My Experience with Home Insurance

We just got our personal home insurance renewed and it's such a b*tch to pay.  We pay it off in the full amount just because we don't want to incur any further interest charges.  Since Vancouver is due for the “big one” anytime (so they say) we decided to fork up an extra $400 per year for earthquake coverage.

It would suck big time if after an earthquake, our 1960's (?) home disintegrates into a pile of rubble (and I don't doubt that it will haha) and we didn't pay the extra $400 a year it cost to insure our home for that.

For the remainder of our annual insurance fee, we are paying for property coverage on the building, private structures, personal property (personal property amounts to the same cost of the dwelling- I guess that says a lot!), and additional living expenses.  To be honest, I don't see how personal property costs that much, especially when the only “valuable” things we own that could be taken are the Macbook Pro, some garbage-y PC laptops (yeah their resale value isn't so hot I don't think), and the large sized (I am ashamed to give expletives on how large it actually is) television in the living room.  I always have a fear of my Macbook Pro being taken because I have hours and hours of work on there.  I guess I should learn to or get in the habit to back up my homework!

Because our basement suite is a basement suite with a stove and whatnot, that means there is increased chance for fire.  Therefore our insurance also goes up because of this.  However, it was great because when we got assessed for insurance, it was before we gutted the place and did upgrades, so the building dwelling and structures weren't so expensive to insure.

The contents insurance that we have apparently doesn't cover the tenants contents (it covers the structural damage to the basement suite), so tenants are advised to get their own tenant insurance, and I don't think that costs very much per month.  I am always fearful of burglaries in the area, though the area is pretty safe.  Maybe I just have generalized anxiety disorder and it's just me.

Prior to the currently lovely tenants we have, an older adult came to view the suite.  He was pretty short of breath as he walked to the suite entrance, and all I could think about was finding him deceased for days (this is terrible I know, but I'm quite a morbid person) because of his heart or lung disease.  I wonder if insurance is more expensive for those who are older?  There is higher chance for fire because older adults with dementia probably have difficulty remembering things (like turn off the lights-which is minor, or turn off the stove- which is more dangerous).  Or even older adults with lung disease who have to use oxygen and perhaps? perhaps even smoke a little bit in the home.  I did a little bit of research (via my friend the search engine) to find that there is specific insurance for the 50+ group.  Castle Cover building and contents insurance specifically insures people who are older than 50 (though if you ask me, 50+ is not old. I wonder if the premiums are more expensive as one gets to 75+ or 85+ or even 95+?).

Anyway, home insurance seems pretty essential and not wise to skimp on.  When I was growing up, I remember that my frugal dad did not insure the house we grew up in for many years.  I think it was after the third break-in that he decided to pay for insurance!  We were lucky that it was only break-in theft that occurred and not something more serious… like a car running into the side of our house (we lived on a corner) and creating a big hole in the structure of the house!  I'm sure my dad was happy he got insurance then…

I'm not sure if people skimp on home insurance nowadays (or even 20 years ago!).  There's just such a rise in petty crime, natural disasters etc.

Readers, do you skimp on home insurance?  If not, do you end up adding the extras, like earthquake protection?

39 Comments

  1. Mariane on March 12, 2012 at 9:39 am

    We are just looking into switching to a less expensive home insurance provider. I hope everything works out because this quote is significantly less expensive than what we have been paying for the past five years. Our home is expensive to insure because it is 100 years old and even though it has been upgraded, the cost to build an equivalent home is much higher because of the better building practices back then (this is what I’m told but it sounds like bull crap to me.) Either way, when I told our current insurance agent about the quote we got he got all doom and gloom on me and tried to convince me that the person who quoted the lower amount is trying to under insure us etc. which could be the case but it could also be the case that he has been over insuring us for 5 years and enjoying the hefty paycheque. I wish we could get a third party, unbiased opinion about what we need because I’m stuck here between two sales people trying to figure out what’s best about something that I am only beginning to understand. sucks.



  2. Juan on March 12, 2012 at 10:34 am

    Ya, lump sum insurance really is a pain. All of those unplanned expenses really do put a dent in the monthly budget :\



  3. Modest Money on March 12, 2012 at 9:11 am

    Ouch, your overall home insurance must’ve been quite pricey if the earthquake coverage alone was $400/year. As someone who is hoping to buy my first home later this year, that pricing does make me pessimistic about the feasibility of affording to own a place. We are due for a big earthquake though. So it would suck even more to skimp on that coverage and then regret it later.



  4. Money Beagle on March 12, 2012 at 9:28 am

    We live in Michigan and the chances for earthquakes are pretty slim. Ours is pretty basic and is cheaper because we have our auto insurance through the same provider.



  5. Michelle on March 12, 2012 at 9:52 am

    We don’t skimp on home insurance. We have earthquake insurance also, and even though we live near one of the biggest faults, it only added $33 to our yearly bill. Our insurance it pretty cheap also. It’s only around $700 a year.



