home and easily cause tens of thousands of dollars’ worth of damage.

Make sure you:

  • Review your policy to understand what your insurance covers,
  • Get the full policy limit available.

Flood insurance when you live in a condo

When you’re living above ground in a condo, you may think that you don’t need to worry about flooding damage.

However that’s not entirely true. People often overlook the threat of electrocution during a flood. Anytime there is flooding, you might need to be evacuated. You might think that your property or its contents are not at risk, but you certainly are.

Evacuations are covered under your policy even if there isn’t a loss (damage to your stuff), providing policyholders with living expenses if they need to be displaced in an emergency.

Home Insurance: Facing Natural Disasters

When it comes to home insurance, cutting corners simply isn’t worth it. The cost of a claim and the impact it could have on your personal livelihood it could have are too significant to take lightly.

It is worthwhile to take a few minutes to:

  1. Review your existing home insurance policy and understand what it does and does not cover,
  2. Talk to your insurance broker to make sure you are properly covered for an emergency before it strikes,
  3. Keep a current home inventory checklist, make an emergency plan and assemble a disaster safety kit so you’re fully prepared in the event of an emergency.

The Insurance Bureau of Canada has terrific emergency preparedness resources, including a 72-hour emergency preparedness plan for you and your family.

Don’t wait to review your home insurance policy for when it’s more convenient. Not only will you end up with better coverage for your home, you will get peace of mind knowing that you are prepared to face whatever Mother Nature will throw at you.

Slater advises you to “ask questions, read your wordings, take photos, talk to your broker as you want to know that your insurance will respond the way you expect it to should the worst happen. Be aware of what you are paying for.”

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