5 Home Insurance Nightmares (and How to Avoid Them)

Whether you’re a first-time homebuyer or a long-time owner, don’t get caught off guard by a home-insurance nightmare.

By Josh Sherman | 4 minute read

This June, disaster struck for one northern Saskatchewan family after a wildfire burned down their home.

To make matters much worse, Tessa and Leonardo Santana had recently fallen on hard times. As a cost-cutting measure, they cancelled their home-insurance policy prior to the blaze. When their home went up in smoke, they were faced with the prospect of having to pay out of pocket — and it was money the couple did not have.

While the Santanas story is a tragic reminder of the importance of home insurance, sometimes, having coverage is not enough. Home owners are sometimes surprised to learn what’s not covered by a basic home-insurance policy. So suggests Anne Marie Thomas, director of consumer and industry relations for the Insurance Bureau of Canada, which is an industry association that represents Canada’s home, auto, and business insurers.

Wahi spoke to Thomas and other industry experts about potential home-insurance nightmares and what homebuyers and owners can do to protect themselves.  

1. Something happens when your home is vacant

Whether you’re going on vacation, or vacating your home during the selling process, you could find your coverage void while you’re away. “With a home-insurance policy, home vacancy is a real concern to an insurance company,” explains Thomas. “As you can well imagine, lots of things can happen to an empty house,” she continues. 

“If you leave in December and go to Florida and you’re coming back in February and a pipe bursts in your house, if you had nobody check your house in all that time your insurance company is going to say we are not paying,” she says.

Up front, most insurance policies won’t provide coverage if you’re absent from your property for more than 30 days. If you’re planning on being away from home for a month or more, Thomas recommends informing your policy provider to see if you can work out an arrangement to maintain coverage, such as having a friend conduct weekly check-ins on your home.

2. Items left in storage are lost

Most insurance policies do provide some level of coverage for contents held off site in a storage unit, but your policy may have a much lower limit than you realize. “Sometimes, contents in storage up to a certain amount might not be covered,” Thomas explains. “If you put everything you own into a storage unit for two months you might be surprised to find out you don’t have coverage.”

3. Pests cause damage to your home

Vermin are more than an annoyance for homeowners. They can cause costly damage to a property if not addressed. Worse still, insurance policies typically won’t cover the costs incurred. “Raccoons in your attic, squirrels in your attic, the damage they do is not covered. That’s why it’s really important to make sure your roof is sealed,” says Thomas. 

Pest-related damage is not covered by home-insurance policies because coverage is intended to protect against sudden and accidental scenarios. “A property-insurance policy is not a home-maintenance policy,” says Thomas. “If you just didn’t fix the hole in your roof, that’s neither sudden nor accidental. It’s poor maintenance, so that would not be covered,” she explains. 

4. Water damage

“Water or sewage backing up through drains or toilets is not covered unless you add a sewer backup endorsement,” says Samantha Schmidt, an underwriting specialist at Surex. (An endorsement is a policy add-on.)

5. Changes to the Home (or How You Use It)

Are you planning a reno project? Notify your insurer.

Not only are physical changes to your home reason to inform your insurer, you should also notify the insurance company if you’re changing how you use your property, such as by launching a home business or putting your basement up for rent. “It all depends on the type of business,” says Thomas. If it’s a startup consulting business running out of your kitchen, it may not affect your coverage. However, if you have regular clients visiting your home or are using the property to store merchandise, you may need a commercial insurance policy.