Are You Aware of The Fine Details of Insuring Real Estate?

Home Insurance

Is your Vancouver Real Estate covered by insurance? Really? Are you sure you’re not missing something or possibly missing a better option?

For many Canadians their home is one of the largest investments they will make! This is nothing new but have you taken the time to put in the proper safety nets to protect your hard earned money and assets? Insurance is one of those topics that people don’t really like talking about until something has happened!

Like any industry there are people who are skilled at their jobs and others that are happy to just process the paperwork with minimal effort. Just like in life not all insurance agents perform at the same level. Don’t be afraid to ask your agent questions and make sure they ask you questions as well. You want them to know about you so they can meet all of your needs! To help protect you, and depending on what kind of real estate you own, here are a few tips!

All Real Estate Owners:

· If you have done any renovations, ask if your policy includes betterment insurance or enough betterment insurance to cover your needs. Standard insurance will only replace the original condition of the construction, so depending on the level of renovations completed will depend on how much coverage is needed.

· When you take a mortgage against your property you will be offered Mortgage Insurance by the lender or mortgage professional. This may or may not be a good idea for you as a consumer. Mortgage Insurance will pay off your mortgage should you and/or your co-applicant pass away. All you have to do is continue to pay the regular contribution and you will remain covered for the term of the mortgage. Due to some people’s age or health this can be a great relief. If you have a spouse, family or other dependants that you would like to continue living in the home, then this is not a bad idea. However, consider that you are continuing to pay a consistent fee on a depreciating asset. In other words if you continue to pay down your mortgage the regular fee that you pay for that type of insurance will be covering less and less mortgage. Furthermore, if you completely pay off the mortgage you will have paid for a product that you never have a chance to use. If you were to take out Life Insurance you could look at acquiring a policy that will cover your mortgage in the case of your demise, and the life insurance policy continues to exist whether you have a mortgage or not. Depending on your age and qualifications, one product or another may be better for you. Don’t just take the banks word, as it doesn’t hurt to look into the numbers and determine what works best for you.

· If you are hiring services to work on or in your home or property, (anyone from Cleaners to Contractors to Landscapers) always make sure they have Commercial General Liability Coverage. This just allows one more safety net for you to avoid potential problems landing on your insurance coverage and your rates going up!

Strata Properties:

· When you live in a strata complex the building is insured by the strata in case of issues like fire, water or earthquake damage. One of the challenges of living with a large number of people is we are all humans and unfortunately things can happen, or not happen for that matter, which could lead to problems. While the building is insured, your personal contents are not. So as an owner in strata properties, you are going to want to cover the contents of your home with Contents Insurance. As well, generally under the standard contents policy there is an opportunity to get Deductible Insurance. At the Annual General Meeting (AGM), most Strata Councils provide the details of your building’s insurance policy (if they do not provide this simply contact your Strata Manager and request this information). It is not uncommon for building deductibles to be anywhere from $2,500 to $10,000 for a water damage claim for example. So having your home policy covering this cost is definitely something you will want to look into, as a few hundred dollars deductible is much better than a few thousand dollars deductible when it is YOU having to pay.

Rental Property Owners (Including Basement Suites):

· As an investor/landlord always protect your own assets. Most landlords will likely have insurance on the property itself but what if the property is burned to the ground? Have you considered how you will continue to pay the mortgage while the insurance company rebuilds? Income Insurance for revenue properties is something as an investor that is important to consider. While it will erode a small portion of your profits up front, ask yourself what you would do if you had no way of creating revenue on a property that still requires regular mortgage payments!?

· More to that point, if you are living in a home with a mortgage helper you will want to disclose this fact to your insurer as there is a possibility that they could deny an insurance claim if this info was not disclosed. It is important to be upfront about this information rather than putting your home at risk.

Finally, it helps to build a relationship with your insurance provider. Work with a single agency or person for all of your insurance needs. Then, as things in your life change your professional insurance advisor will be able to provide you with the correct advice to have adequate coverage, including as your portfolio and income changes throughout the many stages of your life! I hope that you will never need this information but if you do I hope you use it well!

(If you would like to be put in touch with a great Insurance Professional, I would be happy to strategize with you.)

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