Home insurance can be a financial lifesaver when Mother Nature wreaks havoc on your abode. But simply purchasing a policy doesn’t necessarily mean you’ll be sheltered from the potential financial fallout after a storm hits.
What if your roof gets wrecked? Or a tree in your yard falls over and lands on your neighbour’s property, damaging his home, or worse, injuring the homeowner himself? How about if your basement is leaky or gets flooded?
Will your insurance policy cover the cost of fixing these problems?
The truth is, there are numerous grey areas.
“With almost 200 insurance companies in Ontario selling policies, there are many types available on the market,” says Peter Burns, president of the Insurance Brokers Association of Ontario and owner of Burns, Demeyere & Associates, an insurance brokerage in Tillsonburg, Ont.
Because home insurance is not regulated like auto insurance, each policy is different and may not fully protect you in the event of certain types of damage to your home, Burns says.
“Some policies could charge for certain coverages where other companies throw them in as part of one price.”
Here’s a primer on what you should know about home insurance and weather damage:
1 - Leaks and liability
When it comes to leaky basements, note that seepage, the slow escape of water through holes or cracks in your foundation, or through a window casing, is usually not covered by home insurance.
“If you’ve got a crack in your foundation, that is your problem,” says Burns. “If you have seepage and you get two inches of water in your basement, [insurance companies] will not pay to have it cleaned up or to replace what got wrecked. That’s a maintenance matter you should have taken care of yourself.”
So a bit of vigilance on the part of the homeowner can go a long way here. Regularly inspect basement walls for cracks and ensure any caulking around windows and doors is in good shape. Also, check gutters and downspouts to see they’re clear and working properly, so water can move away from your home and not end up creating problems.
2 - Flood zone
Say a storm dumps so much water that municipal infrastructure can’t handle the deluge, and it ends up gurgling up through a drain and flooding your basement.
In this case, it’s essential you have sewer back-up coverage. “This is typically something that has to be requested over and above basic coverage,” notes Larry Lythgoe, Ontario region claims director for Royal & Sun Alliance Insurance. “Even then some policies have a limited amount of coverage, so it’s critical that the customer knows what that limit is.”
If you’ve spent $50,000 renovating your basement, high-end home entertainment system and all, and your policy has sewer back-up coverage with a $10,000 limit, there’s a potential for a loss there, he says.
You should have a sump pump in your basement and regularly check that it’s functioning. “Once a month, go down there and pull the chain,” says Henry Blumenthal, vice-president and chief underwriter for TD Insurance. “Oftentimes, those things seize up if they don’t exercise, just like you and me.”
If possible have a generator as well, so, if a serious storm knocks the power out, the sump pump will still work.
3 - If a tree falls
A tree on your property gets blown over and lands on your neighbour’s property, causing damage to his or her home or car, or worse, to the homeowner. This creates a complicated set of circumstances, as it involves a third-party claim.
If the tree was in good shape, you likely won’t be liable if it tips over, insurers say; technically there’s nothing you could have done to to prevent it.
“On the other hand, if it was a dead tree or it had a dead branch and you didn’t attend to that, there could be some exposure on your policy,” says Lythgoe. “You could be responsible for the damage.”
Damage would be covered under the personal liability portion of your policy, which is typically around $2 million in coverage that protects you against damage you caused to other people or property.
But it would still count as a claim with your insurer, which could raise your premium.
Again, homeowner vigilance is key.
“A tree could look healthy but there could be some rot inside and it’s not always apparent,” Lythgoe says. “So keep an eye on things, and, if you see that a tree’s not in good shape, take corrective action.”
4 - Up on the roof
If a nasty storm rips holes in your roof, your insurance company will help you fix the damage.
But how well the roof has been maintained will be a factor in the amount of coverage the insurer will provide.
Insurance companies will often take into account the depreciation of the roof. “They’ll pay for some of the cost of putting the new roof on, but they won’t pay for all of it,” says Burns.
“A homeowner policy is not a maintenance policy; you can’t just wait and say, ‘I hope I get a windstorm because I need a new roof.’ The purpose of the policy is to put you back in the same condition you were in prior to the claim.”
So regularly monitor your roof to see that it’s in good shape. Check all openings to see they’re sealed properly, and look for signs of water damage on ceilings or walls.
“A roof that has a 25-year guarantee means that after 25 years, it’s guaranteed to leak,” says Blumenthal. “So you should make sure you prevent this from happening.”
Another thing to keep in mind with roofs is snow load. If you live in an area that gets loads of the white stuff, some policies might exclude damage that results from excessive snow on a roof. Know what coverage you have.
5 - When fences falter
What if your fence blows over in a storm and it needs to be replaced? This is a simpler matter.
Most insurance companies will consider the fence an extension of the home and should cover the replacement cost, says Burns.
But again, maintenance is key here. “It’s the same thing as a roof; it should be in good shape, not half falling over,” he says.
The major thing to understand about home insurance: A policy can provide peace of mind when a storm rolls in, but it doesn’t absolve the homeowner of his or her duties.
“You’ve got a lot of responsibility in an insurance policy to maintain a home,” says Tom Hamza, president of Investor Education Fund, a non-profit organization with a mandate to help consumers. “If you’re not maintaining your home and damage happens, there’s a much greater chance of that not being covered.”
“Just because you have an insurance policy,” he adds, “doesn’t allow you to abstain from the responsibilities as a homeowner.”
• Know what’s covered: Do you have a comprehensive, all-perils policy, or a basic, named-perils policy?
An all-perils policy will protect you against most risks, whereas a named-perils policy will cover a specified list of risks, such as fire, lightning and wind.
“All-perils policies offer better coverage and generally, with some companies, can be less expensive, because that’s the kind of client they want,” says Peter Burns, president of the Insurance Brokers Association of Ontario and owner of Burns, Demeyere & Associates, an insurance brokerage in Tillsonburg, Ont.
Beware: A comprehensive policy requires you to insure the house for 100 per cent of its replacement cost, not at the same amount as its market value.
• Update your policy.
Constantly inform your insurance company about upgrades to your home and additional contents. Keep an inventory for yourself that you review on a regular basis.
“Go around with your phone and take a video of all your rooms and your contents,” Blumenthal says. “In the event of a large loss, it’ll be much easier to work with your insurer, if you can show that video.”
Keep a copy of your inventory off-site.
• Limit damage.
In the event of weather damage, you have an obligation to mitigate further problems.
Notify your insurance company or broker right away, but if no one can be dispatched immediately to inspect your home, you can still work to salvage things; pay for a temporary roof patch-up, for example, or if your basement floods, you can rent a pump to get the water out.
Your insurer should reimburse you.
If your house is uninhabitable, insurers will usually pay for additional living expenses if you need to shack up somewhere else while your place is repaired.