Things You Never Think Of Until It’s Too Late

This post is written by Trusted Partner, Park Insurance. To become a contributing editor, please contact our Real Estate Investor Solutions Specialist, David Maxwell at david@reincanada.com.

I was recently asked to comment on a REIN members unfortunate situation with Fire Fighting Expenses in Red Deer. It turned out that the REIN member received a bill from the city for the costs of putting out a fire at their property. Needless to say this was something they never thought of until it was too late.

Most insurance policies will provide coverage for certain costs that may arise in the event of a claim. Some of these costs may relate to:

Fire Fighting Expense

• You may think this is what your tax dollars are for but in some municipalities or rural areas this is not the case. In Red Deer anything under an hour is “on the house”.  Over that and they charge out at $615 per hour. In the REIN members case they ended up with a bill in excess of $13,000 and their insurance for this was only $5,000 (the Park Insurance REIN policy provides $25,000).

Building Bylaws

• Do you know what bylaws would apply in your area if you had a claim? They can vary from area to area and can range from sprinkler systems to the sewage/drainage system, setbacks and easements down to the interior door knobs. And don’t forget about the secondary suite if you have one.
• Do you know when the bylaws apply? It is usually triggered by a percentage of the assessed value of the structure affected but each municipality is different.
• Do you know how much it cost to meet the bylaws? Depending on where your property is meeting those bylaws may have a greater cost than you thought.

Rebuilding Costs

• Rebuilding costs are constantly on the rise and with inflation they are increasing every day. In the wake of a disaster costs rise even more. Do you know how much it would really cost to rebuild or repair your property if there was significant damage to it? Your insurance broker can give you a guide but it is up to YOU, THE OWNER, to find out how much it would really cost. It may cost a bit but spend the money and get an expert to do a formal rebuilding cost appraisal.

It wasn’t so long ago that I would hear someone say “I can rebuild this house for less than $100 a square foot.” My answer was always “Sure, but would you WANT to live in it?”.

Additional Costs

• How much will it cost to replace your stuff? Appliances? Curtains or blinds? Furnishings? Those little things that you may provide for your tenants such as a lawnmower? Think about it for your own home from the clothes in your closet, the ketchup in your fridge, the spices in your cupboard right down to the toilet paper in your bathroom.

Your insurance broker is not a bylaws officer, a building contractor or a grocery store clerk. We know insurance and can recommend how best to protect yourself and your stuff but ultimately it is YOU, as the owner, who is responsible to know what you need to protect yourself. Take some time and really think about what you know about the costs that could impact you if something happens. Are you going to get a bill from the fire department? What bylaws does your area have. How much will it really cost to rebuild your home. Once you have done that your insurance broker is there to help you.

A wise man once told me something I will never forget, “You can buy insurance based on the cheapest price or the best coverage. Which one is going to let you sleep at night?” Me, I really like sleeping.

Chris Westrop is the Vice President of Commercial Lines at Park Insurance. He has 30 years of experience in the commercial insurance business and is a Chartered Insurance Professional with the Insurance Institute of Canada. He is also a REIN member and a regular attendee at many of our programs. Learn more about Chris and the experienced team of Commercial Insurance advisors at Park Insurance. Chris may be reached at (604) 659-3133 or cwestrop@park.ca.