Do You Have Adequate Coverage Limits?

Aug 6, 2014
Staebler blog logo
Default featured image
Do You Have Adequate Coverage Limits?
In our previous post, we asked this question:
True or False: Insurance brokers are provincially regulated.
Answer: 
Yes, they are! Insurance brokers are regulated by the Registered Insurance Brokers of Ontario (RIBO). All brokers must register with RIBO before they can work as an insurance broker in the province of Ontario.
Did you know the answer?
Now for this post’s question!
When determining an adequate coverage limit for your insurance policy, what is the difference between the replacement cost and the actual cash value?
Check back for the answer in our next post!
When purchasing insurance for property and business risks, it’s critically important to ensure that you purchase the right amount. When it comes to selecting policy limits, ultimately the responsibility for selecting an adequate limit falls to you, the insured, but your broker can assist as they have access to some electronic valuation calculators that can provide estimates.
Sometimes, the estimated rebuilding value can seem very high, particularly when you consider it in comparison to the market value of the property. There are some good reasons for that. When it comes to rebuilding you need to consider:
•Up-to-date replacement cost of the entire structure including the foundation, sewage and utilities, and any interior finishing.
•The additional cost to comply with current Building by-laws, which may have changed significantly since the building was originally constructed.
•How quickly do you need the building repaired or replaced? Urgency in rebuilding increases labour and materials costs.
•Removal and storage costs associated with undamaged building contents.
•Costs associated with demolition and debris removal, even perhaps toxic debris that cannot go to the landfill but requires special (and expensive) disposal techniques.
•Fees for building permits, engineering, and architectural work.
•General contractor profit and overhead costs, which tend to increase as costs increase for reconstruction projects.
•And don’t forget the tax man – HST for all projected amounts.
Having adequate coverage limits could mean the difference between either taking on new debt, losing your business and lifelong work in the event of a disaster, or getting yourself back up and running with little delay and little personal financial burden.
Professional Appraisers can also help to determine replacement cost estimates, and are headed by a central body, the Appraisal Institute of Canada (www.aincanada.ca). You may visit their website or phone their head office (613-234-6533) to obtain a list of members.
Even for a partial loss, under insurance is penalized, as the application of the a co-insurance clause will reduce the amount of the claim payout proportionately to the amount of under-insurance.

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Related Posts

Kitchener Fire Department’s Home Safety Reminders

Kitchener Fire Department’s Home Safety Reminders

Did you know the number one cause for home fires is related to unattended cooking? Whether it’s an unattended oven, stovetop, or barbeque, with busy lives and household distractions it is becoming more common to forget that something is cooking. To help avoid a fire...

read more
Protect Your Property: High Winds

Protect Your Property: High Winds

This article is Part Two of our New Blog Series on protecting your property from natural threats.  Be sure to check back to the Staebler Blog for future articles to help protect your home. Part One: Flooding High winds are an all-too-common threat for property owners....

read more
Updated Backyard Fire Rules in Waterloo Region

Updated Backyard Fire Rules in Waterloo Region

Residents in Waterloo Region have different rules for backyard fires depending on the city or township they live in. The regulations range from no permit needed to requiring a permit to not allowing allowing fires at all. See below for a roundup of Waterloo Region's...

read more
Be Aware of Ontario-based Door-to-Door Scams

Be Aware of Ontario-based Door-to-Door Scams

Opening the door to an unknown person can be unnerving. It becomes even more uncomfortable when the stranger on the other side begins the interaction with high pressure sales tactics like time-limited offers. Often these face-to-face interactions are for a service or...

read more
How to Save on Your Home Insurance

How to Save on Your Home Insurance

Everyday costs continue to rise in Waterloo Region and Ontario, making consumers eager to find savings in their household budget. As a local, independent insurance broker, we’re always looking out for more ways to assist our clients and today we’re sharing the top...

read more