Buying a home is exciting, even if this isn’t your first rodeo. It’s where your future unfolds for years to come—maybe even decades.
That’s why it’s so important to have all of your ducks in a row when you buy one, and home insurance is a big part of that process. It can cover the costs of repairing your home and replacing your belongings in the event of unexpected damage, and it can also cover legal costs if someone is injured on your property.
Homes are the biggest purchases that most of us will ever make, so you don’t want to leave yourself or your property vulnerable to insurance surprises when you settle into your new home.
Here’s what you need to check before signing on that dotted line.
Is Overland Flooding Coverage Available?
Water damage is one of the biggest culprits for home damage in Canada, and the growing incidents of extreme weather have made the chances of home damage more likely than ever.
That’s why it’s so important to check if your dream home sits in a high-risk area. When we say “high risk,” we’re usually referring to these things:
- The risk of overland flooding
- The risk of tornado damage
- The risk of heavy rainfall causing property damage
- The risk of sustaining earthquake damage (uncommon in Canada)
It pays to know if your next home has a reasonable risk of incurring damage from that kind of weather. The repairs could put an unbearable financial strain on any home owner—especially young ones.
Ask an insurance broker about overland flood coverage in particular, as it’s the most common kind of extreme weather that can cause damage to your home. Restoring your basement out of pocket costs a lot more than paying for insurance coverage.
Does the Home Have a Backflow Prevention Valve?
Sewage backups: they’re gross, but they do happen. Once in a while, sewer lines get flooded or clog, sending unpleasant stuff back up your toilets and into your freshly cleaned bathroom. This happens when sewage gets pushed back up through the pipes into your basement, coming through drains, sewer lines, and even toilets.
It causes massive repair bills, making it worth your while to install a backflow prevention valve. It doesn’t hurt to look at sewer backup coverage either. Ideally, you should know if the home has a backflow valve before moving in—or risk getting caught in a bad situation in the first few weeks or months of home ownership.
We’re lucky that standard toilets are designed to keep stuff travelling downward instead of upward most of the time. Just like wearing safety pads in a soccer game or a hard hat on construction sites, chances are good that you’ll be glad to have the backflow valve at some point in your life.
Even if you skip the insurance coverage for sewer backups, at least ask the owners to install a backflow prevention valve on the sewer line. Ideally you would have the coverage for the sewer line, too, but the valve is going to go a long way toward protecting the home between now and when you move in.
If it’s an Old Home, Has it Been Updated?
While they have a ton of character, old homes come with insurance speed bumps. No, we’re not even talking about replacing the roof every 20 years.
Insurance companies have a list of things they like, things they don’t like, and things that they will simply not insure. You want to make sure that your dream home doesn’t have things in those last two categories.
That’s why it’s important to verify these things about every home you tour:
- Does it have lead pipes? If so, then the home probably can’t be insured.
- Does it have galvanized pipes? Insurance providers will stipulate that you replace the pipes soon, at best.
- Does the electrical system run on 60 amps or 100 amps? 60-amp systems are more likely to overheat, which could cause an electrical fire. You’ll need to upgrade to a 100-amp system.
- Does it have knob and tube wiring? That’s an immediate “no” from insurance providers.
- Aluminum wiring is also known to cause fires, so that will need to be replaced.
- Does it have a wood-burning stove? It likely needs replacing, or at least a WETT inspection.
- Is the foundation cracked? If so, then any claims you make related to that (say, a basement flood) would be denied on the basis of pre-existing deterioration.
If it’s a Condo, How Does Your Association Handle Claims?
Insurance works a little differently for condo owners compared to detached home owners. If you guessed “because of the condo association,” then you’re on the right track!
Repairing damages gets tricky with shared areas:
- Who pays for damage to a wall that separates one semi-detached condo from its twin?
- If a crack in an outside wall causes water damage on the inside of your condo apartment, then whose policy does it fall under?
- Condo corporations won’t cover “betterments or improvements” made to your unit. If your upgraded hardwood floor is damaged from a burst pipe, then the condo corporation will only cover enough for the original flooring.
A lot of condo associations will have a “master policy” for the whole condo association. This typically covers damages to common areas, like the street, sidewalk, or the hallways inside a condo apartment building. Everyone will pay into that in some way or another, yet no single condo owner will be held responsible for maintaining or repairing them.
Condo insurance can differ depending on the building type, but you’ll see one of these types most often:
- Detached condo homes
- Semi-detached condos
- Apartment condos
That’s important because they could all have different layouts, which will have a direct impact on the boundary between your unit and an area owned by the condo corporation. Discuss your policy carefully with your condo association to understand the precise boundaries between areas that are covered by your own condo insurance policy and areas covered by your condo association’s master policy.
Follow these tips and you’ll be in good shape for your home insurance coverage, letting you get back to enjoying your home. It’s what they’re meant for, after all.
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