- How do I file a claim?
- What is the best type of insurance coverage?
- What am I required to do when my rental property is vacant, to ensure that my insurance will remain valid?
- What is meant by upgrading a building that is over 25 years old?
- Why do I need insurance for my condo when I am renting it?
- How much insurance should I purchase?
- The cheapest price or the best value—which should I purchase?
1. How do I file a claim?
We make filing a claim easy by simplifying and expediting the claims process.
- All your policies are consolidated with one reputable and trustworthy
- Procedures are consistent with the use of standardized forms
- You have one contact for all your insurance needs
- Timely response by professional, courteous, and knowledgeable staff
2. What is the best type of insurance coverage?
The REIN Ultimate Insurance Program provides excellent coverage at great rates that are not available through other programs.
How does Park Insurance do it? It is simple really. All residential investment properties are insured under a “commercial,” rather than a “residential” insurance platform.
The result is the REIN Ultimate Insurance Program. It delivers lower rates, while at the same time providing expanded insurance coverage with higher levels of protection.
All Risks Polices: When insuring any investment property, you always receive the best value when you purchase the broadest protection available, which comes in the form of an ‘All Risks’ policy.
Basically an ‘All Risks’ policy covers all forms of loss, except those perils (risks) that are specifically excluded or that are limited by a dollar amount. All policies in the REIN Ultimate Insurance Program provide the ‘All Risks’ level of coverage. The REIN Ultimate Insurance Program offers policies for the following property categories:
REIN Investor Guard
For rented dwellings with up to six self contained units
REIN Strata Guard
For rented condominiums and townhouses
3. What am I required to do when my rental property is vacant, to ensure that my insurance will remain valid?
Your REIN Investor Guard insurance policy allows for the property to be vacant for a maximum of 120 days at which point the policy becomes void. A vacancy permit MUST be arranged to extend coverage beyond the 120 day period.
During any period of vacancy you must comply with the following conditions, otherwise the permission for vacancy and coverage shall be void.:
- all doors and windows must be securely closed and locked
- all rubbish must be removed from within the described building and premises
- building(s) must be checked a minimum of once a week
- the water supply and water appliances have been shut off and drained, and/or you have made arrangements to maintain heat in the building
4. What is meant by upgrading a building that is over 25 years old?
Insurance companies don’t like to insure older buildings that have not been updated in 4 major areas. They specifically worry about heating, electrical, plumbing and roofs.
Heating: The main worry is non-standard heating such as space heaters, wood or coal burning stoves and furnaces, fireplace inserts as primary heat, combination units, and kerosene heaters. Generally any forced air, gas, or oil fired furnace or electrical heat is okay, if the system has been recently inspected and serviced.
Electrical: One of the leading causes of fire results from faulty electrical systems. The primary causes are over-fusing, ‘handyman tinkering’, inadequate amperage to support the household requirements, and the combination of wiring materials and systems that are susceptible to overheating.
Heat is generated as electricity flows through electrical wiring. Problems arise from higher temperatures within the wiring system resulting from increased electrical flow. If there are too many appliances on one circuit, the wiring and electrical system will overheat, potentially causing a fire. The wiring must be capable of supporting the current flow required by household needs.
- Fuse boxes where incorrect fuses are used because the circuit is overloaded and
causes a fuse to blow out.
- Knob & Tube wiring that appears in dwellings built prior to 1950.
- Aluminum wiring appears in some dwellings and condominiums built between 1965-1973 when copper was scarce and pricey.
- Aluminum does not conduct electricity as well as copper.
- Aluminum expands more than copper creating a tendency for the connections to work loose from the copper contacts in the outlets and fixtures.
- Electrolytic corrosion between the two different metals also occurs.
Most new homes are wired with 14 gauge copper wire equipped with circuit breakers and capable of delivering 200 AMP service. If you have one of the problem issues identified you may have problems obtaining insurance.
