What to do if your home insurance claim gets denied
This article has been updated from a previous version. Robert’s insurance nightmare began on a storm...
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Named perils – or basic – home insurance is one of several policy types available to homeowners in Canada. As its name suggests, it protects your home against specific perils only – all of which are listed or ‘named’ in the policy. For instance, if ‘theft’ is mentioned, then the peril is covered. If the peril isn’t mentioned, then it isn’t covered. This applies to both your dwelling and personal belongings.
Named perils is the cheapest home insurance policy available. The drawback to the reduced cost is that it puts the policyholder at a greater financial risk, as its number of possible protections is limited compared to other policy types (aside from the no-frills policy). For instance, both broad form and comprehensive policies are designed to protect your dwelling against all known perils – though there may be some exclusions (listed in the policy itself). Named perils is the opposite – it’s designed to protect your property against a handful of perils only, while exclusions are not listed at all (and there are usually more of them than in the other two policy types).
Furthermore, if you are a named perils policyholder, the onus is on you to prove that the peril you’re filing a claim for is not an exclusion. Conversely, in the case of broad form and comprehensive policies, it is the insurer who has to prove that the peril is an exclusion, making it easier for you to receive the necessary funds.
Named perils policy will usually cover the following:
Named perils policy provides the following protections when it comes to liability:
Named perils policy will protect your property and belongings against the following perils:
While the named perils policy will protect your home from every major peril, including fire, theft and water, it will not protect it from everything. In fact, anything that doesn’t fit into its strict list of perils is likely to get rejected during the claims process.
There may be exceptions within exceptions too. Water damage, for instance, may protect you from some water-related hazards but not others. Comprehensive policy, on the other hand, is more likely to protect you against a wider range of water-related hazards (including overland flooding and sewer back-up).
In addition, the burden to prove that the peril in question is covered by your policy is on you, the policyholder, not the insurer, whereas in the case of broad form and comprehensive policy types, the burden of disproving the claim falls on the insurer. In other words, you are far more likely to receive coverage with other policy types than you are with a named perils policy.
As a result, most insurers would not recommend a named perils policy to your average homeowner.
With that in mind, here’s how the named perils policy compares to others policy types:
Named perils | Broad form | Comprehensive | No-frills | |
---|---|---|---|---|
Main dwelling | Protects against named perils only | Protects against all perils (aside from certain exclusions) | Protects against all perils (aside from certain exclusions) | Protects mainly against fire |
Contents | Protects against named perils only | Protects against named perils only | Protects against all perils (aside from certain exclusions) | No protection |
Personal liability | Included | Included | Included | Not included |
Voluntary medical payments | Included | Included | Included | Not included |
Additional living expenses | Included | Included | Included | Not included |
A named perils home insurance policy is unlikely to cover the following perils:
Sewer back-up: If your property and contents were to incur water damage due to a backed-up sewage pipe, toilet or shower drain, you will probably not receive any coverage, as this doesn’t fall under what’s typically called ‘water damage.’
Overland flooding: This is another type of water damage that your named perils policy is unlikely to protect you from. In this case, the damage would be caused by overflowing water from a nearby river, stream or thawing snow. Like sewer back-up, this peril is unlikely to appear on a named perils policy.
Earthquake: Named perils policies do not cover earthquakes. So, if you live in an area prone to earthquakes, such as certain parts of B.C., then you should consider more comprehensive coverage.
Additional living expenses: If you are forced to vacate your home due to a peril that isn’t covered by your policy, then your additional living expenses will not be covered either.
Valuable possessions: Though your named perils policy will cover the cost of replacing your personal belongings (usually 60% to 80% of the cost of your dwelling), this may not be enough to cover the more valuable items in your home, such as jewelry or artwork. For this, more comprehensive coverage may be required.
Mold, pest infestations and general maintenance: Your named perils policy will not cover the costs of getting rid of mold, updating your electrical system or dealing with pest infestations (such as mice, termites, bed bugs or cockroaches). That’s because these issues are considered preventable, and thus, fall under ‘maintenance.’ There is no home insurance company in Canada that will accept a claim for what’s deemed to be a maintenance concern – regardless of your policy.
Deliberate damage or injury: If you purposely damage your dwelling or personal possessions or cause injury to yourself and/or others, then your named perils policy will refuse to cover you. In fact, there is no home insurance policy from any legitimate provider in Canada that would cover deliberate damage or injury.
If you’re an average homeowner in Canada, then it’s unlikely that a named perils home insurance policy would be right for you. The coverage offered under named perils is often too narrow to be worth the money in most cases.
That said, this policy type isn’t entirely without merit. For one, it is cheaper than broad form or comprehensive coverages. This means that if your home is unoccupied – and devoid of personal possessions (for renovation purposes or because it’s a vacation home, for instance) – then this cheaper policy may be worth it, since you’re less likely to incur heavy losses in the event of a major peril.
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It’s impossible to pinpoint who in Canada would offer the cheapest named perils home insurance, as your premium amount will depend on your specific circumstances, such as the state and size of your property, your home’s location, your past claims and so forth.
That said, one of the easiest ways to find cheap home insurance quotes (for the named perils coverage or otherwise) is by shopping around via free comparison sites such as LowestRates.ca. All you need to do is fill out a short form about your property and insurance history, and you’ll immediately access over 50 quotes from Canada’s top providers.
Alternatively, you can consult a broker, who can compare multiple insurance quotes on your behalf and present you with the cheapest one – though this may take longer than going through a comparison site.
Named perils policy is cheaper than the other two widely available policy types, such as broad form and comprehensive. However, the specific amount will vary from insurer to insurer. It will also depend heavily on your personal circumstances, such as your property’s square footage, condition and location, your claim history, whether you smoke or not and so on.
The easiest way to find out the cost of a named perils home insurance policy is by pulling up quotes on a comparison site such as LowestRates.ca. Alternatively, you can consult a broker, who can find quotes for you based on your personal details.
Yes, named perils home insurance policies include personal liability coverage. The coverage is typically as follows:
Personal liability: Ranges from $100,000 to $5,000,000.
Voluntary medical expenses: Ranges from $1,000 to $10,000.
Accidental damage to property: Ranges from $500 to $10,000.
Taras Trofimov
About the Author
Taras is the Content Manager for LowestRates.ca. He has produced thought leadership content for organizations like Constellation Software, Facebook and Yellow Pages as well as outlets like The Globe and Mail, Autoblog and MSN Autos.
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