You can create extended home insurance coverage by adding additional options, such as:
- Sewer Backup
- Water Service Pipe
- Oil Damage
- Scheduled Articles
- Replacement Cost & Actual Cash Value
- Other Considerations
In order to identify the need for Sewer Backup coverage, we first must understand the coverage afforded under the standard policy.
Water Damage coverage found in the standard wording usually includes damage arising from sudden and accidental escape of water from an indoor plumbing, heating, sprinkler or air-conditioning system; or from an indoor or outdoor “domestic appliance” on your premises; or from a water main.
“Domestic appliance” is defined in the policy and includes water heaters, waterbeds and swimming pools. “Water” may be in liquid form, or it may be steam or ice. However, coverage for freezing damage is restricted to property inside your home and there are special requirements if your home is unoccupied for more than four consecutive days in winter.
Coverage usually excludes damage arising from:
- Floodwater such as that from an overflowing creek
- Repeated or continuous water seepage (from a cracked basement wall, for example, or from an unrepaired pipe
- Malfunctioning sump pumps, leaky gutters and downspouts
- Plumbing vibration or “water hammer” (often caused by a loose valve stem on a tap)
- Sewer back-up.
Personal property such as jewellery, furs, silverware, coin or stamp collections, fine arts, sports equipment etc. can be specifically insured under your policy. You may choose to schedule some property because:
- The limits of coverage for that particular property (such as jewellery) may be inadequate
- You prefer to have a lower deductible (or no deductible) for this property
- Scheduled property coverage can be broader than your standard contents coverage
Replacement Cost & Actual Cash Value
The calculation of how much money your insurer will pay to you following an insured loss is described in your policy, usually under “Basis of Claim Payment.”
Actual Cash Value (ACV) Actual Cash Value is defined as the value new less depreciation based on the age of the item. An example of an item valued on ACV basis might be – a sofa bought 5 years ago at a cost of $500 and the life span of the sofa is considered to be 10 years. Actual Cash Value is 5/10 of $500 or $250.
Replacement Cost is simply the new cost of the item in question. Almost all home policies use Replacement Cost as the settlement basis for contents coverage, Again, verify this on your own policy.
Material Changes that your insurance company must know about:
Wood stoves are a common source of fires and carbon monoxide poisoning, particularly if they are not properly installed and maintained. Insurance companies often want to inspect such installations. Typically insurers will apply a surcharge to policies where a wood stove has been installed.
Is your house under construction, being renovated?
Are you operating a business from your home?
Have you increased the value of your home?