Plumbing: One of the most frequent and costly types of insurance claims is water damage from burst pipes, so plumbing is a main area of concern for insurance companies. There are two main components for plumbing systems being water supply lines and drain/waste/vent pipes. For underwriting purposes we are more concerned with the supply lines. Recently constructed dwellings utilize copper or plastic plumbing lines. Galvanized steel piping was used, almost exclusively, until 1949. The main hazard associated with aged, galvanized steel plumbing systems is deterioration and rust. If your home is over 25 years old but has copper or plastic supply lines you should not have a problem obtaining insurance coverage.
Roof: Insurance is not a replacement for proper dwelling maintenance. If a roof is not maintained properly it could lead to damage to other parts of the building and/or contents. Asphalt shingles are the most common type of residential roof covering. Life expectancy of asphalt shingles varies from 15 to 20 years, depending on the thickness, weight, and installation. Other relatively common materials used in roof coverings include:
- Clay tile, metal or concrete – life expectancy 50 years
- Wood shakes or shingles – normal life expectancy 20+ years
- Tar & Gravel – built up roof common in the 1950s and 1960s – life expectancy 15+ years
Your roof should have been replaced if your home is over 30 years of age, unless you have one of the more superior types.
5. Why do I need insurance for my condo when I am renting it?
Strata-titled properties (condos, townhouses, etc.), bring to light unique and often overlooked risk exposures. It is for this reason that the majority of condo owners do not carry sufficient insurance. Some of the reasons for this lack of insurance or inadequate coverage are:
- Insuring a condominium unit is complicated by the fact that there are two parties
involved—the owner of the unit and the condominium corporation.
- Coverage for “Betterments and Improvements” are not covered under the condominium corporation’s Master Insurance policy.
Strata Master Insurance Policies
Strata Master Insurance policies typically provide coverage for the building and its common areas, such as walls, roof, floors, elevators, swimming pools, and any associated out buildings. These policies do not cover, however, appliances, upgrades, and other items in each owner’s unit.
The coverage limitations of the typical Strata Master Insurance policy leave insurance gaps that the appropriate condo insurance package can fill.
One risk that is unique to strata-titled properties involves the issue of ‘loss assessments.” Condominium corporations insure all building units within the condominium corporation complex, including common areas, through a Master Insurance policy. Because the common areas of a condominium complex are available for the shared use by all unit owners within the complex (sidewalks, lobbies, hallways, exercise rooms, swimming pool, meeting and party rooms, etc.), there is a shared responsibility amongst all owners when a claim is made against the condominium corporation’s Master Insurance policy.
How does this shared responsibility work in the context of insurance?
Scenario One: A visitor slips on one of the condo complex’s sidewalks because the snow and ice have not been cleared. The visitor bangs his head, is paralyzed for life and unable to work. If the condominium corporation is sued, their liability insurance will usually cover their legal costs and any possible judgement against them.
However, if the financial value of the claim is very large and the condominium corporation is under-insured for the amount of the judgement, each unit owner is now assessed to cover the shortfall.
Scenario Two: Some condominium corporations purchase Master Insurance policies that have a very high deductible (i.e. $10,000), for property claims. Again, each unit owner can be assessed to pay a portion of the deductible when a loss occurs and a claim is filed. It is also quite common for one unit to be assessed the entire deductible in some cases, depending upon the circumstances surrounding the claim.
Scenario Three: Some condominium corporations fail to buy enough insurance to rebuild at today’s construction costs. Should the building suffer a serious loss, and the condominium corporation’s level of coverage is inadequate—each unit owner would be assessed to pay a portion of the claim.
In all cases, it becomes important for the investment property owner to add to his/her policy adequate coverage for such ‘loss assessments’. Talk to us about this critical coverage need.
Betterments and Improvements
When purchasing a condominium unit, the purchaser is buying the unit—with its improvements. However, the Strata Master Insurance policy provides coverage for the unit as it was originally built by the owner developer. Therefore, any upgrades to the unit by you or by previous owners, such as lighting fixtures, air conditioners, flooring, kitchen and bathroom cabinets, countertops, floor and ceiling mouldings, etc., requires additional coverage, referred to as “Betterments and Improvements.”
