When it comes to insurance, know what you're buying: Pollard
By Dave Gordon, AdvocateDaily.com Contributor
Homeowners should pay close attention to the wording of their insurance policies to ensure they are well-protected in the event of a worst-case scenario, Oakville insurance lawyer Weston Pollard tells AdvocateDaily.com.
Pollard, partner with Edwards Pollard LLP, has successfully represented clients in disputes with insurers over property loss, such as fire and flood damage claims.
Canadian Underwriter recently reported on challenges associated with overland flood protection, and how insurers are struggling to create coverage that is fair and cost-effective for both sides.
“This type of coverage is somewhat new to Canada,” Pollard says. “With major floods happening yearly as a result of changing weather patterns, and insurers competing to offer this product, it’s very important for a person buying home insurance to consider this risk.”
The insurance publication reports that more than 85 per cent of insured losses since 2000 have been due to water.
Know your policy and its definitions, Pollard says, because “certain things you might expect to be covered under flooding — like a sewer back up — isn’t necessarily.”
With a finished basement, significant damage can occur in a sewage flood, requiring an arduous cleanup job which, if not covered by insurance, can be quite expensive, he says.
Some insurance companies require the homeowner to install a backflow valve in order to be insured, and Pollard says that investment is worth it, to ultimately save tens of thousands of dollars in the event something goes wrong.
“In most cases, people want to protect their best asset, the home. They are going to want to have comprehensive insurance on it, for all risks, which covers pretty much everything you would imagine,” he says. “Even within the comprehensive policy, it’s still important to pay attention to what the limits of the insurance are, and the policy's wording. People often look for the cheapest options, not necessarily the best coverage for their needs.”
It's also important that homeowners understand the personal liability coverage they have and Pollard suggests it’s always better to err on the side of having more than less.
As an example, he says if someone slips on a homeowner’s stairs causing serious harm, or breaks their spine from a dive in the backyard pool, a typical policy might cover $100,000. But Pollard says that amount is insufficient and could leave the homeowner on the hook for the rest — including significant medical, legal and rehabilitation costs of the injured person.
It is equally crucial to make sure the policy will replace material items for their full amount, should they be destroyed in a fire, flood or other disasters, Pollard says.
“There’s often conflict around depreciation values,” he says. “The insurance company says your couch is five years old, and it’s only worth 35 per cent of what you think it’s worth. If you are doing that for every item in your house, that’s going to be a major dispute with your insurance company. We could be talking about a shortfall in coverage in the hundreds of thousands of dollars.
Pollard also advises homeowners to determine what, if any, coverage they have for alternative living expenses. If the house burns down, or the roof caves in from snow or water, the occupants will need immediate shelter, such as a hotel, and other urgent basic necessities like food, clothing, transportation and more, he says.
“Typically, most policies will cover your alternative living expenses, but there will be a limit," Pollard says, adding that, in cases where a fire is being investigated, it’s quite possible the investigation could be measured in weeks or months.
“The insurance company is going to take a real hard look at each and every clause and coverage limit in the policy and evaluate your claim according to those conditions. Make sure you know what you are insured for,” he says.