GREATER VICTORIA & VANCOUVER ISLAND REAL ESTATE

There is an understandable assumption that if something serious happens to the house, insurance will take care of it.Sometimes it will.Sometimes it won't.

And sometimes the answer depends on something surprisingly ordinary: how the home was maintained, whether the insurer was told about a renovation, how long the house was left unattended, where the water came from, or whether a particular optional coverage was ever purchased.

Newer homes add another layer of confusion because home insurance and new-home warranty insurance are not the same thing.As a REALTOR® in Greater Victoria, I think these are conversations homeowners should have long before they ever need to make a claim.

Here are some of the lesser-known issues worth understanding.

First: Home Insurance and Home Warranty Are Two Different Things

Let's start with an important distinction.Home insurance generally protects against specified accidental losses and liabilities, subject to the wording, limits, deductibles and exclusions of your particular policy.

BC's mandatory new-home warranty insurance is different.For most qualifying new homes constructed by licensed residential builders in British Columbia, the familiar 2-5-10 warranty provides specified coverage for:

• 2 years for certain defects in materials and labour
• 5 years for defects in the building envelope
• 10 years for qualifying structural defects

It is protection against particular construction defects, not a maintenance program for your home and not a substitute for ordinary home insurance.

That distinction matters because something can go wrong with a relatively new home without necessarily being a warrantable construction defect.

1. Running the Washing Machine or Dishwasher While You're Out

This is a good example of how insurance myths develop.

You may have heard:"If you leave the washing machine or dishwasher running while you're out, insurance won't cover you."

Home insurance commonly provides coverage for sudden and accidental escape of water from indoor plumbing and domestic appliances. A washing-machine hose that suddenly fails, for example, may result in an insured loss depending on the policy.

But that doesn't mean every appliance-related water problem is automatically covered.

Insurance policies distinguish between a sudden event and damage that develops because of repeated leakage, seepage, deterioration or inadequate maintenance.Imagine the difference between:

Scenario A: 

A properly maintained washing-machine hose suddenly ruptures and floods the laundry room.

And:

Scenario B:

 A connection has been slowly leaking behind the washing machine for months, staining the wall and rotting the flooring, but nobody investigates it.

Those are very different insurance situations.

There is also the practical issue of damage mitigation. If someone is home when a hose bursts, the water can potentially be shut off within minutes. If nobody is home for several hours, a relatively small failure can become an enormous claim.

So regardless of the exact wording of your policy, running water-using appliances while you're home is sensible risk management.

2. Your Bathroom Fan Is More Important Than You Think

Bathroom exhaust fans aren't particularly exciting, but from a building-science perspective they perform an important job.

Every hot shower introduces moisture into your home.

Without adequate ventilation, that moisture can contribute to condensation on windows and other cool surfaces and, over time, potentially contribute to mould, deterioration and damage.

BC Housing specifically provides homeowner guidance on avoiding condensation and exhaust-duct problems. Homeowners should use ventilation to manage indoor moisture rather than assuming condensation is simply something a builder must repair.

This becomes especially important with a newer home.

BC's Homeowner Protection Act Regulation allows warranty coverage to contain conditions relating to proper maintenance, and damage caused by an owner's negligence regarding maintenance may be excluded in appropriate circumstances. Importantly, those maintenance requirements must have been provided to the original owner by the builder or warranty provider.

So the issue isn't:

"You forgot the bathroom fan once, therefore your warranty is void."

It is more nuanced.If an owner receives instructions about ventilation and humidity control, repeatedly fails to follow them, and moisture-related damage develops because of that lack of maintenance, the cause of the damage can become an important issue in determining warranty coverage.Read the homeowner maintenance manual that came with a new home. Don't just put it in a drawer.

3. Going Away on Vacation Can Change Your Responsibilities

Here's one many homeowners don't think about.

Leaving your house for a vacation doesn't necessarily mean your insurance stops. However, policies can impose requirements when a home is unattended, particularly during the heating season.

Depending on your policy, you may need someone to check the property at specified intervals, maintain heat, shut off the water supply or take other precautions.

This becomes particularly important during cold weather because a frozen pipe can burst and cause extensive damage before anyone notices.Insurance Bureau of Canada specifically advises homeowners going away during heating season to leave the heat on and arrange for someone they trust to check the home, noting that failing to take appropriate precautions can affect coverage.

Before leaving for an extended winter vacation, don't guess.Ask your insurer:

"What does my policy require when my home is unattended?"

And get the answer before you leave.