While condominium laws require that the condominium corporations have their own insurance that protects the structure and common areas of the building, upgrades are almost always excluded from the condominium corporation’s Master Insurance policy. It is the responsibility of the individual unit owner to insure the upgrades to their unit in the event of loss—regardless of who made the improvements.
Note: Most condo owners do not have adequate insurance to cover this type of loss.
Do not assume that the Strata Master Insurance Policy protects you from loss or damage to your rental unit!
NOTE TO INVESTORS
Typically, the walls of the condo unit, as well as the plumbing and electrical lines within them are considered part of building’s structure, which in the event of a loss would be covered by the strata corporation’s Master Insurance policy.
However, the laws vary from one province to the next and there is emerging case law that makes this a grey area. (See Emerging Trends for additional details.)
Therefore, it is very important to:
Read carefully the Strata Corporation’s by-laws regarding their insurance decisions.
Read carefully the Master Insurance policy to confirm the level of coverage provided.
6. How much insurance should I purchase?
Insurance is there to rebuild your building in the event of a claim. The limit of insurance you purchase has to be enough to cover this expense at today’s costs and you also have to allow for costs to remove the debris from the damaged structure. The amount of insurance you select has nothing to do with the homes purchase price or re-sale value.
Having the right amount of insurance coverage is very important. With a Replacement Cost policy you can only collect the face value if you rebuild the building. If there is not enough insurance in place to cover the full cost to rebuild, you will have to pay the difference yourself or else only receive a settlement based on the depreciated value of the original building. In most cases this would be far less than the amount of insurance you carry.
Penalties will be applied by any insurance company in the event of partial loss, such as a kitchen fire, when you are not insured to proper replacement value. A simple way to describe this penalty is if you are only insured for half the proper value, the insurance company will only pay half of the cost to make repairs and you will have to pay the difference yourself.
To avoid any unpleasant surprises, you should have the rebuilding cost (including demolition and debris removal) estimated and purchase your coverage accordingly. Make sure you also include the value of all detached sheds and garages. You could hire an appraiser, consult with a local builder or you could contact our office for help. We have an evaluation tool that can help guide you in deciding an appropriate amount of insurance, but ultimately it’s up to you to determine the amount of insurance to carry.
Enhanced Replacement Cost: Our Enhanced Replacement Cost coverage pays up to 15% above the limit of the insurance purchased, just in case it costs you a bit more to replace or rebuild your home after a covered loss. Automatically included for your peace of mind!
7. The cheapest price or the best value—which should I purchase?
For some insurance shoppers, the cheapest price is the name of the game and admittedly, with some purchases the lowest price can still deliver good value. However, cheap insurance—like cheap medicine—is no guarantee that it will really protect us when we need it.
Buying insurance for your investment property should be balanced against your risk-comfort level. It is important, therefore, to:
- Identify the level of protection that will provide sufficient coverage in the event of loss,
- Assess the calibre of customer service, or more precisely the strength of the broker’s claims service. All insurance coverage is equal until it comes time to file a claim. Not all brokers are able or insurance companies willing to offer a fair settlement that you deserve.
- Consider pricing as an important factor from a budgetary point of view, while at the same time carefully weighing the value of each insurance option.
Getting good value for your insurance dollar does not necessarily mean that your policy will cost more. In fact, a focus on value may cost you the same or even less than cheap insurance, while at the same time provide you with better coverage.
Insurance is a way to protect your future and it gives you peace of mind during the trip there. To spend a fixed amount each year to pay for your insurance will appear insignificant when your investment property suffers a loss due to accident or fire. Without insurance, most people never recover from a major loss.
So, buy wisely. And once again, it is critical to carefully select a broker who can assist you to make educated or well informed decisions. This will save you money now, and most importantly when you have to file a claim.