Home insurance you didn’t know you had

You purchase home insurance to protect you from catastrophic losses, such as an all-consuming house fire, or a massive backup of sewage water in your basement. But did you know your everyday home insurance policy can often protect you from perils that are not always so obvious?

I talked to Wayne Ross, vice president of claims at Aviva, on the coverage you already have, but don’t know about, along with a few add-ons that may be worth exploring. (Caveat: every insurance provider and policy are different so double-check with your insurance provider.)

What your home insurance already protects against

Mortgage rate protector

In the event of a big loss, where you find yourself displaced from your home as you rebuild, this coverage will protect your mortgage rate. For example, when you get your mortgage you negotiate for a five-year fixed-rate at 2.65%. But in year two, you have a massive electrical fire that prompts extensive rebuilding that takes the better part of six months. In that time, the five-year fixed rate jumps to 3.75%. This coverage would protect you from that rate increase and pay the difference between your original mortgage rate and the higher rate, for the remaining portion of your original mortgage term.

Smash and grab losses

Not all losses covered by your home insurance actually occur at home. “The contents coverage of your home insurance covers loss and damage of your belongings—even if that loss or damage doesn’t occur at home,” says Ross. For example, if your laptop, camera and MP3 player are stolen from your car through a smash and grab—where someone smashes your window and grabs your belongings—then the loss of your belongings is covered by your home insurance. (The damage to your vehicle will be covered by your auto insurance.)

Vacation losses

Do you know someone who went on vacation only to find that while down at the beach someone broke into their hotel room and stole their passports, camera and cash? While the loss is an inconvenience, it doesn’t have to be a setback. Home insurance will cover the content loss, as will some travel insurance. Consult with both insurance providers to determine which one would offer you the biggest repayment, based on deductibles and your policy terms.

Your mom’s retirement room

Does your mom live in a senior’s residence? Did you know that all her personal belongings, furniture and even those tech gadgets you’ve given her to help her keep in contact with the grandkids are covered under your home insurance policy? The maximum claim coverage is $10,000, but it can be applied to anything that was stolen or damaged in your ma’s retirement residence.

Your kid’s college dorm

Your home insurance coverage also extends to belongings your kids cart off to college. While the maximum claim coverage is usually $10,000, it means your kids don’t have to get their own insurance for their dorm or off-campus apartment while away at school.

Stolen bike

Ever had a bike stolen? Just about every avid cyclist or urban commuter can tell a tale of a damaged or stolen bike. It’s almost an epidemic in North American cities. The good news is that the loss of your bike is covered by home insurance—even if your bike was stolen, while locked up outside your favourite brunch spot. “Just be sure you know the coverage limits for items like bikes,” says Ross. Typical coverage tops out at $3,000 for all bikes under the policy under most insurance providers, but it can be less. If you know that the cost of replacing your bike will be more than $3,000, consider a separate rider—extra insurance that adds a few bucks to your yearly premium, but guarantees loss coverage of a particular item.

Litigious neighbour

You just don’t hear too many stories of people being sued because of a slip and fall on their property. But just tell that to the Sandhu family. For five years they were in court to refute a neighbour’s claim that she slipped and fell on the Sandhu property in Calgary, Alberta. The judge eventually ruled in favour of the Sandhu family but the biggest expense—their legal bill—was completely covered by their home insurance policy. “Most people don’t realize how comprehensive the liability coverage really is,” says Ross, “and these days the cost to raise that coverage from $1 million to $2 million is negligible.”

Loss assessment coverage (strata only coverage)

If you live in a condo you’ll be happy to learn that most comprehensive insurance policies offer loss assessment coverage. This coverage protects condo owners from any special assessment costs that are assigned to them. So, if your condo building’s roof is damaged and each unitholder needs to pay $5,000 to cover the repairs, the loss assessment coverage will pay the $5,000 on your behalf (minus any deductibles).

Additional home insurance coverage to consider

→ Rebuild to code
Building codes are updated at least every decade, which can be a problem if your home was built a few decades ago but suddenly requires extensive repairs or a rebuild. “What was built in 1986 won’t necessarily be sufficient for rebuilding in 2015,” explains Ross. Bylaw coverage in your home insurance policy can protect you from the cost of complying with changing bylaws should you be required to rebuild due to a catastrophic loss.

→ Unit owner additional protection
This is liability insurance specifically made for condo-owners. If you damage your unit and this ends up causing damage to the common elements within the building, you could be held financially accountable by your condo board for paying the condo corporation’s insurance deductible. These deductibles are often much larger than unit-holder insurance deductibles—often starting at $10,000 and going up. To protect yourself from this unexpected cost you can purchase additional protection that would kick-in and pay the deductible should the situation arise.

→ Sewer back-up
If your basement is now liveable space, or if you store items of value in your basement, you should seriously consider purchasing sewage back-up coverage. The pricing ranges from $50 to $1,500 per year, depending on where you live, and covers all basement water damage due to sewage and waste water.

→ Flood protection
Worried about flooding? Call your insurance provider. For the first time, homeowners can purchase extra flood protection—known as “overland water protection.” Not every insurance provider offers this protection, so be sure to ask if protection from flooding (known as overland water damage) is covered. If not, you may need to switch insurance providers. The pricing is similar to the sewage back-up rider, which ranges from $50 to $1,500 per year, depending on where you live.