5 Questions Homeowners Should Ask Their Insurance Broker | CBC News

Frank Craig thought he had insurance.

She filled out paperwork, worked with a broker and paid for a policy, but when her Merritt-area home flooded in November 2021, she discovered her coverage wouldn’t pay for needed repairs.

“If you think you’ve got all your ducks in a row, guess what? Life comes your way.”

Craig’s experience has prompted others to review their policies and the fine print in detail.

“You don’t know how good it is until you need it,” he said.

You are not alone in reassessing your policy. Other residents who lost or had their homes damaged by extreme weather events have discovered that their insurance coverage did not meet expectations.

According to the Canada Insurance OfficeThe insurance industry in Canada now spends about $2 billion a year on severe weather-related claims, up from an average of about $422 million a year between 1983 and 2008.

“Insurance can and should be there to cover the impacts and get us back on track,” said Dan Sandink, director of research at the Institute for Catastrophic Loss Reduction.

However, people need to make sure they ask the right questions to get the coverage that will actually protect their homes in the event of a flood, fire, or other severe weather event.

What type of coverage is available?

Sandink said the place to start is to find out if a homeowner can actually get the coverage they need, particularly when it comes to flood coverage.

Some homes may not be offered particular types of flood insurance or may have a high premium due to risk.

There are some areas within communities like Merritt where getting land based flood insurance will sometimes cost thousands of dollars more than an individual’s annual insurance costs.

What are you paying?

Although insurance is a contract between the consumer and the business, what is actually covered will differ by agreement.

Insurance typically won’t differentiate between a house fire and a wildfire, so coverage tends to be clearer. However, when it comes to flooding, it gets complicated.

Sandink said people should understand that land flood, extreme rainfall flood and sewer overflow coverage will likely be separate endorsements or add-ons to their policies.

“It’s important to be clear about what you’re interested in having covered and what will actually be covered.”

What are your deductibles?

In some policies, the client will be responsible for paying a certain cost in order to access coverage.

Sandink said that typically people will pay higher deductibles in exchange for lower annual premiums.

This could mean that policyholders may have to bear more up-front costs to access an insurance payout for something like a flood claim.

What difference will mitigating the risk make?

In some cases, Sandink said, people may be required to take steps to reduce the risk of something like a flood or wildfire, in order to qualify for comprehensive insurance coverage.

This could include putting in a check valve or a backup power system in the event of something like a flood.

If a policyholder is making upgrades to reduce risk, they should check to see if insurers will offer a lower rate.

What are the caps?

Within some policies, there may be limits on certain types of coverage.

Sandink gives the example of flood coverage where a home may be covered for full replacement value in the event of a fire, but only a limited amount in the event of a flood.

“These sections of your policy, these endorsements may have a different limit, so it’s important to understand what you’ll actually be insured for.”

It encourages people to compare prices with different providers to get the type of coverage that’s right for them and ask if there are options to remove the limits.

Extreme weather claims on the rise

According to Rob de Pruis, national director of consumer and industry relations for Insurance Canada, extreme weather-related claims have increased dramatically in recent years, but it’s important to keep the increase in perspective.

He said the industry as a whole pays out $40 billion dollars a year in claims. So while the $2 billion spent annually on severe weather is significant, it’s not a huge percentage overall.

With the increase in claims, there have also been more people sharing their concerns about the coverage they have had.

Merritt Mayor Mike Goetz said he has heard from many flood-affected residents who struggled to navigate the insurance claims process.

“We had some issues with a couple of companies that were just terrible.”

However, de Pruis said that people are often upset when they find out that the coverage they paid for doesn’t cover what they thought it would.

“A lot of disagreements or misunderstandings are simply because people may misunderstand your insurance coverage. Your insurance policy doesn’t cover everything.”

Consumers in BC with complaints about insurance companies can contact the BC Financial Services Authority. If the concern is related to the brokers, individuals can contact the BC Insurance Council.