No one likes an unpleasant surprise. However, that’s what could be in store for you if you don’t know what is—and what isn’t—covered by your property insurance. Here are 5 common home insurance myths and the realities behind them.
Myth #1: My dental practice is located in my home. My homeowner’s policy also protects my business.
Reality: Some people mistakenly believe that their home policy will automatically provide contents and liability coverage for a home-based business. This is not true. However, if requested, an insurer may grant an extension of these coverages to include the business.
Still, it’s advisable for dentists in this situation to obtain separate, commercial coverage for their practices. One major reason is that home policies do not provide practice interruption coverage. This component of business insurance provides a benefit to help replace your lost income while your practice is being restored following a disaster (such as a fire). For some dentists, that cost could total tens of thousands of dollars over several weeks.
TripleGuard™ Insurance (www.cdspi.com/tripleguard-insurance) from the Canadian Dentists’ Insurance Program—which is specifically designed to protect dental offices—includes contents, liability and practice interruption coverage in one economical package.
Myth #2: If the 7-year-old television in my home is stolen, my home insurance will cover the cost of a new one.
Reality: It would depend on the type of coverage you obtained. With Replacement Cost coverage, you would be compensated for the value of a new television. On the other hand, if you have Cash Value coverage, the compensation would be based on the depreciated value of the 7-year-old television. Usually, the premium for Replacement Cost coverage is higher than Cash Value coverage. A deductible may apply in either situation.
Myth #3: I’m covered if my home is damaged by insects or rodents.
Reality: Home insurance policies do not typically provide coverage in this circumstance, since damage caused by vermin is considered preventable. It’s therefore important to ensure your property is regularly inspected and that measures are taken to prevent infestation.
Myth #4: All home policies provide earthquake coverage.
Reality: Most home policies do not provide coverage for earthquake damage, unless you purchase it as optional coverage. Purchasing this extra coverage is worth considering if you live in earthquake-prone areas (such as parts of Quebec and British Columbia). Note however, that the deducible for earthquake claims is usually much higher compared to other perils covered by a home policy.
Myth #5: If stolen, items in my home like jewellery, fine art or collectibles will be fully covered by my insurance.
Reality: Many insurance policies impose limits (for example, a maximum of $2,000) on the amount of compensation that can be paid for these types of items. You may therefore wish to consider purchasing additional coverage for these types of objects, in the form of an “endorsement” or “rider” to your homeowner’s policy.
THE AUTHOR
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Ms. Whiteman is a professional insurance advisor at CDSPI Advisory Services Inc. E-mail: insurance@cdspiadvice.com |