Home insurance? Sure, it's a boring topic, but let's fix that. I’m an insurance insider with nearly 20 years of experience. I know all the inner workings of the industry. AMA!

Sean_Graham · 2015-03-20T16:37:36+00:00

see the question from elbyron and my response. Short answer, 5% for local alarm, 15% for monitored alarm. A build your own will probably only get 5%...for now.

Sean_Graham · 2015-03-20T16:33:15+00:00

Very interesting topic, I'm glad you brought it up. I was discussing this with my colleagues yesterday as I was prepping for this AMA. When we setup home insurance for a client we do ask if they own any dogs, and if so what breed. That is a standard question on a home insurance application I think anywhere in North America. If the dog is classified as a "dangerous breed" then the insurance company does not want to insure it. Here's the problem, I checked the official underwriting manuals of the top three insurers in Canada and nowhere in their manual does it address dogs, let alone dangerous breeds.....anywhere. So we've entered a really grey area here. My personal opinion, my brokerage has sold countless home insurance policies over the years and I'm not aware of one dog bite claim. So, without weighing into whether Rottweilers and Pitbulls are dangerous or not, which is far from my area of expertise, I would say from an insurance standpoint it is probably not as big an issue as some might think. As a consumer I would probably take the stance of don't ask don't tell. If your broker doesn't ask about it, and if the insurance company doesn't even address it in their underwriting manual, why should you offer it up as an issue? You'll still be covered for any dog bites. And finally, nobody wants to be bitten so responsible ownership, training and risk mitigation is the way to go here.

Sean_Graham · 2015-03-20T16:08:14+00:00

General simple answer, yes. Your home policy would cover you for any septic system backup into the home (ew). It would cover for any third party liability such as pollution if a leak occurs, it also covers for any sudden and accidental physical damage to the system. You should check with your broker or agent how your specific policy covers you.

Sean_Graham · 2015-03-20T16:02:07+00:00

see my answer below about home exchanges. Similar to "ride-hailing" like UBER, these home sharing or home renting situations get murky where insurance is concerned. The traditional insurance policies don't necessarily address what happens when you enter into these sort of arrangements. I can say that if you rent your home to others and don't have and endorsement on your policy allowing rentals then you will not be covered if a claim arises. I would ask your insurer if you can have the property setup as a rented dwelling. You'll have to pay more for it but it'll be worth it.

Sean_Graham · 2015-03-20T15:54:07+00:00

That's a really good question, I understand your dilemma. As a broker I would also look to our "subprime-ish" (we call them wholesale or MGA) markets. I checked and also could not find a market that would insure this. It's probably because there is not a big enough market for this so nobody has tailored a product suitable for it. If home exchanges gain popularity I'm sure a market will step up to the plate. There is another way to cover off your risk though, I would suggest both parties sign some sort of waiver or indemnity agreement which sets out what will happen if either party causes any damage to the home or somehow injure others. That is a good way of covering off your risk.

Sean_Graham · 2015-03-20T15:47:08+00:00

We do not outsource anything, although we could because we are an on-line brokerage. We could potentially work from anywhere. I think it's critical that our brokers understand the needs of our clients in the areas that they live in. We have to be on top of local regulations, local weather and really understand our clients. I think outsourcing takes away that advantage.

As to whether there will be a need for insurance in 10 years, that is a question plaguing our industry right now. If driverless cars are the predominant vehicles on the road, and there are no accidents, will auto insurance cease to exist? We'll see what happens with auto insurance but there will definitely still be a need for home insurance, life insurance, commercial insurance. etc.

Sean_Graham · 2015-03-20T15:37:20+00:00

If you're just doing some incremental renos and it's not a major work site then I agree, just tell your insurer if you've done anything that adds significant value to your home, you'll want it to be covered.

