This post is a collaboration with Sonnet Insurance, but all opinions, stories, and screenshots are my own.
Buying insurance is one thing, but reading your insurance policies cover-to-cover is quite another. The thing is, if you have insurance—of any kind—you need to do both.
I’ll be the first to admit that, according to research done by Sonnet Insurance, I am a statistic. Specifically, I am the 1 in 3 Canadians who hasn’t read their home or car insurance policies.
Or at least, I was.
If you haven’t heard, my goal for this year’s Financial Literacy Month was to read our entire home insurance policy, cover to cover. I knew roughly what our coverage was, but I’d never looked into the details—and better to do it now than when we’re in the middle of something going wrong, you know?
Why you should always read your insurance policies
If you sign up for any kind of insurance, ideally you know what you’re getting ahead of time. I got both our car insurance and our home insurance through Sonnet, and as part of the online sign-up process, they make everything really clear at a high level. I knew what I was buying, and I did enough supplemental research to understand what, if any, extra coverage we needed. (For example, we added earthquake insurance to our policy, because apparently, the Ottawa Valley is one of the few places in Canada that it actually makes sense to have it! Who knew.)
But there are two main reasons that a high-level understanding of your coverage isn’t enough.
- You might miss key details about your responsibilities. If there are certain things you’re required to do to keep your coverage valid, you’d want to know, right? No one intentionally wants to invalidate their coverage and end up paying for a disaster out of pocket, but it can happen. Your full policy has details about your responsibilities, and they’re not too hard to fulfill—but you need to know what they are. For example, if you’re doing a kitchen reno, give your insurer a call so you can rest assured that the new value of your home is covered.
- You might not know you’re covered for specific things. Yes, you probably know the Big Stuff that your policy covers, but there are often smaller or less-obvious things that you’re covered for, and if you never read your policy documents, you could end up paying for them out of pocket when you don’t even have to.
Insurance is a really key financial product in your life, which is why it’s so important you understand it fully—which is why you and I both need to read our policies cover to cover.
So I got a coffee, settled in, took a deep breath and opened up my detailed policy documents. This is not my first insurance rodeo, since I’ve previously read my pet insurance documents and based on that I figured I was in for a very un-wild ride.
And I was so pleasantly surprised you guys, holy heck.
Reading my insurance policies was… easy?
The biggest thing I’ve always said (ahem, raved) about Sonnet is that they know what I want.
I want really competitive prices on my insurance for my house and my car? Check.
I want to buy and update them online without having to call anyone? Check.
I want to understand what I’m buying at a high level so I can make the right choices? Check.
Since they know—and deliver—all of that, it shouldn’t have surprised me when I opened up my policy documents, I saw this instead of a wall of text.
I was so prepared for that wall of text. I was so prepared for this to be a painful activity! And instead, it was dare I say it, delightful.
They understood that sure, when people are opening up The Policy Documents, they’re looking for information. But instead of leaving the information as a wall of policy-document text, they put together handy overviews and breakdowns, like this list of things that aren’t covered.
There’s a similar list for things that are covered, and other high-level overviews that can help ease you into the real nitty-gritty of your policy.
Which again, I did still read! It’s Financial Literacy Month, I was not about to slack on this essential task. I learned some interesting things, including that if we’re away from the house for more than 14 days in the winter, there are some steps we need to take to make sure that if the pipes freeze, we’re still covered—just in case we decide to become hardcore travellers anytime soon, now I know.
If you’re looking through your coverage, there are some key things you’d want to keep an eye on so you fully understand what’s covered and what’s not.
Identity theft coverage
Did you know that if someone steals your identity, you might be covered under your home insurance policy for some of the costs of dealing with it? I, for one, had no idea, and as someone who routinely makes online transactions, I feel just a bit safer my policy has my back in the worst-case scenario.
Overland water coverage
If you have no idea what “overland water” is, don’t worry—33% of Canadians are right there with you according to Sonnet. Overland water coverage protects you from fresh water coming into your house from lakes, rivers, or—crucial Canadian coverage—melting snow and ice. While it’s not available everywhere, it’s typically an add-on to your coverage, so you should make sure you understand if you’re covered, and for what types.
Sewage backup coverage
On the scale of truly terrifying house nightmares, sewage backups that impact your house is right up there, at least for me. 23% of Canadians aren’t sure if their coverage would take care of loss or damages resulting from a flood caused by the sewer systems backing up, and of all the things you don’t want to think about when there is literal sewage in your home, it’s “I wonder if this is covered.”
Read your insurance policies!
There’s plenty more you can learn from reading your policies, but at the end of the day, the biggest benefit (in my opinion anyways) is always going to be peace of mind. You’ll have a solid plan of what you need to do to keep your coverage intact, and you’ll have a good sense of whether damage or losses are covered—which is one less thing to worry about in the case of loss or damages!