Home Insurance - Insurable and Uninsurable Perils

In this article, you will discover:

  • The four main insurance types
  • 14 insurable perils
  • 5 uninsurable perils
  • Surprising items your home insurance may cover
  • Insurance perils where coverage can be separately purchased
  • How much will your home insurance pay out in the event of a loss

Four Main Home Insurance Types

There are four major types of home insurance to select from:

Comprehensive - This policy is the most inclusive home policy. With it, your building and its contents are covered for all risks, except risks that are specifically excluded. Examples of these would be earthquakes (insurable with a separate policy) or overland flooding (an uninsurable peril).

Basic Named Perils - If you want to save money by accepting more of the financial risk that comes with self-insurance, you might consider this insurance. It’s a named peril policy. This means it covers only the perils listed on the policy.

Broad - This is a mid-price option between the basic and comprehensive policies. This provides comprehensive coverage for the most costly items like the building and perils named on certain contents.

No Frills - This is the least costly type of home insurance. You can obtain very basic, no frills coverage from some insurers. These are generally for properties that don’t meet the underwriting standards of the insurance carrier. A structure may have some physical difficulties that may prevent it from meeting the insurer’s standards.

Note: Make sure you just include the value of the structure when purchasing home insurance. Home insurance doesn’t insure the land.

14 Insurable Perils

Following are the 14 insurable perils according to the Insurance Bureau of Canada:

  • Aircraft or Vehicle Impact
  • Electrical Current
  • Explosion
  • Falling Object not including objects propelledby snow slide or earth movement
  • Fire
  • Lightning
  • Riot
  • Smoke released suddenly from malfunctioning cooking or heating devices, but not from fireplaces
  • Theft
  • Transporting of personal property while it is temporarily away from your home; includes building fixtures and fittings being repaired or in seasonal storage
  • Vandalism while the building is normally occupied
  • Water Damageis a complex issue so be sure to discuss it carefully with youragent or broker
  • Wind and Hail applies to the outside of a building except for antennas, satellite dishes, etc.; the interior of a building and its contents are covered only if the storm has first created anopening
  • Window Glass breakage in a building that is normally occupied; not coveredby tenant insurance

Uninsurable Perils

In general, Alberta homeowners insurance is designed to protect you from events that are unpredictable, sudden and accidental. What’s considered a predictable and preventable event is generally uninsurable such as:

Water Damage caused by floodwater is considered predictable. However, water damage caused by an indoor burst would be covered.

Damage arising from the freezing of indoor plumbing would not be covered if you didn’t take the proper precautions such as draining the plumbing or arranging for the heat to be maintained

Damage from freezing outside the home including moving snow and ice, and heaving frost is not covered

Insect and rodent damage is not covered

Damage by snow slide, landslide and other earth movement is not covered

Again, these are considered predictable and preventable.

Home insurance Coverage You Can Purchase Separately

There are some perils not included in any type of home insurance policy that you can purchase separately

Earthquake - the cost varies according to location and the type of home construction

Sewer Back Up - This may be a coverage to consider purchasing if you live in a low lying area

Furnace Oil Spills - If you have furnace oil you may want to consider this to protect you against a potential environmental hazard

Note: You might be surprised to know that you home insurance may covers you for liability for other things you own not that are not used for business such as golf carts, self-propelled lawn mowers and motorized wheelchairs

How Much Will Receive in the Event of Home Insurance Loss

Under the basis of claim payment clause in your policy, you’ll see how much your insurer will pay you after a loss:

  • Actual Cash Value (ACV) - This means that the property will be replaced with something that’s of a like kind and quality. However, an allowance for depreciation due to age, condition and wear and tear is subtracted from that amount. So, if a $1,000 TV is stolen, you may only receive $200 to replace it.
  • Replacement Cost- This means the property will be replaced with no allowance for depreciation. So, you would receive $1,000 for that same TV.

Unless it’s noted on the policy, the policy defaults to ACV. You can purchase a separate replacement cost endorsement to receive the higher payout.

Many insurers offer discounts on home insurance policies. We can help you realize all the ones you’re entitled to.

Contact us on what you need to be completely covered with home insurance while achieving the proper peace of mind about your home.

You can also obtain a quote on home insurance on this site.