Too many Canadians know more about their favourite sports team or movie star than they do about the property insurance they rely on to protect their homes and investments. Why doesn't the misfortune of those hit by Edmonton's C$60 million dollar hailstorm, BC's raging forest fires and the continuing array of natural disasters spur other property owners to protect themselves while they can? The greatest risk may not come from natural catastrophes but from the financial, physical and emotional devastation often associated with settling insurance claims.

As flood-stricken residents of Peterborough, Ontario and other flood-devastated communities have found out, flooding or water seepage is generally not covered by residential insurance policies although additional coverage for sewer back-up may be purchased. While some commercial insurance policies may provide limited coverage for flooding, not all residential properties in low-lying areas can be insured. In addition, new realities mean less coverage by insurance companies intent on reducing their exposure. "Acts of terrorism" and "the increasing flow and storage of computer data, supported by ever more accessible information technologies" may result in losses against which you are not protected.

Even when coverage is available, the insurance industry places two significant responsibilities on policy holders whether they are tenants, homeowners, cottage owners, landlords or investors: getting the right insurance and mitigating risks and losses.

The Insurance Bureau of Canada (IBC), the national trade association for more than 90 per cent of the private property and casualty insurance industry, cautions homeowners not to wait until trouble strikes to verify that they have the right insurance. During natural disasters, insurance companies may have temporary underwriting restrictions in place, making the instant purchase or upgrading of insurance exceptionally difficult although renewal of existing policies will usually continue.

A state of emergency might also disrupt real estate transactions since new policies would be provided on a much slower case-by-case basis. Local real estate professionals should be aware of necessary closing date flexibility to accommodate delays in processing insurance.

When reviewing your property insurance needs, two issues must be carefully considered:

1. How much coverage is enough?

   Does the value profile that your insurance representative prepared accurately reflect the replacement value of your property in today's marketplace? As real estate values increase so should the insured replacement value in the policy. Policies should be updated to include renovations or additions. However, do not over-insure buildings by including the market price of the site in the insured value. Insured property does not include the market value of the underlying land. Keep the amount of contents coverage (including taxes) up to date; minimum contents coverage for homeowners is normally a percentage of the building amount. Give careful thought to the "self-insured part of each loss," as the insurance industry refers to deductibles. Higher deductibles may lower premiums but be sure you can afford to make the proper repairs out of your own pocket if loss occurs or your coverage may suffer.

2. What must insurance protect?

   Insurance policies cover only disclosed risks. Before making major changes such as building a rental apartment into your home, duplexing it, starting a home-based business, or making any other significant alterations to the structure or the way it's used, find out what the repercussions would be for your insurance. Ask your insurance representative what precautionary measures are necessary. Lifestyle changes from installing home security systems or buying a boat to taking in foreign exchange students may affect coverage.

Revising your policy may trigger other expenses, too. If an insurer carries out a pre-coverage property inspection, it may insist on up-grades like replacing a 60 amp service or an old roof before insuring your real estate.

Invest time and effort to find the right insurance representative. This professional should provide the experience necessary to anticipate problems, investigate alternatives and select the best possible coverage. Since insurance brokers may only handle a few insurance companies, shopping around means evaluating salespeople as much as the products they sell. Once you've signed up, you're stuck so learn as much as possible about what you are getting into.

Establishing an accurate insured value may mean increased costs, but paying for too little insurance may be expensive if disaster strikes. Thoroughly investigate what is covered and what is not before you have a claim and you may save yourself weeks or months of frustration and argument with your insurance company if a claim is necessary.

Published: July 20, 2004

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Futurist and Strategist PJ Wade is "The Catalyst" -- intent on "Challenging The Best Become Even Better." PJ earned this title by translating the dynamic impact of Boomers and their multi-generation families into relevant insights that start people thinking and taking action—in business and in life. Author of 7 books and more than 1600 published articles, PJ encourages individuals to become their own futurist. PJ writes and speaks about the insight, knowledge and solid decision-making skills that professionals and their clients need to live and work in this vortex of change. For instance, since PJ knows that home is headquarters for the new decades-long "unretirement," she wrote the popular book "Reverse Mortgages: Best Friend, Worst Enemy... Your Choice! (CatapultPublishing.com), which is filled with suggestions and insight on protecting and using home equity. Her new business book, "What's Your Point?," which identifies 7 common mistakes professionals unknowingly repeat to their detriment, will be published in 2009. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently-quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more on blogs, books and topics, visit TheCatalyst.com.