Are You Covered?

It's up to you to ensure you're insured.

We all buy insurance - we insure our homes, our belongings, our health, our lives, our vehicles - but how many of us truly know what coverage we have or what we really need?

When things go wrong - the basement floods or someone is injured on our property - the one thing we don't want to hear from our insurance agent is: "You're not covered for that."

Rural property owners have a few additional concerns when it comes to risks and liabilities. People in rural areas often have bigger parcels of land, which means there is a bigger piece of property on which potential injuries can occur, says Christine Gaudreau, of OTC Insurance Brokers of Dartmouth, NS. This could involve people on all-terrain vehicles, snowmobilers, hunters, cross-country skiers, or people just walking across the property.

"Every home policy has an element called personal liability," Gaudreau says. "That's where you have coverage for anybody that may hurt themselves on your premises. It would also provide (legal) defence costs."

She says liability is for a third party. "Your policy is designed to cover your personal liability where you are found negligent. For example, if you don't salt your icy steps and someone falls. If there is no negligence, there is no substance to the suit."

The law regarding trespassers, or people who are on your property without your permission, has changed recently - to the detriment of the trespasser who may be injured, and to the benefit of the home or property owner, according to Jamie MacGillivray, of MacGillivray Injury and Insurance Law, Halifax.

"It used to be the same standard for a trespasser or for someone invited onto your property. That standard was 'reasonable care' - which is up to the judge to interpret. Now all the homeowner has to do is not create a danger with the deliberate intent of doing harm. If you want to build a fence on your property, you should be able to do so." This wouldn't be seen as a deliberate attempt to hurt someone who may cross your property and be injured by the fence, since that was not your motivation. "If you have invited people to your home or property and they get hurt, you have to show that you took reasonable care (to prevent injury)," MacGillivray says. "If people come onto your property without your permission, they are deemed to have assumed all risks."

MacGillivray also says that if someone is injured while committing a crime on your property (breaking and entering, for example) you could be held liable if you had a deliberate intent to do them harm - say, if you had a shotgun ready and waiting to be fired as the person entered.

Gaudreau says, "A lot of exposure in rural communities relates to wells.  If people fall into them, or if the water hasn't been tested and people get sick from drinking it, the homeowner is responsible." This type of coverage is generally included in the homeowner's policy.

She says most policies offer $1 million in liability coverage. Insurance companies sometimes offer up to $5 million. You can even get an umbrella policy that covers your home, all of your property and your automobile "which increases your limit," she says.

"If you have $1 million on your home and $1 million liability on your auto, and you buy a $4 million umbrella to cover everything, your limit would increase to $5 million in liability coverage. The premium for this would be approximately $300 to $400 per year."

MacGillivray says $1 million is adequate coverage in most cases but adds there are exceptions that would require more coverage. "If the person injured was making a high income and they sued for lost wages, it is possible (that $1 million wouldn't be enough)."

Flood insurance is another concern for both rural and urban homeowners. Gaudreau says there is a difference between water in a basement and flood damage.

"Part of your regular policy has a water extension endorsement and you usually get coverage through that," she says. For example, if you turn on the bathtub taps and promptly fall asleep - that would be covered under the water extension endorsement.

Natural flood damage - consider the destruction in Charlotte County, NB, last December, for example - would require specific flood insurance. "Most people don't choose to buy it because it is more expensive. It may also have higher deductibles," Gaudreau says. She recommends that people in Atlantic Canada buy flood insurance since they live in areas that are largely surrounded by water.

She points out that flood insurance covers living expenses like  accommodations, meals, and travel, if you have to stay elsewhere while your home is being cleaned and repaired after a flood. "Usually it is 10 per cent of your building limit. If your home was worth $150,000, you would have $15,000 for additional living expenses," she says.

Most policies also offer replacement costs for furnishings, where items will be replaced with items of a similar value. She suggests that people keep an inventory of contents of the home and store it in a safe place outside the home. A video inventory or digital photos to show contents can also be helpful when it comes to replacing items. More valuable items such as fine art or jewellery require appraisal and separate coverage.

Gaudreau says the old term "act of God" isn't used in insurance policies anymore. Instead, the policy wording specifies those perils (hail, windstorm, explosion) that are covered and those that are excluded.

It is important to read your policy to understand what is covered and what is excluded. You can also call your agent if you have specific concerns.