Home insurance policies don’t cover absolutely everything. The majority of home insurance policies are hopefully written on a comprehensive form that covers everything except what is specifically excluded, but you may not know about some of those exclusions.
We have compiled a list of extra endorsements that you may want to consider adding to your existing policy. In addition to the suggestions below, you may still need to add scheduled items to your policy to ensure your higher ticket items are covered correctly (see special limits below).
These are just some of the common missing coverage options on home insurance policies. There are more out there, so make sure you have a thorough conversation with your broker to see where you could be vulnerable.
Guaranteed Replacement Cost on Building
With inflation and the cost of materials constantly rising, the coverage on your policy could be less than what it would actually cost to rebuild your home. By adding Guaranteed Replacement Cost you are assured that your home will be rebuilt even if it exceeds the policy limits.
Home Based Business Coverage
During and after the pandemic, a lot of people started operating their own business from their homes. Unfortunately, there is most likely a specific exclusion for business pursuits on your home insurance policy.
This can be critical for people operating a business from their home. Their supplies, stock, or any liability claims would most likely not be covered from their home insurance on its own.
With most insurance companies you can add an endorsement to your policy to cover some basic home-based business losses. Some businesses would require a full commercial insurance policy, so it’s important to have a detailed conversation with your broker so they can place the correct coverage for you and your business.
You can learn more from our article Home Based Business and Your Home Insurance
Liability Limits & Personal Umbrella Policies
Lawsuits are becoming more common in Canada and it’s important to make sure that your liability limits are sufficient in order to cover any lawsuit that is filed against you. You can only increase your liability limits so far on your personal policies, but there is also a personal umbrella insurance policy that could increase your liability coverage.
A personal umbrella policy is there to try to cover you for the extra liability coverage you may need if your policy limits have been exhausted. For a simplified example, if you are sued for $3 million dollars, and your home insurance has a limit of $2 million, you could be on the hook for the extra million dollars past your coverage. An umbrella policy is a separate policy that would respond to cover for the remaining $1 million that went past your home insurance policy.
Learn more about umbrella policies.
Insufficient Special Limits for Contents
Your policy includes special limits for contents such as jewellery, furs, tools, garden tractors, bicycles, money, securities, collectables, etc. Many of these limits are as low as $500 and are most likely insufficient coverage for what you actually own.
Thankfully you can increase these limits with the majority of insurance companies. Find out more about these limits and how to increase them from our article titled “Special Limits: Limits on Your Home Insurance Contents“.
Overland Water Coverage and it’s Limits
Flood damage is not insured, but companies are offering a coverage that is called “Overland Water”. This endorsement will respond to sudden and accidental damage caused by fresh water from rivers, lakes, or water accumulated as a result of heavy rainfall or flash melt of snow.
The overland water endorsement has many different limit options on a policy. You can purchase full policy limit which would be the limit on your entire dwelling, or you can specify a certain limit. The only benefit of specifying a certain limit would be to lower the premium on the policy.
Ground Water Coverage and it’s Limits
Almost all insurance companies have exclusions for water entering your home through basement walls or foundations. There are companies that offer a ground water endorsement that will cover water entering through the basement walls or foundations. This coverage will only respond to new instances of water entering the home from the ground and will not respond to existing or recurring ground water entry.
As with overland water, the ground water coverage has many different limit options on a policy. You can purchase full policy limit which would be the limit on your entire dwelling, or you can specify a certain limit. The only benefit of specifying a certain limit would be to lower the premium on the policy.
Sewer Backup Coverage
This covers many water related losses including backing up of sewer, sump pump, floor drains, and septic tanks. These types of losses can be very expensive to clean up and get your home back to normal. No one wants to handle this clean up on their own.
As with ground water and overland water, sewer backup coverage has many different limit options on a policy. You can purchase full policy limit which would be the limit on your entire dwelling, or you can specify a certain limit. The only benefit of specifying a certain limit would be to lower the premium on the policy.
Earthquakes are not common in Ontario, but they do happen. There is a very high chance that earthquake damage is not covered on your home insurance. So, if your home were to fall down due to an earthquake, you would have no insurance coverage. You can add an endorsement to your policy that will add earthquake coverage for your home.
Service Line Coverage
Though your policy may cover damage to lines within your home, it will not cover damage to service lines on your property outside of your home. Coverage is available for repair or replacement of service lines that bring water, power, data and communications into your home.
You can read more about this important coverage in our article titled Water Lines, Sewer Lines, and Service Line Warranties Canada…
Home System Protection Endorsement
Your policy excludes mechanical and electrical breakdown of your appliances, computers, heating & cooling systems, and similar items. Coverage is available with some companies for an additional premium.
You can learn more about home system protection endorsements on our article Is There Insurance for My Appliances & Home Equipment?
Single limit or sometimes called Combined Limit, combines the limits of the Dwelling Building, Detached Private Structures, Personal Property and Additional Living Expense sections of the policy in the event that a claim occurs. This is ideal for situations where you need a little extra limit in say personal property, but you don’t have any detached private structures. It can also be useful for situations where you need more in detached private structures, but not as much in personal property.
This endorsement is inexpensive, and some companies have it built right into the coverage. The endorsement is absolutely worth the small cost.
Personal Cyber Insurance Coverage
There are more cyber-attacks now than ever before, and if you have had a cyber breach, it could cost you a fair amount of money to put your life back in order. Companies are starting to offer personal cyber insurance coverage that would respond to things like a cyber-attack, Ransomware, Identity Theft, and more.
Claim Settlement Options
Some insurance companies will offer an endorsement that changes how claims will be settled. For example, if you are retired and you think you would not want to replace your home if it burned down, you could opt for a full replacement cost cash settlement.
Not every insurance company will offer this, but it doesn’t hurt to ask your broker if your insurer does.
Talk to Your Broker
We have given quite a few different examples of coverage that could be missing from your policy. It’s important to talk to your broker to see if any of these coverage options are for you and if there are any other gaps in your insurance coverage.
It is not a good feeling to think you have coverage for something and when you go to use it, you find out you don’t. Everyone should have the conversations before they need the coverage to ensure that they do have it.