Insurance is NOT a one size fits all product. Beware of simple solutions to complex situations.
At first this may seem like an obvious statement but insurance products have changed over the decades and they continue to change, almost on an annual basis.
A century ago, fire insurance was fire insurance and little else. Flood, sewer backup, windstorm, theft, earthquake, identity theft and other perils were excluded. Insurance companies did not have the resources or knowledge to accurately predict frequency of claims and severity of losses so they stuck with what they knew and understood well.
Gradually, insurers added in coverages such as sewer backup as another way to attract new customers and to give these customers more peace of mind with their insurance policies. Comprehensive policies that offered very few exclusions became the norm and brokers eagerly promoted them to their clients as a way to limit loss exposures. It was a good idea – at the time.
Aging sewer infrastructures, more technically advanced homes, higher valued homes, additional on- premise activities such as commercial/business activities, densification of neighbourhoods, cyber risk and other factors have made insurers think again about their “all inclusive” coverage policies.
They have unbundled some of the coverages (like water damage) that were previously included. These coverages are now optional and are subject to different deductibles. The rapid proliferation of multi-family units, like condo buildings have exacerbated the situation; more people living in close proximity increases the chances of claims for fire and water claims.
Additionally, the stress of keeping strata fees affordable by strata councils has resulted in higher strata deductibles being passed along to the individual unit owners. These deductible amounts can vary a great amount among strata. You need to ask the deductible question and understand the answer.
To summarize, a simple approach to insuring your property is not practical or advisable. With the help of your insurance broker, you can tailor your policy to reflect your individual circumstance and avoid potential claims that may not be covered.
Have questions? Contact us at info@fraserheightsinsurance.com for more information.
