When determining your insurance coverage options there is an important distinction to note: market value or replacement cost.
The Canadian insurance industry uses “insurance to value” (ITV) to measure risk and to ensure your insurance covers the replacement cost of your home. If you do not have the appropriate coverage, you may find yourself short when it comes to replacing/rebuilding your home in the event of a loss.
Many people believe that market value is the best determinant when calculating insurance premiums, however replacement cost would be a more accurate assessment. For example, what would it cost you to rebuild your home after a major event such as a fire? The cost not only includes the higher costs of materials required but also the labour (which will be higher after an earthquake or other disaster due to scarcity), debris removal, changes in building codes, etc.
Being underinsured doesn’t help anyone. Under many insurance policies it is up to you to report any changes in your property, such as renovations or additions, which may warrant an increase in your coverage to fully insure the replacement value of your home.
We are here to help!
As a trusted advisor, we will ensure that you carry the most appropriate amount of insurance. Have you done any renovations or improvements to your home? If you don’t declare it, you can’t insure it.
The real estate value of your home is not necessarily the same as the cost of replacing your home. The costs of labour, materials, and constructing to code are likely to have increased since your last full inspection.
For more information about being underinsured or replacement costs, please give us a call at Scrivens Insurance and Investment Solutions at 613-236-9101.