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Home Cents

What's in your insurance policy? Add to ...

Five years ago, as a major rain storm pounded Toronto, I found myself in my flooded family room, toys floating by in ankle-high water, wondering whether my insurance policy would cover the damage.

Many neighbours were in the same boat, with water-stained bundles of carpeting placed curbside on every street. All told, the Insurance Bureau of Canada estimated more than $400-million was paid out to property owners to cover flood-damaged basements from that particular storm.

Like many home owners, I hadn't thought much about my insurance coverage until I was faced with a claim. A recent TD Insurance poll reveals 23 per cent of Canadians are unsure or have no idea what's covered in their insurance policies. And of those who do understand their policies, most do not bother to take the proper steps to take full advantage of their coverage, such as keeping a detailed inventory of their valuables and updating their policies when they acquire something of major value.

"Not updating your insurance policies is like not checking the weather before you get dressed and leave the house - you risk finding yourself in an unfortunate situation you could have avoided," says Henry Blumenthal, vice-president and chief underwriter at TD Insurance.

Of the 1,500 Canadians polled, 53 per cent had made a claim on their insurance before, and of them, 42 per cent said they were surprised by something on their insurance policy.

Last year, 37 per cent of TD's home insurance claims were the result of water damage, 17 per cent were the result of wind and hail, 14 per cent were due to theft and 2 per cent were due to fire.

Mr. Blumenthal offers a few tips for ensuring your insurance has you covered:

1. Develop a list of possessions. This list includes items in your home and in other buildings on the property. Among the things you should include are indoor and outdoor furniture, appliances, electronics, computers, recreational equipment, china, linens, silverware, kitchen equipment, jewellery, clothing and other personal belongings.

2. Go Digital. When you've completed your inventory, transfer it to your computer. Make a back-up copy and keep this away from your home. You can also take photographs or videos of particularly valuable items. This can help you recover your possessions if you are unlucky enough to be broken into.

3. Update your policy. A home's value increases as possessions of worth are acquired, as well as when repairs or renovations are completed.

4. Don't assume anything. Get the facts and ask questions to ensure you understand what your basic home insurance policy covers. Most insurers have a maximum replacement cost for individual items. This can also help you determine whether you need to add any additional riders to your policy. An insurance rider provides the policy holder extra protection beyond the provisions contained in a standard insurance agreement.

"The bottom line is no one wants to be standing knee deep in water in their basement wondering if they're adequately covered," Mr. Blumenthal says. I can certainly attest to that statement.

Luckily, this story has a happy ending for me: My insurance company paid for my new flooring, and I never liked that carpet anyway.

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