What Can Void Your Home Insurance
Friday, 2 October 2020
Your home insurance protects your property from damage caused by incidents such as a fire, flooding, theft or vandalism. It also covers your personal contents and provides liability coverage if someone filed a lawsuit against you. The last thing you would want to discover while filing a claim is that your home insurance is void due to certain activity in your home. In order to avoid voiding your home insurance policy, we wanted to share in this blog about what can void your home insurance so that you know what to avoid and when you should notify your broker about changes.
What Can Void Your Home Insurance? – Illegal Criminal Activity
It may seem self-explanatory that illegal criminal activity would void your home insurance, but we can’t fail to mention it. Illegal or criminal activities can include:
- Growing, manufacturing, processing, storing, possessing or distributing drugs, narcotics or illegal substances or items.
- Any alterations to your home to facilitate any of the above.
- Causing intentional damage or harm to another person, their property, or your own property.
As a homeowner, it’s your responsibility to know what is going on in your own home, so pleading ignorance to illegal activity rarely holds up as a defense. The bottom line is you should never take part in illegal activities or allow roommates or tenants to commit illegal activity on your property – it could void your home insurance.
What Can Void Your Home Insurance? – Fraudulent Claims
Filing a fraudulent claim is not just a bad idea, it’s a crime that can result in arrest, fines and loss of insurance coverage. Here’s an example of a fraudulent claim: a homeowner reported a fire in the home and filed a claim with their home insurance company. The claims adjustor investigated the claim and determined the fire was caused intentionally by the homeowner. In addition, there was proof that the homeowner accelerated the spread of the fire causing greater damage. This person was arrested for arson and their policy was cancelled. Insurers can detect fraudulent claims using anti-fraud technology, so only submit claims if they are necessary and never exaggerate or manipulate the damage to get a higher payout.
What Can Void Your Home Insurance? – Claims for Items You Can’t Prove You Own
Home insurance covers your personal property, up to a limit determined by your policy, but what can void your home insurance is if you file a claim without proof of the items. A claim requires proof of ownership, whether it be receipts, photos or other evidence showing the item in your possession. Along the same lines of a fraudulent claim, without proof, your claim would likely be denied. This is why BIG encourages clients to create an inventory of their personal property. It’s particularly convenient to do this when you are moving into a new house and then you can update it regularly when you purchase or purge items.
Your home insurance normally has a payout limit for highly valuable items such as jewellery, artwork and other collectibles. For these types of items, you should consider adding special coverage in the form of a rider. You’ll be required to have them appraised, but, if they were ever damaged or stolen, you would receive the full appraisal amount, and not the limit on your contents insurance.
What Can Void Your Home Insurance? – Renovating without telling Your Insurer
When you are setting up your home insurance policy, you must be honest about your home’s characteristics such as: construction type, roofing, heating, plumbing, electrical, rental units, and other risks. If you are not truthful on your home insurance application, it could be considered misrepresentation, resulting in a voided policy or no coverage for claims.
You should also notify your insurer about any home renovations as it can significantly affect the value of your home and the amount for which it should be insured. If you are considering installing an addition, putting a swimming pool in, adding an alarm system, or otherwise updating your space (electrical, plumbing, kitchen, etc.), it is advisable to inform your insurance broker before you start. Failing to communicate changes can either mean that your policy will be voided or that you will only receive a claim payout for the original value of the home on your policy.
What Can Void Your Home Insurance? – Being Away for Extended Periods of Time
What can void your home insurance is failure to notify your broker about your home being vacant. Empty homes are more likely to see break-ins or damage going undetected. Significant damage can happen and if you’re not there to mitigate it (ie. water damage causing mold), your claim might be denied and your policy cancelled. It is your responsibility as a homeowner to ensure a responsible adult is checking your property every 48-72 hours while on vacation. If gone for longer, check in with your broker as your property may be considered vacant, in which case you’ll need to make changes to your policy.
What Can Void Your Home Insurance? – Starting a Home-Based Business
We are all for entrepreneurs and we love seeing people grow their businesses! What we don’t want to see is businesses without proper insurance. Your home insurance covers your personal living space and belongings, but it does not usually cover business-related activities or equipment. In fact, most policy wordings exclude this type of coverage. If you’re starting small, it may be is possible to get an add-on coverage for your home-based business, but you must inform your broker. As your business grows, a commercial broker will be able to help you get the right coverage for your type of business as well.
Now that you know what can void your home insurance, the moral of the story is: be honest and communicate with your broker. Our trusted BIG brokers are all about developing real relationships with clients and help get the best coverage. If you need to make a policy change or update your coverage based on what you’ve read today, give us a call or contact your broker.