Many Canadians take the opportunity to shop for a new home insurance policy when they move to a new home, but 80% don’t ensure their belongings are properly insured when it comes time to make the move.
A survey from Square One Insurance Services Inc. found that over one million Canadians move to a new home within the same province each year. As an insurance broker, it’s important to make sure your clients’ belongings are covered for the duration of their move, especially if they’re switching to a new home insurance policy.
Stefan Tirschler, Square One’s product and underwriting manager, says the largest mistakes happen when assumptions are made.
If the client has obtained a new policy at his new home, he may assume the old policy covers his personal belongings through the transportation of the products. In addition, “some people assume their property insurance policy covers their personal property no matter where it is. That assumption is generally incorrect, because policies have exclusions and specific language regarding their extensions beyond the premises,” explains Tirschler.
He relates those assumptions to an iceberg. “When it comes to insurance, people are often confident in what they have and they don’t often consider the implications of changes in their situation on their coverage. Assumptions can be troublesome at the best of times, and on the broker side, they can be especially troublesome if an agent or broker doesn’t necessarily understand the implications of what the customer is up to.”
By that, he means the client’s specific moving situation could impact coverage. “Some policies will only cover property in transit to a new home if coverage for that new home is already enforced at the time of the move. Policies could include exclusions related to vacancy at either the old home or new home, the [breaking] of fragile articles while in transit, so those kind of exclusions can also impact the customer if a loss were to happen between homes.”
Another example of clients not understanding their insurance obligations in the wake of a move is when someone moves into his new home from a condo before a new owner has purchased that condo. If a pipe bursts and water damage affects the condominium, your client could be held accountable since he is still the owner of the unit, even though it is currently vacant.
To mitigate losses during a move and to ensure your clients’ belongings are properly insured, Tirschler says it’s vital to ask questions and avoid making costly assumptions. Some basic questions to ask include:
“How long will the move take? The duration that personal property is between homes is important to know, so if you’re relying upon extensions of coverage within an existing policy, you can be confident the customer’s move won’t exceed limits of duration,” says Tirschler.
It’s also important to know “what particular property is being moved and by whom. If a customer is moving a large quantity of valuable property or fragile articles, it’ll be important to make sure they’re covered for the kinds of loss you might anticipate while they’re on the road,” he explains.
Are they actually going to move into this new home right away? If clients are moving far away, the move might not be completed within a week. “They might move their personal property into a new home, but then take time to wrap up affairs at the old home. In that case, if the new home doesn’t actually become occupied, you could run into potential vacancy exclusions if the customer never set up a residence beyond depositing their property at the new home.”
If the client is leasing his previous home rather than selling it, “it’s important to ask the customer what’s happening with their old location, how long it’ll be their responsibility, and what steps they’re taking to prevent loss or damage before they’re living in the new home,” says Tirschler.
The Square One study was conducted on Aug. 8, 2017 and involved 5,000 Canadians.
This story was originally published by Canadian Insurance Top Broker.