  6. SavingMentor on March 12, 2012 at 11:25 am

    I hate dealing with insurance in general. I break out in cold sweats just thinking about it. I went through an insurance review recently and switched everything to an agent my father knows and then promptly forgot everything about it now … this always happens!

    I doubt I have earthquake coverage so I sure hope I never have to deal with that!



  7. Roshawn @ Watson Inc on March 12, 2012 at 11:49 am

    I don’t thing we skimp. Unfortunately, we have needed it. It sucks paying, but it sucks way worse when you have an emergency and have to come out of pocket for what should have been covered. I don’t know if paying for insurance is ever pleasant though.



  8. Jen on March 12, 2012 at 12:55 pm

    Ouch. I think our insurance is much lower than yours, probably because we’re in a concrete condo. Something to think about if/when we move to a house!

    As for the contents being so high, you’re probably (or should be) insured for “replacement value” of all your things. So if your house burns down or the sewer backs up, rendering all your stuff contaminated or gone, you can replace it. Just think about how much it would be to buy every piece of furniture, clothing, dishes, appliances, artwork, media, etc. new. It adds up quick!



  9. Julie @ Freedom 48 on March 12, 2012 at 5:30 pm

    I didn’t know home insurance was even an option? We’re in the same boat as you. We have a house with a basement rental suite – and our insurance went up because of that. We also pay one yearly lump sum. We’re currently paying just over $1,000/year for our home insurance.



  10. Joe on March 12, 2012 at 3:42 pm

    You should consider investing in induction stoves to reduce fire hazards. Also, always be careful to maintain copies of your insurance policy. Insurance is only the right to sue. Read about Whiten v. Pilot, a Canadian lawsuit (www.rossmcbride.com/artic…urance-Co/). No wonder Pilot Insurance now operates under the name Aviva Insurance. But seriously, this is perhaps the most valuable use for a safety deposit box: insurance policies.



  11. mycanuckbuck on March 12, 2012 at 6:23 pm

    No, I don’t skimp – but I also don’t get the extras. I’m in Ontario, and when we “get” an earthquake, it pretty much amounts to people going “Did you feel that?” “No, did you?” “I think my desk swayed a bit..” 🙂 What kills me is my car insurance costs..ugh!



  12. Steve@Thelooniebin on March 12, 2012 at 4:50 pm

    I’ve read a lot of blog posts about skimping on home insurance so that you save money every month and that’s the worst advice I have ever heard. Yes it’s nice to save money but God forbid, if something happens and you have to make a claim, you’re going to be in for a big surprise when the insurance agent starts shaking their head when you need something replaced.



  13. Mariane on March 12, 2012 at 7:14 pm

    That’s scary!! We used to be with Pilot/ Aviva… I’m glad we aren’t anymore!



  14. Joe @ Retire By 40 on March 12, 2012 at 10:03 pm

    We insure enough to cover the value of the rebuilding if there are any incident. I think you can insure less, but I wouldn’t want to risk it.



  15. Erik on March 13, 2012 at 9:12 am

    I know you said your house was evaluated before your guy’s renovations but remember that your insurance company is only going to replace what you have the home insured for. You would have to notify your insurance company of any changes that you have done or risk a claim not being paid out even if it is a partial loss. Also it looks like that website for the 50+ is from the UK so probably not applicabale here.



  16. youngandthrifty on March 13, 2012 at 12:51 pm

    @MM- Actually it’s not too bad, the earthquake coverage takes up a relatively large chunk of the actual home insurance. Yeah, I’m getting more and more anxious about when the “big one” is going to come. It’s hopeful that our infrastructure will hopefully withstand a high richter scale earthquake.



  17. young on March 13, 2012 at 12:53 pm

    @Erik- Thanks for your suggestions Eric. Our insurance company was aware of the changes we made and they did adjust the insurance 🙂 (or at least she said she did?!).



  18. young on March 13, 2012 at 12:54 pm

    @Joe- So you don’t insure anything inside the home, e.g. if there was a break in?



  19. young on March 13, 2012 at 12:54 pm

    @Marianne- Sorry, I think Pilot/Aviva aren’t Canadian- I haven’t heard of them. Did they go out of business?



  20. young on March 13, 2012 at 12:55 pm

    @mycanuckbuck- LOL.. Well hopefully that’s the extent of ours too.. *gulp*. Yeah car insurance costs more than our home insurance!



  21. young on March 13, 2012 at 12:55 pm

    @Julie- That’s pretty good!



  22. young on March 13, 2012 at 12:56 pm

    @Steve- Totally agree. It’s sort of like “infalliable thinking” that the younger generation Y are often guilty of 😉



  23. young on March 13, 2012 at 1:02 pm

    @Joe- Ughh how terrible! Thank you for sharing that story! Great tip too- I’ll make sure to put the policy in the safety deposit- good idea…..!



  24. young on March 13, 2012 at 1:03 pm

    @Jen- Yup, lifestyle inflation at its best in a house 🙁 Good point- I didn’t think of that. Or if the dish washer or laundry machine breaks.



