What homeowners wish they asked before purchasing an insurance policy
When shopping for insurance, many homeowners conduct a comparison based on cost and coverage (premiums and limits) alone. Although this is a great place to start, many make the mistake of ending their comparison there which could cost them tens of thousands of dollars in the event of an uninsured peril.
Did you know there are many nuances to policies that may provide either tremendous hidden value or a significant unprotected risk to a homeowner? As with clothing one size does not fit all, and similar to used car shopping, many questions should be asked before making an informed buying decision.
We have prepared the following list of questions we recommend asking your insurance carrier or broker, to help determine the policy best suited to your needs. These questions will also determine if your broker is skilled and familiar with the products you are being sold, or if they are simply presenting one or two options based on price alone and rushing you to a decision so they can move on to the next sale.
- Does the policy cover all code upgrades to my building as requested by the building inspector or the most recent federal, provincial, and local codes?
- Am I free to pick the company I’d like to repair my disaster, or do I have to use the insurance company’s preferred vendor?
- Are there secret internal claims handling guidelines that trump the policy I thought properly covered me? Y or N.
- Would my basement be fully protected if water entered through cracks in the foundation wall?
- Would I be covered if my foundation settled and caused damage to my interior finishes?
- Is there a discount offered for installing a backflow preventer or a sump pump backup? Explain.
- Does the insurance company have pre-negotiated rates with preferred vendors that are lower than industry standard, and am I entitled to those rates if I choose to have additional work performed at my cost?
- Do I have the option of accepting a cash payout in lieu of repairs, and if so, is it for 100% of the contractor’s quote including their overhead and profit?
- Would my basement be fully protected for water ingress through an open window? Is there a cap?
- Will my home be put back the way it was, or with functional equivalents?
- Will I receive final cleaning after reconstruction? Please explain.
- In what way does the policy protect my family if we have a claim from pollutants such as lead, mold, and asbestos?
- If a wind storm blows several shingles off of one face of my roof, will I receive a) a new roof on my whole house b) a new roof on the affected face, or c) replacement shingles only?
- If my family and our pet had to be relocated during restoration, how is my pet cared for?
- Does my policy cover the cost of repairing the cause of loss, for example a broken toilet supply line?
The goal of these questions is not to grill your broker, but to gain a better understanding of the actual use of the product in the event of an insurance claim. We recommend taking notes during your discussions, and following up with an email as a memorandum of understanding and attaching this to your policy for your records.
In our office, sadly every week we see claims being denied or payouts reduced for areas which the homeowner thought they had full coverage for.
Insurance is purchased to provide peace of mind that the things which we hold most important to us are covered, and we hope that by asking these questions you will gain a better understanding, and ultimately greater confidence in the policy you choose to purchase.