Your Friendly (Home Insurance) Myth Busters: Debunking Popular Insurance Myths

Let’s face it: no one wants to swap out their nightly read for their home insurance policy. Very few homeowners fully understand what their policy entails, much less can confidently tell myth from fact when it comes to home insurance. So, if you aren’t well-read on the fine print of your policy, it’s OK! Having a base understanding of your coverage is ideal, but you can leave the rest to your friendly home insurance experts here at Excalibur Insurance Group.

There’s a lot of misconception surrounding home insurance, and we’re here to crack down on some of the more popular myths.

Myth #1: You have to purchase home insurance in Canada.

Home insurance is not government-regulated the same way that auto insurance is. As such, home insurance isn’t a mandatory purchase. It’s still highly recommended of course, seeing as home insurance is a way to protect your assets and the things that matter most to you in the event of an unexpected weather event, break-in, or liability claim. However, it’s worth noting that if you are trying to secure a mortgage, your mortgage provider may require you to show proof of home insurance to ensure that their financial investment is protected. Moreover, if you’re a renter, you’ll likely need to show your condo corporation or landlord proof of tenant insurance.

Myth #2: Home insurance covers all your belongings, as long as they’re inside your home.

Home insurance does provide contents coverage, but it’s not a “one size fits all.” Your home insurance covers your physical dwelling and its structure as well as your belongings within, but there are limits. You’ll want to discuss with your home insurance company about the full extent of your contents coverage to ensure that you are covered for everything. High-value items may be restricted from coverage, so you’ll need to acquire a separate rider or higher maximum coverage to include these. High-value items can be anything from antiques, jewellery, a wine collection, and so on.

Myth #3: As a renter, your landlord has insurance, so you don’t need to buy any.

Whether you rent a house, a condo, or an apartment, you’re likely to require tenant insurance either as a clause in your lease or simply because your landlord’s insurance does not include coverage for your personal belongings – or your personal liability. Your landlord has what is known as a master policy, which includes coverage for common areas, the building’s physical structure, and the landlord’s liability. This means that anything within your unit and your personal liability necessitates your own policy. Luckily, tenant’s insurance is relatively inexpensive as it doesn’t include the physical dwelling.

Myth #4: Renovations don’t impact your insurance.

Planning on doing some developments to your unfinished basement? You should tell your home insurance provider. Renovations that are large enough to impact the overall value of your home, or increase your liability risk, will impact your insurance and undisclosed modifications can result in denied claims. You should call your insurance broker or provider before making any renovations to update your policy and reflect the new renovations. Note that small modifications like fixing a creaky door or painting a room won’t impact your insurance, so you won’t need to update your provider.

Myth #5: All types of water damage are covered by home insurance.

Ontario sees a large number of water loss claims, but did you know that not every instance of water loss will be covered by your home insurance? You’ll need to purchase additional coverage to be protected against instances of flooding. Your standard policy should include coverage for accidental water damage, like if an appliance in your home overflows or leaks. It may also cover you if hail causes a hole in your roof that allows water to enter the house.

Myth #6: Homes are always insured for their market value.

Homes are insured for what is known as their “replacement value,” not their existing market value. Market value will include location, comparisons to other homes in the area, and land value, but replacement value only focuses on the cost it would take to fully rebuild your home as it stands today. This includes labour, materials, permits, etc.

Myth #7: If you are married, your insurance will cost less.

This is (mostly) untrue. Marital status and your age are factors in the cost of your auto insurance because older married people are statistically less likely to be involved in accidents, but this has no impact on your home insurance. Some folks who are nearing or of retirement age may qualify for insurance discounts, depending on the provider, but otherwise, there is no impact.

Myth #8: The larger your mortgage, the more you will pay for your home insurance.

Your mortgage has no impact on your home insurance, whether you own several hundred thousand dollars or are paying off your last few thousand. That being said, mortgage-free homeowners may qualify for discounts of up to 15%. However, multiple mortgages on a single property could increase your rates.

Myth #9: If someone breaks in and steals your silverware, your payout will be enough to replace what was lost.

This isn’t exactly untrue, as it depends. Your policy could contain coverage for actual cash value or replacement cost. Replacement cost will give you what you need to replace your silverware, whereas actual cash value will insure you for the value of the item minus any depreciation.

Myth #10: Every home insurance policy is the same.

This couldn’t be further from the truth. Home insurance is tailored to the individual, and it can vary by provider as well. When you purchase a policy, ensure that you’re open and honest with your provider, and you go over everything that is covered, what isn’t covered, and what your limits are. Coverage can look very different between providers and between homes.

The insurance world is chock-full of misconceptions and myths. Sometimes it’s difficult to understand not only just how it all works, but how it affects you. We hope that this blog helped you differentiate fact from fiction. If you are still confused or have any questions, give us a call to discuss at 1-800-298-7343.