Give Me Back My Five Bucks

Here’s why you should always have home insurance

Our first night in our new condo should have been a cause for celebration. We grabbed take-out, unpacked boxes, and went to bed exhausted after moving furniture around all day. But instead of a peaceful night’s sleep, we got a frantic knock at our door at 10pm. It was the building caretakers – there was water leaking in the suite directly below us!

Panic.

Together with the caretaker, we looked over our bathrooms and found no water on the floor, or anything that would suggest a leak. So he left and said he would follow up in the morning. We were horrified! Talk about bad luck – the first showers we took on the first day of homeownership, and there was some sort of leak originating from our suite.

The next morning, strata called and informed us to coordinate with the owners downstairs and hire a plumber. It was a Thursday and were just going into the Canada Day long weekend, so we weren’t able to book anyone until the Tuesday. It was a pretty stressful long weekend to say the least.

But no matter how worked up we got, we realized that the most this issue would cost us was $1,000 because we have home insurance. Now, $1,000 is still a lot of money, but we already had more than that amount sitting in our joint account, and it was considerably less than the potential tens of thousands of dollars it might cost to repair whatever was wrong and fix the water damage!

I’ve had home insurance of varying coverage since I bought my first place, but I didn’t always have renters insurance when I was younger. Even if you are renting and don’t own the place where you’re living, you could still be liable for any damage you cause to the building, or unintentional harm caused to others who live (or visit) the property. Plus think of how much it would cost to replace all of your stuff! Most of the time a landlord will require you to have insurance as a rental condition. However I’ve definitely not had it before, and looking back that was pretty stupid of me. But for some reason the thought of paying $20/month for something invisible that I likely would never use seemed like too much to handle when I was already on a tight budget.

Here are a few things I’ve had to consider when buying home or tenant insurance:

There are different levels of insurance

Basic insurance is cheap but it doesn’t protect the contents of your home and the deductible is generally high. Standard insurance covers you for some perils, but not everything. Comprehensive insurance covers you for most things of varying maximums (except for earthquakes and floods, etc), but all insurance is different, so you’ll really want to ask a lot of questions or do your research online instead of assuming that you’re covered for something.

Bundle your insurance for a better rate

I used to get my tenant insurance with an insurer that also provided comprehensive auto insurance. By bundling these two together, I was able to save a few hundred dollars a year.

Make an inventory of your belongings

Usually a comprehensive policy includes contents insurance – which covers the cost of replacing your belongings. I found most are set at $25,000 but you can pay more if you want more coverage. When I first got tenant insurance, I thought all I needed was the $25,000 coverage, but when I actually took the time to create a complete list of the replacement cost of the items in my home, I realized my stuff more than exceeded the $25,000 coverage. Furniture, kitchen appliances, cookware, antiques, electronics, and all of the other items in your home can add up quickly! So I adjusted the policy amount to cover what I needed. You’re also able to insure stuff like artwork, jewelry, bikes, outdoor gear, etc. up to a certain maximum, but often times those require an additional endorsement to cover those items.

Be realistic with your deductible amount

Usually you can get your deductible amount down to $500, but in exchange your monthly rate will be higher. We chose to go with $1,000, but I’ve seen deductibles as high as $2,500.

Be proactive

If there is a potential problem in your home where you might need to use your home insurance, it’s best to call them as soon as possible to let them know what’s going on. That way they can tell you exactly what they need for the insurance process to go smoothly, because the last thing you want in an insurance claim situation is to feel unorganized.

Anyway, after finally getting a plumber in to check out our unit, the problem ended up originating from our bathtub faucet in the master bathroom (the shower diverter was pushing water into the wall). The plumber only cost $200 to come in and fix the problem, and there was very minimal damage to the unit below us – so we came in way under our insurance deductible. But the fear and panic was real, and I can’t imagine how someone would feel if they weren’t covered!

This is not a sponsored post, but for those interested, I used Square One Insurance – which offers insurance on both condo and tenant insurance. I used to be with CDI but switched over to Square One because the price was much better, the reviews online were better, and the user interface was really really nice to use. 

Have you ever had to claim anything on your home/tenant insurance?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


Comments

  1. Vadym says:

    Sorry for your experience. Did you perform home inspection before buying the unit?

  2. NZ Muse says:

    Been burgled several times while renting – contents insurance is so important!

    House insurance here sounds different, generally more for disaster/worst case scenario stuff. Things like water leaks I don’t believe are typically covered (but I’m def not an expert, just going off what I recall from my own policy)

    • Krystal Yee says:

      Interesting! So if you have a water leak in your place, would it just be your responsibility to pay for all the damage out of pocket?

  3. Michelle says:

    You mentioned you came in under your $1000 deductible. Does that mean you chose not to go through your insurance? Or did you have to cover damages for the unit below you?

    • Krystal Yee says:

      Yeah we ended up not going through insurance. We paid $200 out-of-pocket for the plumber, and we will also end up covering damages to the unit below us, which is just patching a small portion of drywall and shouldn’t cost more than $100-200.

  4. KC says:

    I’m not sure if you have this on your insurance but make sure that you have sewage back-up coverage. Most policies do not include it and often don’t let you know about this. This tends to happen more in apartment buildings (including condos) due to high pressure water.

    I had sewage back-up in the last month before I left my place and my renter’s insurance covered my portion. The neighbours all around me did not have such coverage and had to pay at least $5,000 to do so. I only had to pay $500 deductible and my insurance took care of the rest. All of the neighbours thought it was included in their policies.

    • Krystal Yee says:

      Yes great advice – and I’m so glad that your renter’s insurance covered your sewage back-up! I feel horrible for your neighbours who had to pay out-of-pocket but it definitely pays to do research and get covered for something like that. It was one of the main things I made sure we had, and actually just double checked that we did as soon as I read your comment haha.

  5. I’m so sorry to hear about the water damage. Mr. FAF and I are first time homeowners and are not experienced with repair. Whenever something breaks or leaks at our house, I tend to freak out. Mr. FAF lives 10 hours away, so I either try to fix it myself or drop at least $100 on a repairman.

    I’m glad it cost you guys much less than 1k although I know it was super stressful!

  6. Another benefit of home insurance is the liability coverage. Most policies have $1,000,000 in liability. Typical home liability covers third party accidents/damage that happens both on your property and also off your property. The last thing you want is for some random accident to result in a lawsuit that wipes out your savings/net worth.

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