4. "Unoccupied" and "Vacant" May Not Mean What You Think

A house can still contain furniture and yet create an occupancy issue for insurance purposes.

This becomes particularly relevant when:

• someone moves out before their home sells
• an estate property sits empty
• an owner moves into a new house before selling the old one
• a major renovation makes the house temporarily uninhabitable
• a rental property sits between tenants
• someone leaves for an extended period

Insurance policies can distinguish between a temporarily unattended residence and a vacant property.

Vacancy can materially change the risk because leaks, fires, break-ins and other problems may go unnoticed.If your living situation changes, tell your insurer.

Don't assume that because the premium has been paid, the property's occupancy no longer matters.

5. Slow Leaks Can Be Very Different From Burst Pipes

Water damage is one of the areas where homeowners are frequently surprised.

The critical words are often:sudden and accidental.A pipe that unexpectedly bursts can be very different from water that has been slowly seeping through a shower enclosure, foundation, roof, appliance connection or plumbing fixture.

Homeowners should investigate:

• unexplained staining
• swollen baseboards
• bubbling paint
• musty smells
• soft drywall
• deteriorated caulking
• moisture under sinks
• discoloured ceilings
• recurring condensation
• water around toilets
• dampness around appliances

Don't wait for a small problem to become a major one.

6. Sewer Backup May Not Be Included

Many homeowners hear "water damage" and assume all water damage is essentially the same.

It isn't.

Water escaping from your plumbing system is different from sewage backing up through a drain.

Insurance Bureau of Canada advises that damage from sewer backup is typically not covered by a standard policy unless appropriate sewer-backup coverage has been purchased.

This is worth checking even if you don't have a finished basement.

A sewer backup can damage flooring, drywall, cabinetry, mechanical systems and personal belongings, and remediation can be extensive.

Ask specifically:

"Do I have sewer-backup coverage, what is my limit, and what is my deductible?"

7. Overland Flooding Is Another Separate Issue

A burst pipe inside the house and water entering the house from outside are not necessarily treated the same way.

Overland flood coverage can address certain damage caused by events such as heavy rainfall, spring thaw and overflowing rivers or lakes, but it is generally an optional coverage.

This matters in BC, where the risk can vary enormously by location.

If you're purchasing a property near a creek, river, low-lying area, steep slope or known floodplain, insurance should be investigated as part of your due diligence, not the day before completion.

8. Earthquake Damage Isn't Automatically Included Either

This one deserves particular attention on Vancouver Island.

Earthquake insurance is generally optional coverage rather than automatically included in a standard home policy.

Insurance Bureau of Canada has reported that roughly 70% of Vancouver Island homeowners have purchased earthquake coverage, which also means a meaningful number have not.

And don't look only at whether you have earthquake insurance.

Look at the deductible.

Earthquake deductibles can operate very differently from the ordinary deductible on your home policy and can represent a substantial amount of money.

For Greater Victoria homeowners, this is one section of an insurance policy worth understanding very clearly.

9. Renovating? Your Insurance Company May Need to Know

Planning a beautiful new kitchen?

Finishing the basement?

Adding a suite?

Replacing the electrical system?

Building an addition?

Before the contractor arrives, call your insurance representative.

Insurance Bureau of Canada's consumer guidance specifically states that homeowners have a responsibility to promptly inform their insurer about changes in circumstances such as renovations.

Renovations can change both the value of the home and its risk profile.

Major construction may introduce:

• open walls
• temporary electrical systems
• construction materials
• contractors and subcontractors
• structural alterations
• changes to plumbing
• changes in occupancy
• periods when the home cannot be normally occupied

Your existing policy may not automatically address every construction-related risk.

10. Starting a Business at Home Can Matter

The home office has become completely normal.But there is a difference between occasionally answering emails from the kitchen table and operating a business that involves equipment, inventory, employees or clients visiting your property.

Home insurance is primarily designed around residential risk.

Insurance Bureau of Canada specifically identifies starting a home-based business as a change that should be disclosed to your insurer.

If you operate from home, ask whether your policy adequately covers:

• business equipment
• inventory
• customer property
• business-related liability
• clients visiting the premises
• detached buildings used for business

Your insurer cannot properly assess a risk it doesn't know exists.

11. That Wood Stove May Be an Insurance Issue

Older Vancouver Island homes, and rural properties in particular, may have fireplaces, wood stoves or other alternative heating systems.

Don't assume an insurer considers every installation acceptable simply because it was there when you bought the property.

An insurer may want information about the installation, inspection, certification, chimney, clearances or maintenance.

