Home insurance limits and exclusions
Insurance contracts have limits and exclusions. Do you know about them?
In general, a home insurance contract covers the following risks: fire, explosion, smoke, theft, and vandalism. Certain natural disasters like tornadoes, windstorms, and hail are also covered. However, while all contracts include limits and exclusions, almost half of consumers (47%) are unaware of the exclusions in their insurance contracts1.
Years ago, the main reason for claims was fire, followed by theft. Today, water damage makes up over half of claims. Damages caused by an overflowing bathtub, or a faulty washing machine are generally included in your basic home insurance policy. That said, barely 19% of Quebeckers know that sewer backup is excluded from basic coverage. To ensure coverage against the risk of a sewer backup, for example, or water leakage from your home’s roof or walls, it is recommended that you add additional coverage to your contract. This coverage is called an endorsement.
Other specific exclusions also exist depending on the situation and your insurance needs. If you have a pool (either in-ground or above-ground), you need to purchase an endorsement to cover “damages caused to swimming pools, spas, outdoor saunas or to their equipment.” If your pool breaks or leaks and causes water damage, these damages would be included in your basic coverage; however, damage to your pool caused by freezing or thawing, for example, is not.
Know the limits
Before purchasing an insurance policy, do a personal property inventory in order to determine the value of your belongings, and show this inventory to your damage insurance agent or broker. It will also allow you to identify items or collections that exceed the limits set for certain items in your insurance contract.
Coverage for certain items may be limited to a maximum amount, which is indicated in your insurance contract; this amount varies, depending on the type of loss incurred. For example, in cases of theft, limits generally range from $1,000 to $2,000 for jewelry, furs, bicycles and collections. For other types of losses, contracts may include limits on animals, software, items used for business, lawnmowers or towing equipment, wine and spirits, as well as money. Contact your damage insurance agent or broker to check the limits in your insurance contract. He or she can then offer you endorsements to raise certain limits on items that are important to you.
1. All the statistics in this article come from a May 2018 Léger survey of 1,035 Quebeckers aged 18 and over, carried out for the Chambre de l’assurance de dommages and the Chambre de la sécurité financière.