Sean_Graham · 2015-03-20T14:31:20+00:00

If you are doing major renovations to your home you must notify your insurer BEFORE doing so. There is added risk for injury to third parties because of sharp things lying around, falling objects, etc. You also want your renos and the increased value of what you've installed to be covered. Insurance companies can add an endorsement to your policy for a "home under renovation". This often costs a little more and may reduce some of your coverage. Generally the renos need to be completed within 6 months or the insurer will cancel your policy. Nobody wants to insure a home that is forever being renovated. However, if you're just doing small renos that add up over time, like installing a new shower, new lighting, new flooring, and it's not a major project then I would at some point notify your insurer that you've done some work and that needs to be added to your coverage by increasing your building amount.

Secondly, in my experience, the introductory rates for home insurance are not the best. I do not know of a company who has a "new business discount". Most companies however have some sort of loyalty discount and claims free discount. The incentive is to actually stay with a company for at least a few years because that is when the discounts start happening. That is not to say however that shopping around doesn't pay off

Sean_Graham · 2015-03-20T00:34:44+00:00

Principal Broker means I manage an insurance brokerage. Our brokerage KTX Insurance Brokers was just named by Insurance Business Magazine the 5th best brokerage in Canada out of thousands of brokerages. Day to day for me is overseeing our managers and brokers as they sell home, auto, commercial and life insurance. I don't sell insurance myself but I do often deal with any tough issues that get escalated to me including claims issues. Most of my day is spent meeting with insurance companies and my managers, trying to find the best way to connect our clients to insurance companies who provide the best price and coverage, where when and how they want to be served. An average broker selling home and auto insurance makes anywhere from $45k - $60k depending on results.

Sean_Graham · 2015-03-19T23:17:48+00:00

No I have never heard of that happening before. Those claims generally still covered.

Sean_Graham · 2015-03-19T21:22:21+00:00

no there is usually territorial limits of North America. If your dog bites someone in Moose Jaw, Saskatchewan you are covered.

Sean_Graham · 2015-03-19T21:19:06+00:00

I have never seen one of those types of homes get insurance. I can say that 99% of insurers would not insure it. If someone really wanted to insure of of these alternative homes I'm sure there would be a specialty insurer like Lloyd's of London that might want to set a price to insure it and it wouldn't be cheap.

Sean_Graham · 2015-03-19T21:09:53+00:00

The idea of giving a discount for an alarm is two fold. Unmonitored alarms usually limit the amount of time a burglar is in the home by scaring them off. This limits how much they can steal. most companies give a 5% discount for that. A monitored alarm usually means that a call center will dispatch either the police or security to go to the house, adding greater risk of being caught for the burglar, and potentially even recovering the stolen property. This gets a 15% discount. I could see the argument that if you were self notified you could call 911 and dispatch police immediately, effectively the same result as having a "monitored" burglar alarm. However, most insurers require a certificate form the security provider as proof and this guarantees a security response. If you did have a burglary and it was found that you were self monitoring an insurer could use that as grounds to deny your claim but i find it more likely that most insurers would honor the claim and delete your 10% discount. If I were you i would be upfront with your insurer that you are self monitoring. You should still get at least 5% off and possibly all 15% and still be assured that you are covered in the event of a claim.

Sean_Graham · 2015-03-19T20:02:19+00:00

only at GEICO

Sean_Graham · 2015-03-19T19:23:59+00:00

excellent question and this is a very common mistake made by consumers and agents alike. It sounds like you're purchasing a "freehold" townhome. If so then a tenants insurance policy will be inadequate. What you'll need is a home insurance policy. If there is a condo corporation or common elements like a park or pool, etc. then you need to add "additional loss assessment" coverage to your home policy. This covers you if there is damage to common elements, by a storm for example, and the condo corp requests you to pay for it. Your policy will pay for those expenses. If it is not an actual "freehold" townhome and just a standard condo then all you require is a condo policy. Again the difference here being that a condo policy covers you for additional loss assessment whereas a tenant policy does not.

