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CURRICULUM CONNECTIONS | Connecting Our World to Yours HOMEOWNERS INSURANCE: THE BASICS CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics What is Homeowners Insurance? A Homeowners Insurance Policy is a legal contract between the insured and the insurer to protect the insured, their home and belongings if they are damaged or destroyed A home can refer to a condominium, apartment, house or mobile home Protection is provided against losses caused by fire, water, damage, storm, theft and other perils CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics COVERAGES Homeowners policies can protect the home, its owner and anyone named in the policy including a spouse, children, boarders and other guests Policies can also protect detached structures such as garages, pools and sheds CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics WHAT IS NOT COVERED? • Items that tend to result in liability claims, such as boats and ATVs, may not be covered • One-of-a-kind items, such as jewelry, art and collectables are excluded from standard coverage • Certain natural disasters in areas prone to these disasters are often excluded from standard coverage CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics What might an insurance company look for when determining the insurance needs and costs for a home? CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics Factors that Influence your Premium: • wiring – some wiring (ie knob and tube, aluminum) can increase the chance of a fire, especailly if the wiring has deteriorated or been damaged during renovations. • pipes – galvanized or lead pipes usually means that the plumbing is older and older plumbing is more susceptible to cracks, leaks and other problems. • electrical service – it is preferable to have breakers instead of fuses, and 100-amp service at a minimum. Fuses and lower electrical service can increase chances of a fire. CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics Factors that Influence your Premium: • heat source – oil-heated homes can present a costly environmental hazard, so your insurance representative will ask for many details about the age and condition of your tank. Insurance companies tend to prefer forced-air gas furnaces or electric heat • wood stoves – these are a common source of house fires and carbon-monoxide poisioning, particularly if they are not properly installed and maintained. CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics Factors that Influence your Premium: • age of roof – companies generally prefer if your roof has been updated within the last 20 years. • where you live – insurers keep records about such things as the number, type and cost of claims by neighbourhood. They can tell from past experience what the circumstances are in your neighbourhood, and how likely it is that you will have to make a claim. For example, if you live in an area where most people commute to work and homes are left unoccupied during the day, the stats may show your neighbourhood has more break-ins. CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics Factors that Influence your Premium: • proximity to water – insurers are concerned about fire, and will look at how far your home is from a source of water (ie hydrant, fire station). If you live in an urban area, this is generally not a problem, but if you live in the country and the distance is great this may affect your premium. • replacement cost – the factor that will make the biggest difference in the cost of your home insurance is simply the size and composition of your house – as well as your contents *taken from www.ibc.ca – “Homeowners Insurance” CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics LOVE IS BLIND ON MOVING DAY • How many of you expect to rent your own apartment in the next five years? • If you do, what sorts of possessions will you take with you? • What do you think would happen if some or all of those possessions were lost or destroyed? • Who would pay for replacing them? CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics LOVE IS BLIND ON MOVING DAY • How will Chris replace all of those possessions? • If you worked for the insurance company would you recommend that Chris receive enough money to replace all of the things he lost? Why or why not? CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics TENANT’S INSURANCE An average two bedroom apartment contains personal property that would cost more than $20,000 to replace YET… nearly 2/3 of renters do not have insurance even though it is relatively inexpensive to obtain! Your landlord or condominium association may have insurance, but this insurance only protects their building. Your belongings are not covered under their policy CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics LOVE IS BLIND ON MOVING DAY • How many of you knew about the availability of an insurance policy for people who are renting? • What do you think such a policy should cover? • Should a policy cover only your possessions or should it cover you in the event of damage caused by a fire, flood or theft? CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics TENANT’S INSURANCE COVERAGES - Tenant insurance protects individuals who live in a house, mobile home, condominium or apartment that is owned by another person - Tenant insurance protects against theft, loss of personal property and loss of use of property - Tenant insurance covers personal possessions such as furniture, CDs, electronics and clothing - Tenant insurance DOES NOT cover structural damages caused by carelessness CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics TENANT’S INSURANCE LIABILITY INSURANCE Liability insurance protects you when you are at fault or being sued Provides coverage for bodily injury: If someone gets hurt in your home your policy will cover any medical expenses incurred from the injury Most policies cover the behaviour of household pets The tenant is liable for events they cause or which occur within the home Some events which are caused by a landlord’s negligence may be covered by their insurance instead of the tenant’s CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics TENANT’S INSURANCE LOSS OF USE - Protects you when your home is not livable - Example – if your home is unsafe after a fire, being repaired, etc - Most often pays for temporary housing - May pay for additional costs resulting from the home being “unusable” CAREER CONNECTIONS | Homeowners Insurance: The Basics TENANT’S INSURANCE PROPERTY INSURANCE ACTUAL CASH VALUE vs. REPLACEMENT COST Actual Cash Value Coverage only pays for what the property was worth at the time of loss, minus your deductible - Replacement cost coverage will pay what it actually costs to replace the items you lost, minus your deductible - You should talk to your agent or broker if you have any items that are valuable or irreplaceable CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics TENANT’S INSURANCE TAKE INVENTORY To ensure that you are compensated for any belongings that you lose in a loss you should take an inventory all of your personal belongings. - Photograph or videotape each room - Keep receipts for major items - Keep documentation in a place other than your home CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics How can you reduce the risk of a loss in your home? CURRICULUM CONNECTIONS | Homeowners Insurance: The Basics HOW TO REDUCE RISK You can protect yourself against a loss by following basic guidelines Develop good security habits lock your doors install deadbolts don’t let your house appear vacant when away from home Reduce water damage check the pipes in your house when you go away have someone watch over your house turn off the taps to your washer Reduce Fire Risks install and maintain fire alarms have an electrician examine your electrical systems unplug heat producing appliances don’t leave things on the stove unattended have your furnace inspected regularly * Information in this presentation provided by Insurance Institute (www.career-connections.info) , Insurance Education Institute (www.ief.org) and Insurance Bureau of Canada (www.ibc.ca)