A Homeowners policy is designed to give you protection for sudden and unexpected losses to your home and belongings. Its job is to put you back to the position you were before the loss occurred. The cost of purchasing Homeowners coverage can vary greatly based on a number of different factors. Things that the insurance companies look at to set their rates include: how prone your area is to sewer backup, fire, and other perils; the cost of building supplies and labour in your area; the building features of your home; safety and loss control devices such as burglar & fire alarms, sump pumps, backflow valves, and water sensors. (Please note, this list is not an exhaustive list of all the factors that may be influencing your rates. If you have questions about a sudden change to your insurance premiums, we recommend contacting your insurance broker to discuss the details specific to your situation.)
How much insurance is enough?
It’s important to make sure that you have enough coverage for a worst case scenario: the total loss of your home and belongings. When these disasters occur, it’s important to know that you’re protected and that your home will be rebuilt for you. However, as a savvy consumer, you also don’t want to be over-insuring and buying too much insurance for what your needs are. How do you know that what you’re getting is enough? Unfortunately, the only way we can know with 100% certainty is AFTER a loss has happened.
The current industry standard for estimating insurance values before a loss is to conduct a Rebuilding Cost Evaluation. This is usually done with a software program designed specifically to calculate these costs (the software programs are independent from the insurance providers). The programs use data provided by contractors for the cost of materials and labour in various neighbourhoods. As a broker, we would contact you and conduct an interview over the phone or in person discussing the particular construction design and materials used in your home. As brokers, we rely on you to provide us with accurate information and also to let us know as soon as practical if you do any renovations that would affect the building replacement cost of your home. This evaluation process is usually done once every three to five years and is required for any new homeowners business that we submit to our insurance companies. Each year after that, the insurance company applies an inflation factor to the amounts, to account for any increases in the costs of parts and labour.
A Homeowner’s policy can also be modified to add optional coverages or extend coverage beyond the normal limits of your policy. Some examples of these extensions and additions are as follows:
- Earthquake coverage
- Higher liability limits ($1,000,000 is standard)
- Scheduled items such as jewellery or fine arts
- Small business coverage if you operate a business out of your own home
- Coverage for watercraft or recreational vehicles
Have more general questions? Feel free to fill out our contact form and we’d be happy to respond to your general questions and possibly update our site to be more useful to yourself and our other customers in the future. Want a quote or more information about your current homeowners policy with our office? Please feel free to phone or stop by one of our offices if you’d like to speak to someone who will be able to address your specific questions and concerns.