FAQs

Home & Property Insurance FAQs

• Are all house insurance policies the same?
• I have just bought a new home but won't be moving in right away. When is the best time for me to get home insurance?
• What type of perils (causes of loss) are insurable under a typical home policy?
• Acts of God are never covered, right?
• What is the difference between replacement value and actual cash value?

Are all house insurance policies the same?

There are many similarities but policies do differ. It's better to have an "All Risk" policy versus a named peril policy. The "All Risk" is the best money can buy. But beware, just because it says "All Risk" does not mean every claim/scenario is covered. There are numerous exclusions that are part of every property policy.

I have just bought a new home but won't be moving in right away. When is the best time for me to get home insurance?

You need to ensure your home insurance coverage begins as soon as you become the legal owner of the property. Before moving into the house, make sure to ask your broker or agent if your current policy covers your contents at both old and new locations, and also while in transit. Moving into a newly built home? It's important to note that theft insurance is only applicable when a building is ready for occupancy; vacant buildings are not normally insured for more than 30 days.

What type of perils (causes of loss) are insurable under a typical home policy?

The most common types of perils are fire and theft but some examples of others that can be insured against include:

• Electrical currents
• Explosion
• Lightning
• Smoke (only if released suddenly from malfunctioning cooking or heating devices, not from fireplaces)
• Vandalism (while building is normally occupied)
• Water damage (this is a complex issue; be sure to discuss it carefully with your agent or broker)
• Wind and hail (usually applies to the outside of a building with exceptions for antennas, satellite dishes, etc.; the interior of a building and its contents are covered only if the storm has first created an opening)

Acts of God are never covered, right?

Wrong, things like a tornado, lightning, and hail are always covered, however earthquake is a common exclusion but this coverage can be added to your policy, for an additional premium.

What is the difference between replacement value and actual cash value?

The amount of money your insurer will pay to you following an insured loss is usually referred to as either Actual Cash Value (ACV) or Replacement Cost.

Actual Cash Value is the cost of replacing the property with something of like kind and quality - minus an allowance for depreciation.

Replacement cost means you may be able to receive a settlement of your claim without deduction for depreciation, but this requires you to have the property repaired or replaced with like kind and quality.

A deductible may apply in either case.

It's important to note that all home insurance policies automatically include "replacement cost" payments for building losses if repair or rebuilding occurs. The settlement can be up to, but not greater than, the amount of insurance stated in the policy.

Although you and your insurer may appraise your home thoroughly, there's still a possibility of underestimating the replacement cost of a building. Guaranteed replacement cost coverage will make up for such a shortage either completely or to an agreed amount.