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Water water everywhere – are you covered?

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Water water everywhere – are you covered? How to prevent or limit losses when it comes to flooding, theft, and other insurable risks in your home.
Bruce Palmer, Managing Director, OMA Insurance Services
Understanding your home insurance policy, and knowing how to address your particular needs with respect to coverage limits, exclusions, and options, are key to helping you mitigate or prevent losses when it comes to protecting your home against insurable risks such as flooding and theft.

For a brief time in my life, I was an Albertan. I owned a nice little condo backing onto parkland with a small pond fed by a local stream. I had a view of the Rockies from my back deck, and a walk-out basement onto the park. I bought in the south end of my small town because all the locals warned me that the north end and downtown flooded. "It's called High River for a reason," they said. Well, they were right.

As fate would have it, I sold my condo and moved back to Ontario about 18 months before that same small Alberta town had to be evacuated due to recent​​ flooding. Judging from the photos I found online of my old neighbourhood following the evacuation, the little pond in the park had grown considerably, and the second-floor deck of my former condo could have been used as a dock: the water was that high.

The second-floor deck of my former condo could have been used as a dock: the water was that high.

If nothing else, recent events like those in High River — and, closer to home, a brief but destructive mid-summer deluge in Toronto — have reminded us about the limits of property insurance when it comes to flooding.​

The bigger question is this: do you know about your coverage limits, your options, and what you can do about them? Considering one of your biggest personal investments is likely your home, how much time have you spent thinking about reducing your risk of incurring damage? And since having insurance is never as good as avoiding the loss in the first place, do you know what you can do about limiting or avoiding losses? Here are some helpful suggestions:

  • Don't be fooled by an "All Risk" policy. Nothing covers all risks: there are always exclusions, limitations, and extensions that modify, remove — and sometimes even enhance —coverage.
  • Read your insurance policy. They are not usually that long, nor are they that complicated. It is sometimes easier to read a policy once by yourself and then again with an insurance advisor or broker — they can help ensure you understand what's covered and what isn't.
  • Make sure the limits and sub-limits are adequate. Some policies will include "sewer back-up" with a sub-limit. Is this adequate for you in your situation? What is your limit on jewelry or art? How about boats and other "toys" like snowmobiles, off-road vehicles, ATVs, etc.?
  • Specialized coverage can have higher limits and broader coverage, and not surprisingly, a higher premium. But more comprehensive coverage might be more relevant to you.
  • Ask about past flooding in your home or neighbourhood. If it flooded once, has anything been done to make you think it will not flood again?
  • Look at alarms and sensors — and not just for smoke and carbon monoxide. Theft and water alarms can help minimize risk and prevent or limit loss.
  • Remember that your basement is below ground and, quite possibly, below the water table. So, no matter how superior the quality of the materials used, or how good your contractor may be, there is a chance your basement will get wet at some point.
  • Look at your house from a "Wonder what can go wrong?" perspective. Underground oil tanks can leak, so have them moved above ground and protected with a moat and double-hull. Wood stoves can overheat the surrounding walls, so ensure there are proper clearances and insulation. Rags and household chemicals burn when combined, so store them properly and dispose of rags in a safe manner. And, if you are going away, a darkened house, or a single light left on day and night, are sure signs to potential thieves that your home is empty. So, whenever you're away, help keep your house looking lived-in by using timers for your lights, having your snow cleared, and asking neighbours to pick up your mail.
  • Ask your insurance company for a quote before you buy, and ask about what limitations they will put on coverages. Insurance companies are starting to develop sophisticated databases of places susceptible to losses. If they are only going to offer you limited coverage, or perhaps no coverage at all, it is because their data is telling them that you are going to have a loss. They are not infallible, but if they will not insure you, then don't move there! I was talking recently to an insurance broker friend who has a client — a business owner — who built an expensive home on an island off the coast of Florida and basically said to the insurance company, "Insure my new house or I am taking my millions of dollars in insurance premiums on the companies I own elsewhere." The insurance company told him to take his millions of dollars elsewhere. Turns out, an expensive home on an island off Florida's coast has a 100% chance of being destroyed in a storm at some point, and the insurer was not prepared to put its money on the line for such a poor risk. It turned out the insurer was right: my friend's client now owns a washed-out ruin on an island off the Florida coast.
  • Look at what else your policy covers and does not cover. Your personal liability is usually covered by your property policy, your condo policy probably covers your responsibility for your condo corporation's deductible and any condo assessment, and your liability as a director of a not-for-profit may or may not be covered. Do you need extra coverage? Do you need an extra policy?

The reality for most of us is that some risks we choose to insure, and others we choose to take on without insurance. Each of us must make our own decision: there is no one "right answer" for everyone. The important thing to keep in mind is that we should take the time to ensure the decisions we make are the result of a deliberate, informed thought process, and not simply due to some third party — like an insurance company — deciding what's best for us.

For information on OMA Insurance products and services call 1.800.758.1641 to speak to a non-commissioned OMA Insurance Advisor.

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