Home insurance items to remember

On the topic of home insurance

Home insurance has many varied issues.
The story below from the Toronto Star's moneyville.ca site points out a Top 10 list.
It's hard to believe in 2012 that many older homes still have wiring and plumbing concerns, but they do. Knob-and-tube wiring is still visible in many homes built before the Second World War. Galvanized plumbing is also still an issue.
The other area that consumers always have difficult with is that the cost-to-replace on a home for your fire insurance is based on rebuilding your home brand new and to today's standards. Obviously, you could pay $200,000 for a home that is perhaps only 40 years old, but based on mechanicals (high-end gas fireplace, for example) and flooring and many other factors, your home could be deemed to be worth as much as $280,000 to replace -- brand new.
By the way, if your house is 1,800 sq ft on main 2 levels, don't suggest to your insurance broker that you live in a lovely 2,100 sq ft home because you will be paying insurance on a 2,100 sq ft home. Don't be afraid to sit down with a calculator, draw a picture of the floor plan and calculate an accurate square footage. You can then submit this drawing -- with dimensions -- to your insurance rep.
In the meantime, here's the Toronto Star story:

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Home insurance: 10 things you need to knowYour home is your single biggest purchase and the things inside it, probably number two. So when it comes to insurance, making sure your home and possessions are protected is important. Here are ten things you need to know.
1. What if my house burns down?The cost to rebuild your home plays a big role in determining the amount you pay for home insurance. Insurance companies use a formula to figure that out, but since there are several industry approved calculation methods the cost may differ from one insurer to the next. Ask your broker or agent to explain which method they use and the assumptions.
2. Do I have replacement cost coverage?The number the company comes up with in Step 1 is what it will pay to rebuild your home. The amount increases over time, but there is a possibility it isn’t keeping pace with increases in the cost of labour and materials. Check with your broker or agent to see if you have guaranteed replacement coverage. This ensures you will receive the amount that it actually costs to replace your home and not the amount on your policy. Not all policies have this coverage and rules vary across insurance companies.
3. Do I have sewer back-up coverage?It may come as a surprise that not all insurance policies include coverage for damages from sewer back-up into your home. If you are unsure, speak to your broker or agent.
4. Policy special limitsMost policies set a maximum they will pay to cover certain items including jewelry, tools, furs and bicycles. These limits can vary from one insurance company to another. If you have expensive items you wish to protect, make sure the policy has sufficient coverage for your needs. You can also increase the amount of insurance for these items separately, if needed. And if you are shopping around, ensure you include this coverage for an apples-to-apples comparison of rates.
5. What type of policy do I need?Broadly speaking, there are three types of policy: a Comprehensive Policy, a Broad Policy and a Fire Policy. The first type provides full coverage, the second average coverage and the last provides only basic coverage. The names of these policies offered will vary from one insurance company to another, so be sure to ask to better understand what you are buying.
6. Ask for discountsSome insurers offer discounts for such things as being mortgage-free and for being a non-smoking household. There may also be something if you have an alarm system, are claims-free or bring all your insurance policies under one roof.
7. What happens if I make a claim?If you were to make a claim you could lose your claims-free discount. For that reason you want to consider the impact on your rates before proceeding with a claim and better understand how your policy works before you purchase home insurance. Also be sure to consider your out-pocket costs related to any claim such as your deductible.
8. I’m a renter. Do I need insurance?Even if you are only renting your home, you should consider a tenant’s policy. This protects your possessions (TV, computer furniture, sporting goods, jewelry, etc.) and ensures you are covered in the event of damage to your apartment, a neighbour’s, or someone injures themselves while on your property.
9. Older homesThere are a few key areas an insurance company looks at to assess risk before insuring your home including wiring, galvanized or lead pipes, electrical service, heat source, wood stoves, and the age of your roof. Most prefer that you not have knob and tube or aluminum wiring. Galvanized or lead pipes generally indicate the age of the home and most companies prefer that you have this updated to copper or plastic. They also typically prefer that you have breakers instead of fuses with 100-amp service at minimum.
Improperly maintained wood stoves are a common cause of house fires and your insurance company may request a full inspection should you have one. Generally speaking, insurance companies prefer that your roof has been updated within the last 20 years.
10. Optional coverageDepending on where your home is located you may want additional coverage. For example, if you live in an earthquake-prone region you may want to consider earthquake coverage, which is not normally included in standard policies. Another example is sewer back-up coverage which may be particularly desirable should your home be located in a low-lying area that is susceptible to sewer back-ups.
This article was prepared for Moneyville's launch. Andrew Wicken was the general manager of InsuranceHotline.com, a free online insurance rate comparison service.