Author Topic: Canadian House Insurance - Advice?  (Read 6074 times)

Ishmael

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Canadian House Insurance - Advice?
« on: April 22, 2016, 08:33:11 AM »
We bought a property with an old house on it - it was neglected, but still in good shape. We caught it before it started to degrade. In true mustachian fashion, we decided to make it livable, and have been renovating it (mostly by ourselves) over the past decade. We started with a new foundation, and then moved on to new windows, chimney, insulation, siding, metal roof, etc.

Through it all, we were insured by one company that didn't require a house inspection, and although it was more expensive that other people I knew were paying, we just trudged along whilst we worked hard on renovations.  (100+ yr old house, ~1750 sq ft 2-level, electric+certified wood heat, $1000/yr insurance, even with $2500 deductible).

As the renovations are basically complete, and the rate continued to rise somewhat dramatically, I decided it was time to shop around for a better rate. Our broker quickly found us one, and we switched. A house inspection was done, which raised some minor things we have to address, but nothing serious. However, the valuation of the house came back in ridiculous territory - $400k+ replacement value, $75k+ for some outbuildings, and $277k belongings. This would result in pretty much a doubling of the rate we were originally quoted ($823/yr suddenly became $1500+/yr, with a $600+ payment due within 2 weeks). Also, as part of the process we discovered that our previous agent at this brokerage had entered things incorrectly, meaning that it was possible we weren't actually properly insured all this time.

The reason given for the stupid cost is that replacement cost for an older home is more expensive due to the unique materials used back then (i.e. hemlock framing and sheathing boards, which is the only part of the original house remaining now). However, if something were to happen to this house, we'd never attempt to replace it like it is - I'd go with a different layout entirely. Also, their valuation for the outbuildings are out to lunch (I could replace them all professionally for $25k MAX), and we do not have anything remotely close to $277k worth of belongings. I'm sure $100k would more than cover replacements. It all feels like it's a classic bait and switch by the insurer to milk us for an increased premium.

So we want to cap our coverage at $250k for the house, which would allow us to build something suitable, $25k for the outbuildings, and probably $100k for belongings. However, the company flat-out refused to consider it, despite me clearly explaining how they are out to lunch and that we'll take ALL of our business elsewhere, so now we're forced to shop around.

So this has all been yet another one of those completely unnecessary stressful events that pop up when trying to spend money (something I don't recommend - most businesses seem to only be interested in sinking un-removable cash-suckers into you, rather than fairly exchanging items of value for currency). However, it's house insurance, so further attempts must be made.

Can anyone offer any advice about insurance options/insurers that might be able to accommodate me with a reasonable insurance plan? Or any other advice related? I contacted the IBC, but their response distilled down to "you'll have to shop around". We just want to be covered for liability, and to make sure that if something unfortunate were to happen, we could still afford to have a comfortable place to live. You know, basic mustachian stuff. I've never attempted to make a claim, and wouldn't unless it was something serious. I'm in Atlantic Canada, if that has an impact.

RichMoose

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Re: Canadian House Insurance - Advice?
« Reply #1 on: April 22, 2016, 09:38:01 AM »
Sorry I can't be of much help, but I think this is one of those situations where you may have to just shop around. It's getting increasingly difficult though because the insurance industry in Canada is consolidating quite a bit. Many of those "independent brokers" are actually just suppliers of the same one or two of the major insurance companies.

Edit: I just have a standard 1970s house and my rates are jumping every year as well. I increased my deductible to $5000 last year to get my rates down. It helped but not as much as I hoped. It's getting to the point where for me renting is looking better and better. Property/school tax = 2 months rent, insurance + water/sewer/garbage = 1 month rent, maintenance = 1-2 months rent, foregone investment return on home equity = at least 6 months rent. Now my true annual cost of renting is about 1-2 months rent. Hmmmm...
« Last Edit: April 22, 2016, 10:11:22 AM by Tuxedo »

south of 61

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Re: Canadian House Insurance - Advice?
« Reply #2 on: April 22, 2016, 10:03:02 AM »
Good luck! We were in a similar situation - we paid around $500K for our property - but we're carrying about $1.2m in insurance coverage. We too tried to negotiate - if it burns down we would only build about 1/2 the sq footage we're covered for - but to no avail. We're also in the situation of only having one insurer that will insure us (still looking to find some other company that would cover us) so we're at their mercy (and our premiums are going up at 10% per year!!!)

Ishmael

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Re: Canadian House Insurance - Advice?
« Reply #3 on: April 22, 2016, 10:26:49 AM »
Hmm, doesn't sound promising so far. If I come up with anything, I'll post it on the thread then, in case it might help someone else.

Hopefully someone else knows something we don't! :)

Mmm_Donuts

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Re: Canadian House Insurance - Advice?
« Reply #4 on: April 22, 2016, 10:34:32 AM »
We use Square One, because you can pick and choose what you want to insure, and for how much. It's all done online. We have a similar size and age house to yours in Toronto, and pay about 100$ a month. Someone else on this site recommended it a while back.

south of 61

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Re: Canadian House Insurance - Advice?
« Reply #5 on: April 22, 2016, 10:51:01 AM »
Hmm, doesn't sound promising so far. If I come up with anything, I'll post it on the thread then, in case it might help someone else.

Hopefully someone else knows something we don't! :)

Yes, please do, I would be very interested!