  25. young on March 13, 2012 at 1:03 pm

    @Roshawn- Yeah that’s true. What did you need it for? 🙁



  26. young on March 13, 2012 at 1:04 pm

    @SM- I don’t think there are that many earthquakes where you are 🙂 I don’t like insurance either, there are so many clauses and I shouldn’t do this, but I just blindly smile and sign.. 🙁



  27. young on March 13, 2012 at 1:05 pm

    @Juan- YOu can say that again 🙂



  28. young on March 13, 2012 at 1:05 pm

    @Michelle- Where do you live? California?



  29. young on March 13, 2012 at 1:07 pm

    @Mariane- Awe man.. sorry to hear that your experience has been a pain in the butt too. That sounds pretty similar to my situation- I remember the insurance sales person saying something to that effect, that the cost to build now is much more expensive (which I do understand).



  30. Sam on March 13, 2012 at 3:09 pm

    If the “big one” really hits (something catastrophic), do you really think your insurance provider will be able to pay for you AND the tens of thousands other claimants? I doubt it. Insurance contracts are designed in the insurance company’s favour. There are so many loop holes for them to use. You stand no chance. Furthermore, if one of the world’s biggest insurer can go bankrupt (AIG), what does that also tell you?



  31. Joe on March 13, 2012 at 4:51 pm

    Aviva definitely is in business in Canada — www.avivacanada.com/

    Not sure WHY they stopped operating the “Pilot Insurance” brand name, but with stories like what I posted, I’m not shocked.

    I’m glad you’re not with them, too, Mariane. But I hope everybody sees that (1) insurance is only the right to SUE, (2) keep an emergency fund! By not paying your rightful claim, they know they’re pressuring your cash flows, and they’ll use it to reduce the payout, and (3) keep your policy somewhere SAFE, e.g. a safety deposit box and keep a photocopy/scanned copy too. I took a corporate law course in undergrad with a really cool lawyer who gave us tons of practical tips. #3 was one of those tips.



  32. Joe on March 13, 2012 at 4:54 pm

    NP! Sorry just saw this comment after I posted in response to you/Mariane lol. That smart tip was from my third year Prof. Richard Taylor, a lawyer in Peterborough. Very valuable lesson!! Might as well learn from the tribulations of others before they befall us.



  33. spiffi on March 13, 2012 at 10:00 pm

    I live in California and don’t have earthquake insurance. I’ve read the policies and what they offer – and it’s really expensive and doesn’t cover much. If the earthquake damages the gas line, and the gas line causes a fire – earthquake insurance doesn’t cover that – that’s fire damage. If the earthquake causes your hot water tank to tip over and all the water escapes and damages your floors – that’s water damage, not covered.

    The other thing – when you think you don’t have much in the way of “expensive” personal goods – think about it this way: If your house were flattened and you had to rebuild from scratch. Home insurance builds the house and may even cover things like toilets, sinks, kitchen cupboards and possibly carpet and flooring.

    Everything else is personal items – all your appliances, curtains, every stick of furniture you have, kitchen items – dishes, pots and pans, silverware, glasses, replacing the food in your cupboard, your mixer, coffee maker, muffin tins etc. It includes your christmas tree and all your decorations and lights, your bed linens and blankets, towels, washcloths, shower curtain, bathmats and that cup you use to hold your toothbrush.

    We haven’t even gotten into toys – tv, stereo, game system, computer, video games, cds, dvds, books, cell phones, all those random cables you have accumulated over the years, printer, phone charger, camera, cordless phone, tivo etc.

    Now – clothing – you might now have expensive clothes, but you have clothing, shoes, coats, hats, suitcases, scarves, mittens etc.

    None of it may be “worth much” – but to replace it all at once? that’s a BIG chunk of change!



  34. Aloysa on March 14, 2012 at 12:34 pm

    We pay $200 for a year for a small condo. We covered everything we could BUT the earthquake. The earthquake insurance (we live in apossible disaster area) costs about additional $400 a month. Who can affrod that? Not me!



  35. young on March 14, 2012 at 9:53 pm

    @Aloysa- Holy camoly that’s expensive!!



  36. young on March 14, 2012 at 10:02 pm

    @spiffi- Got it! I was not thinking about all these little things. I guess the only thing I thought I might need it for was a burglary. I didn’t think about floods, fires, or earthquakes 🙁 Thanks for listing all these little things- they really do add up unfortunately. I would cry if I had to replace all those things. I wouldn’t have to replace the curtains because I don’t have any though, lol.



  37. young on March 14, 2012 at 10:05 pm

    @Sam- Hmm so are you saying that earthquake insurance is bunk? 🙁



  38. Marvelous on April 10, 2012 at 9:34 pm

    Thanks a bunch for that amazing article. I seriously like the blogging site and thought which I’d tell you! 😀 Thanks, Marvelous



  39. young on April 12, 2012 at 8:34 pm

    @Marvelous- Thanks! 🙂



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