First things first: your checklist of what to do in order to get home insurance starts even before you’ve bought the home.
“When you have your home inspection done, that’s when you get the information about wiring and plumbing that you’ll need to provide to an insurance company. You’ll also know about the condition of the hot water tank, the furnace, the roof,” says Laurie Kay, senior account executive with Reliance Insurance. “If you didn’t get an inspection done, you could have a hard time finding an insurer.”
Knob and tube wiring, which can still be found in some older homes, can be a red flag; many companies simply will not insure these homes. Other insurers may take on the risk, depending on what percentage of the house is involved, and contingent on a specific plan to replace the knob and tube.
There’s another important point in there: Getting insurance is not like going to a grocery store and picking up a box of crackers off a shelf. Insurance companies do not have to sell a policy to you if you look like a bad risk. That involves your track record of claims; a lot of claims signal to an insurance company that it could cost a lot of money to have you as a customer.
“As brokers, we have 20 different companies we deal with, and we do have a ‘last resort’ market we can try to place clients with. However, they may charge quite a high deductible or premium,” Kay says. “Insurance companies are being more selective now because of how high claims are now — all of these climate losses related to flooding and wildfire have meant a real change in the industry.”
Fire is essentially a universally covered peril, but it’s worth reading the fine print when it comes to water damage. To a homeowner, flooding is flooding (and equally terrible). An insurer considers whether it’s from a burst pipe, a leaky pipe, water seeping up from underground, or water coming overland from a nearby body of water or a storm; all of this can affect whether the damage is covered by insurance. Homeowners need to think about what additional water coverage to buy, and whether the cost is worth it. The same goes for earthquake coverage.
Glass-breakage policies are another add-on option that could be useful if you live near a baseball diamond or golf course. Identity theft protection has been an emerging trend in the past few years; Kay says she hasn’t seen a lot of claims to date but that it’s not a bad idea with the way the world is going. Additional coverage for jewelry or expensive bicycles are also popular, but there too, the fine print is important.
“Some companies have no limits, while others have a specific dollar limit. Well, in Vancouver, many people have bicycles that are worth $5,000 or more,” Kay points out. “If you just go through one of those online instant-quote processes, you might not realize you’re not covered until your bike is stolen and you can’t put a claim in.”
A claims-free history as a renter can be helpful for a first-time home-insurance purchaser. Having a good credit history can also help with a discount on the price of the insurance; the assumption there is that someone who keeps their financial affairs in order will also take good care of a home. That may require consenting to having a credit check done.
Some companies also offer a loyalty discount if clients stay with them for an extended time
You can also get a lower premium (the cost you pay to get a policy) by choosing a higher deductible (the cost you pay per claim). Changing from a standard $500 deductible to $1,000 can decrease the premium cost by 10 to 15 per cent; you could go as high as a $2,500 deductible if you like. It’s a calculated gamble.
Some companies also offer a loyalty discount if clients stay with them for an extended time; companies may also be willing to keep insuring long-time customers if they have had to make a cluster of claims after a few years. Other companies offer stability discounts for those who stay in the same residence for a long time, thinking that long-term homeowners are more likely to keep up with upkeep. Seniors or ‘mature persons’ discounts are also sometimes available, with the thinking that they are less likely to make claims.
Kay recommends keeping permits and paperwork associated with renovations in a file, to help establish replacement value for the home in case of an incident. She says it’s a good idea to semi-regularly go through your home and take photos of your possessions. Once the pictures are uploaded to the cloud, there’s a secure, accessible record of what possessions you have in case something happens to your home. It’s much more convenient than trying to track down receipts or combing through credit card records. Going through an established insurance company or broker can also make the claims process go more smoothly, since they can guide you through all of the steps.
All in all, Kay says doing your homework at every stage pays off when it comes to home insurance.
Home insurance purchase checklist
• Consider getting renter’s insurance to start establishing a history for yourself (fewer claims makes you more attractive to an insurer).
• Get a home inspection done before buying a property; get details around the wiring, plumbing, hot water tank, furnace and roof.
• Know the square footage, age, number of storeys, number of bedrooms and bathrooms your home has; that helps calculate potential replacement cost.
• Think about what additional coverage you might need, and whether it makes sense for your own individual needs.
• Read the fine print on coverage.
• Take photos of every room in your home on a regular basis, so you have a visual record of your possessions in case you need to make a claim.