HOME INSURANCE IS ON THE RISE

The fact of the matter is that property rates are on the rise in Alberta. Think about all of the hail damage claims in Southern Alberta; Airdrie was hit really hard this year! Think of the past fire losses in Slave Lake – though it was a few years ago. Insurance companies still have to pay back their reserve, which is essentially the equivalent of a person’s rainy day fund. Think of the flooding in Calgary; this created huge losses as well.

At the end of the day, insurance is about charging a premium which is adequate to the risk associated with insuring certain property. When it comes to Alberta, however, the fluctuation in the weather patterns and catastrophic losses, like those mentioned above, can create very large financial encumbrances for insurance companies. Insured losses for the flood in 2013 were approximately $3.75 Billion. Between 2006 and 2012, the amount of insurance damage resulting from extreme weather in Canada increased by over 650%. Think about how many $1000-1500 home insurance policies a company must sell in order to recoup just a $500 000 home insurance loss.

Essentially, as people are becoming wealthier, possessions and properties are getting more expensive. As such, insurance companies are raising rates to keep up with this trend. It used to be that a $1 Million dollar home was rare. Now, with the current building trend, properties like this are everywhere.

If you purchase sewer backup on your home insurance, which is essentially a must nowadays, this means that you can be covered for damage created by water entry through a sump pump backup, or failure, or if the sewers backup and such water enters the property. Freezing, or rupture from pipes, are also generally covered, subject to exclusions.

Flood damage is not covered, under any standard home insurance wording ever. Even during the flooding in Calgary, damage to the outside of the home was essentially excluded. Sewer backups caused by the flood were, in some cases, covered. Seepage and leakage is another exclusion. Water entry through a window or crack in the foundation is generally a maintenance issue and is thus excluded, as is most wear and tear.

Review your limits with respect to sewer backup coverage, a lot of companies are adding stipulations which limit your insurance for sewer backup to $15 000, or $25 000 in some cases. This limit can be exhausted in a heartbeat if you actually have a loss, and the amount that may have to be paid out of pocket to make good those damages can exceed more than what most people can afford. We have heard horror stories where clients had to pay upwards of $40 000 or more because their former insurance company had low sewer backup limits.

Come into our locations with your policy documents. Even if you don’t buy insurance from us, let us review ALL your coverages.
For more information and myths about water damage, check out this link.

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