BC homeowners paying for ‘irrelevant’ insurance coverage

In 1970, an average home in Vancouver cost just under $30,000 according to Royal LePage. In 2010, the average home price in the city was $676,600. In 1977, a person could buy an Apple II home computer for US $1298 (for 4kB of RAM) or $2638 (with a maximum of 48 kB of RAM.) Today, for less than $1,000 you can buy an Apple MacBook laptop with 2 GB of RAM – nearly two million times more RAM than its early predecessor.

Times change but Vancouver-based Square One Insurance says that homeowners’ insurance policies haven’t kept up.

“Most home insurance policies were designed in the 1970s, meaning they provide too much coverage for fine china, silverware and furs, but not enough for computers, cameras and cell phones,” says Daniel Mirkovic, President & CEO, Square One Insurance. “What this means is that if there was a loss, many policyholders wouldn’t be adequately covered for some of their most prized possessions.”

New data from Square One found that as many as 87 percent of BC home insurance policyholders are paying for irrelevant protection with traditional home insurance policies.

As an example, Square One found 67 percent of policyholders are paying for detached garages that they don’t have. Only about 13 percent of policyholders needed or wanted protection for china, silverware or furs and only 14 percent needed or wanted coverage for fine arts. Just 8 percent needed or wanted coverage for collectibles.

“Traditional home insurance providers don’t take into account the unique needs of policyholders living in metropolitan cities,” adds Mirkovic. “With real estate prices as high as they are, many of us are ‘house poor’ and simply don’t need all the coverage for personal property automatically included in traditional home insurance policies.”

Square One advises BC residents to consult their insurance advisor to ensure they’re paying for only the coverage they need and that they’re adequately covered in the event of a loss.

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  1. The issue of computers, cameras & cell phones might be a city issue, along with detached private structures? Most carriers don’t limit any value for computers, cameras or cell phones, unless they are for business use. Here on the Sunshine Coast, being a rural area, we have a lot of different and high valued detached private structures. That and contents goes along with the “package approach” to policyholder protection. I would suspect if the client were to pick their own values in those areas, we’d see a lot more under insured claims than we already do. Is there a formula suggested by Square One or any carrier, developed by hard data that could replace??

  2. Sorry,but I find this article “irrelevant” or a better term would be way off the mark.I don’t know what insurers/markets Square One deals with, but in the industry almost 30 years, & I’d say policies have kept up with needs.One could argue since purchase cost of electronics has decreased,less coverage is needed.It’s a moot point anyway as most markets now don’t even have any limitation for electronics (computers,cameras, cells).If no limit is specified it doesn’t mean these items aren’t insured,rather they are covered for full RC value under Personal Property Limit so more coverage is supplied than if limits are specifically listed. As far as china,silver,furs mention of them on any policy is actually opposite of what the article infers.They are only mentioned to LIMIT their coverage so there really is not AS MUCH coverage for them as there is for other types of property. And guess what? People still have them. If there wasn’t a limit, they could claim any amount they like for theft. This article infers the consumer could save money on their policy if they don’t insure these items. Not true,limits would still be shown to limit the insurer’s exposure. The automatic coverage for detached structures is for all detached structures not just garages. More people do have attached garages these days but even those people have other structures (sheds, fences,etc) hey would still need coverage for.If this coverage were removed, then people would be upset they have to pay extra premium to insure them. There may be people out there that are house poor, but the larger percentage of the population require coverage limits for furniture, appliances, etc that corrulates to the value of their home. A standard of living is established along with home ownership. That standard of living needs to be a factor when establishing an “automatic coverage limit” for Personal Property.And that has to be established because the industry standard is “package policies,” not scheduled property policies. The best way to determine automatic/package coverage limits for the highest percentage of population is still using a percentage of the value of the home. A homeowner with a higher valued home will still have higher quality furnishings, appliances, etc. Those people who don’t mind going into huge debt to buy a big house, also don’t usually have a problem being in debt up to their ears to finance expensive furniture & appliances. I guess there may be some out there buying high valued homes, yet being more budget minded when furnishing them, but I haven’t met them. If they are out there, they would be the exception to the “norm.” And after all, most markets tailer their package policies to meet the needs of the “norm.”

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