Mega

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Re: Canadian House Insurance - Advice?
« Reply #6 on: April 22, 2016, 12:50:20 PM »
1 - Do you need to have insurance, as in contractually obligated?
2 - Are you not able to tell them no coverage for contents or out buildings? Maybe have an independent estimate for replacement value. What is your property tax valuation?

Mega

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Re: Canadian House Insurance - Advice?
« Reply #7 on: April 22, 2016, 12:51:53 PM »
And yes, they could be jacking the price BECAUSE they don't want to insure you.

LindseyC

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Re: Canadian House Insurance - Advice?
« Reply #8 on: April 22, 2016, 05:50:45 PM »
We use Square One, because you can pick and choose what you want to insure, and for how much. It's all done online. We have a similar size and age house to yours in Toronto, and pay about 100$ a month. Someone else on this site recommended it a while back.

Thanks so much for that suggestion. I am going to check them out. I have a similar problem, house from 1908, all original everything and I pay far too much each month. My house is smaller and not worth anywhere near what they say the replacement value is. (Like I would ever insist on gum wood trim replacement) I currently have my house, life and car under one broker but I think splitting it up is the better option. I only have life because it makes the policy a little cheaper, I have no dependents and am unmarried.

Retire-Canada

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Re: Canadian House Insurance - Advice?
« Reply #9 on: April 22, 2016, 06:18:52 PM »
I have a 100yr old cottage worth maybe $50K to replace. I could only get insurance for $250K replacement cost. I argued about it with my insurer and called other insurers and nobody would budge.

I'm in Victoria on Vancouver Island if that matter.

Ishmael

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Re: Canadian House Insurance - Advice?
« Reply #10 on: April 25, 2016, 05:28:43 AM »
1 - Do you need to have insurance, as in contractually obligated?
2 - Are you not able to tell them no coverage for contents or out buildings? Maybe have an independent estimate for replacement value. What is your property tax valuation?
Well, house insurance is not legally necessary in Canada (auto insurance is, but not house insurance). However, banks insist upon it when you have a mortgage with them.

The only number the providers are interested in is the replacement cost, and won't discuss anything else. I went through the outbuildings one-by-one, citing actual replacement costs values (with links!) and the response back was, "nope". I get the impression it's just low-level employees that have been forced to become mindless drones of company policy and can't use logic to reason through things.

For example, the supposed reason is that the house is old, so it's heritage and would be more expensive to replace to duplicate the style of construction used. Well, this house has been remodelled so extensively that the only "heritage" aspect remaining is framing & sheathing, and one exposed old barn beam. We've told them that, and replacing with modern building techniques/materials is fine, but still no movement. It's funny, because we talked to a firefighter who has said that older homes like ours are safer because they take longer to burn, and carpenters believe they are much stronger due to the framing material (hemlock instead of spruce). So actually our level of risk should be lower, but none of these facts matter.

Thanks Mmm_Donuts: we'll check out Square One if my broker fails to come up with another option. My broker has been great, and she dug up another possibility on Friday, and we're waiting to see what the quote looks like today.

There seems to be quite a few people interested in alternatives, so we should collectively share any info and reward those companies that actually want to provide the service we need.

I'll update this when I figure out the answer (if there is one). 

dogboyslim

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Re: Canadian House Insurance - Advice?
« Reply #11 on: April 25, 2016, 10:34:48 AM »
I'm not familiar with Canada, but in the US, you can ask that the home be valued with a "current construction" settlement.  This means that if the interior wall needs to be replaced, its done with drywall vs plaster etc.  The "Original Construction" settlement values are usually much higher than the current construction type.  The other thing you can do in the US is under insure.  If you disagree with the valuation, you can substitute your own valuation.  This can become problematic at claim time with co-insurance penalties etc.

Good luck!

going2ER

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Re: Canadian House Insurance - Advice?
« Reply #12 on: April 25, 2016, 12:08:41 PM »
I'm also in Atlantic Canada. We have gotten our best rates through Sun Alliance or the Co-operators.

We purchased our neighbours house for the land. They are charging us $1000 for 6 months insurance as it is not occupied. We now have a tear down date for it.

It is really hard to get a good deal on home insurance.

Edited to add: Square one is not available in my community
« Last Edit: April 25, 2016, 12:10:44 PM by going2ER »

Ishmael

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Re: Canadian House Insurance - Advice?
« Reply #13 on: May 04, 2016, 06:33:42 AM »
Just an update - ended up calling TD Insurance, and they offered reasonable coverage ($300k) at a reasonable rate (<$800) with no hassle at all. Although there were a lot of question to go through on the phone, it was a straight forward process and went smoothly. For example, when it came time to discuss outbuildings, I explained I could replace them all for $25k, but that there was a dilapidated old shed that I stated I didn't want insured, he said that's fine, but there's still a liability risk so I need to put up adequate warning signs. Completely reasonable.

They also beat my car insurance rate, and I was ticked off at my original insurer for trying to gouge me, so that's switched over as well.

I'll keep the Co-operators in mind for the future, if I feel the need to look around again. Thanks to everyone for their input!
« Last Edit: May 04, 2016, 06:38:58 AM by Ishmael »

Retire-Canada

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Re: Canadian House Insurance - Advice?
« Reply #14 on: May 04, 2016, 05:00:09 PM »
I need to call my insurer TD again. Rates went up $250 from last year with no claims in the last 15yrs+. It's getting crazy!