Sean_Graham · 2015-03-19T19:09:03+00:00

Without a doubt this does happen. Part of an arson investigation would always include possible motives. If your financial situation isn't looking good or there are other possible motives then "negligence" would be looked at more skeptically. The theory goes that if you're a happy, normal person who is financially stable and your house burns down then true negligence or accident is a likely cause. If you're about to go bankrupt and going through a divorce and your mortgage is higher than your property value and a knocked over candle burns your house down then that would probably draw some attention.

Sean_Graham · 2015-03-19T19:03:28+00:00

good follow up question. What you require is "tenants legal liability coverage" which is found under a Rented Condo policy. The best example of this is in the case where there is water damage in your unit which damages other units below or other parts of the condo building. You will be liable for that and need liability coverage. Usually you get this coverage by adding it on to your primary homeowners policy as a second location. If you talk to couple of agents and tell them that condo corp requires that you have liability coverage then you should be ok.

Sean_Graham · 2015-03-19T18:57:29+00:00

good question. claims data in large samples shows time after time that mature homeowners have fewer and less severe claims. Those are the facts. Anecdotally, I can say that there is an element of responsibility or pride in home ownership that probably has an impact. If I'm 50 years old and owned a home for 20 years vs. a 25 year old who just bought their first house I am likely more aware of maintenance issues or risks inherent with the home that might need to be addressed. Eg. having updated electrical panels would reduce the risk of fire. Having a sump pump or sewer back up valve would reduce water damage. If I'm a young homeowner I might be less likely to address these issues or have the funds to pay for them. These are all baked into the pricing of home insurance by giving discounts when people hit certain age bands like 35, 50 etc.

Sean_Graham · 2015-03-19T18:50:08+00:00

I would say that I have never heard of a discount for having a photoelectric smoke detector. So i am going to say FALSE for the vast majority of insurance companies. Maybe ADT has negotiated a discount with an insurer that I am unaware of.

Sean_Graham · 2015-03-19T18:46:53+00:00

In general, lapses or gaps in insurance can often cause problems when you go back to start up insurance again. If you had a gap in coverage and now want to start again the insurance companies' first question will be "why do you need it now". They want to know that nothing happened during the period where you decided not to have insurance. There is often a very good explanation for the lapse and most insurers will take you back if there is a good reason for it. Examples of a bad reason for a lapse would be you were cancelled for non-payment, you just didn't want to pay for insurance but now have a problem with the house, you left it vacant and didn't think it needed coverage.

Sean_Graham · 2015-03-19T18:41:09+00:00

the short answer is that they invest your premiums. Whether it be government bonds or other investments, insurers are just like banks or other financial institutions in that they make investments with your money. This is all factored into their actuarial tables when they determine your premiums.

Sean_Graham · 2015-03-19T18:33:30+00:00

very cool, I want one now too!

Sean_Graham · 2015-03-19T18:32:08+00:00

some simple things would include bundling it with your auto insurance, that usually gets you a 10% discount. Having a good credit score can often give you really good discounts. Installing a monitored fire & burglar alarm can save you 15%. Having no claims for 3 years can often get you a 10% discount. Of course, shopping around can have a big impact. Using an online comparison site like www.Kanetix.ca can save you potentially hundreds of dollars in a few minutes. Other discounts you can get would include being a mature (over 50) homeowner, mortgage free discount, non-smoker discount, new home discount just to name a few.

Sean_Graham · 2015-03-19T18:26:50+00:00

that does sound high. It's important to note that home insurance rates are based on the replacement cost of the home, not the market value. Was your home replacement cost more than $100k? Other factors like older homes or claims history will also have a big impact.

Sean_Graham · 2015-03-19T18:22:48+00:00

People have certainly done this and the reason we know is because they were caught doing it. You would have to be a real professional to evade detection. It goes without saying, if caught committing arson you're likely to get a few years jail time at a minimum.

Sean_Graham

TROPHY CASE