5 Questions Homeowners Should Ask Their Insurance Broker

Frank Craig thought he had insurance.

He had filled out the paperwork, worked with a broker and paid for a policy, but when his Merritt-area home flooded in November 2021, he found his coverage wouldn’t pay for needed repairs.

“If you think you have all your ducks in a row, guess what? Life comes to you.”

Craig’s experience has led him to urge others to check their policies and fine print thoroughly.

“You don’t know how good it is until you need it,” he said.

He is not the only one to reassess his policy. Other residents who have lost or had their homes damaged in extreme weather events have found that their insurance cover did not meet expectations.

According to Insurance Bureau of Canadathe insurance industry in Canada now spends about $2 billion a year on weather-related claims, up from an average of about $422 million a year between 1983 and 2008.

“Insurance can and should be there to cover the impacts and get you back to normal,” said Dan Sandink, director of research at the Institute for Catastrophic Loss Reduction.

However, people need to make sure they are asking the right questions to get the coverage that will actually protect their home in the event of a flood, fire, or other severe weather event.

What type of coverage is available?

Sandink said the starting point is determining if a homeowner can actually get the coverage they need, especially when it comes to flood coverage.

Some homes may not be offered certain types of flood insurance or a high premium may be applied due to the risk.

There are certain areas within communities like Merritt where obtaining flood insurance will sometimes cost thousands of dollars more than a person’s annual insurance costs.

what are you paying for?

While insurance is a Contract between the consumer and the business, what is actually covered differs depending on the agreement.

Typically, insurance doesn’t differentiate between a house fire and a wildfire, so coverage tends to be clearer. However, when it comes to flooding, it gets more complicated.

Sandink said people need to understand that coverage for overland flooding, extreme storm flooding, sewer backup will likely be separate endorsements or additions to their policies.

“It’s important to be clear about what you want to cover and what you will actually be covered for.”

What are your deductibles?

In some policies, the customer will be responsible for paying a certain cost in order to access coverage.

Sandink said people would typically pay higher deductibles in exchange for lower annual premiums.

This could mean policyholders may face higher upfront costs in order to access an insurance payout for something like a flood claim.

What difference will risk mitigation make?

In some cases, Sandink said people may be required to take steps to reduce the risk of something like a flood or wildfire in order to qualify for full insurance coverage.

This may include the installation of a backwater valve or a backup power system in case of flooding.

If an insured makes upgrades to reduce risk, they should check to see if insurers will offer them a lower rate.

What are the ceilings?

In some policies, there may be limits to certain types of coverage.

Sandink gives the example of flood cover where a house may be covered for full replacement value in the event of a fire, but only covered for a limited amount in the event of a flood.

“Those sections of your policy, those endorsements may have a different cap, so it’s important to understand what you will actually be insured for.”

He encourages people to shop around with different providers to get the type of coverage that’s right for them, and to ask if there are options to remove caps.

Severe weather claims increase

According to Rob de Pruis, national director of consumer and industry relations for the Insurance Bureau of Canada, claims related to severe weather have increased dramatically in recent years, but it is important to keep this increase. in perspective.

He said the industry as a whole pays out $40 billion a year in claims. So while the $2 billion spent annually on severe weather is significant, it’s not a huge percentage overall.

With the increase in claims, there were also more people sharing their concerns about the coverage they had.

Merritt Mayor Mike Goetz said he heard from many flood-affected residents who were having trouble navigating the insurance claims process.

“We had some issues with a few companies that were just terrible.”

However, de Pruis said people often get upset when they find out the coverage they paid for doesn’t cover what they thought.

“A lot of disagreements or misunderstandings are simply because people may misinterpret their insurance coverage. Your insurance policy doesn’t cover everything.”

BC consumers with complaints about insurance companies can contact the British Columbia Financial Services Authority. If the problem is with brokers, people can contact the Insurance Council of British Columbia.