IBC recommends having furnaces, wood stoves and other heating sources inspected, maintained and cleaned.

This is one reason an older home's heating systems deserve attention during both the home inspection and insurance process.

12. Older Electrical Systems Can Affect Insurability

The electrical panel is another part of the house buyers rarely fall in love with during a showing, 

but insurers may care about it very much.

Older properties can contain electrical systems or components that require further investigation or upgrading before certain insurers will offer coverage.

Aluminum wiring is one example. Insurance Bureau of Canada recommends that homes with aluminum wiring have their electrical connections periodically inspected by a licensed electrician.

Other older electrical components may also prompt questions from an insurer.

This is one of the reasons I encourage buyers of older homes to treat the inspection report as more than a list of repairs.Some findings can become insurance questions.

13. Smoke and Carbon-Monoxide Alarms Are Not "Install and Forget"

Smoke and carbon-monoxide alarms are safety equipment and need to remain operational.

Homeowners should routinely test them, replace batteries where applicable and replace the alarms themselves according to manufacturer recommendations.

IBC specifically recommends regularly checking smoke and carbon-monoxide alarms.

Inspectors often flag missing, damaged, improperly located or expired alarms because these small devices have an enormous life-safety role.

14. Mould Is Often a Symptom, Not the Original Problem

Finding mould doesn't necessarily tell you what caused it.

The real question is:

Where is the moisture coming from?

Possibilities include:

• plumbing leakage
• roof leakage
• failed exterior caulking
• shower leakage
• condensation
• insufficient ventilation
• high indoor humidity
• groundwater
• drainage problems
• building-envelope defects

That distinction matters for both insurance and warranty claims.

The visible mould may be secondary damage. Determining the underlying cause is often what determines who, if anyone, is responsible for the repair.

15. Gutters, Downspouts and Perimeter Drainage Aren't Just Maintenance Details

A clogged gutter sounds insignificant until rainwater goes somewhere it was never intended to go.

Water management around a home depends on several systems working together:

• roofing
• flashing
• gutters
• downspouts
• exterior grading
• drains
• foundation drainage
• seals around openings

In Greater Victoria's wet climate, homeowners should pay attention to where water travels during heavy rain.

One of the best times to walk around your property isn't on a beautiful July afternoon.

It's during a November rainstorm.Watch where the water actually goes.

16. Your Strata's Insurance Does Not Replace Your Own Insurance

Condo and townhouse owners sometimes assume:

"The strata has insurance, so I'm insured."

Those are two different layers of coverage.

The strata corporation insures property required under the Strata Property Act and its policy, while an owner's personal strata policy can address things such as personal belongings, improvements, personal liability, additional living expenses and certain assessments.

One particularly important issue is the strata corporation's insurance deductible.If an owner becomes responsible for a loss and the strata seeks to recover its deductible, that deductible can be substantial.

Strata owners should ask their personal insurance representative whether their policy provides adequate strata-deductible or loss-assessment protection.

17. Replacement Cost Is Not the Same as Market Value

Your home might sell for $1.5 million.

That doesn't mean it costs $1.5 million to rebuild.

And the reverse can also be true.

Real estate market value includes the land, location, neighbourhood, zoning, scarcity and market demand.

Insurance is concerned with rebuilding the structure.

Reconstruction after a major loss can involve demolition, debris removal, engineering, permits, labour, materials and rebuilding to current requirements.

Insurance Bureau of Canada specifically advises homeowners not to insure based on the market price of the underlying land but instead to consider what it would cost to rebuild the home with comparable materials.

18. Keep a Record of What You Own

Imagine standing outside your home after a catastrophic fire and being asked to list everything that was inside.

Could you remember every:

• appliance
• television
• computer
• piece of furniture
• tool
• piece of jewellery
• artwork
• sporting item
• kitchen appliance
• coat
• pair of shoes?

Probably not.

Create a home inventory.

Walk through the house once or twice a year and take photographs or video. Record serial numbers for major electronics and appliances. Keep receipts or appraisals for expensive items.

Most importantly, store the record somewhere other than only inside the house.

BCFSA recommends keeping photographs and videos of your property and belongings accessible electronically, and IBC similarly recommends maintaining a home inventory.

Five minutes of video today could be extraordinarily useful after a major loss.

19. Don't Ignore Your New Home's Maintenance Manual

If you purchase a newly built home, you'll usually receive maintenance information from the builder.Read it.It may tell you how to operate or maintain:

• ventilation systems
• bathroom exhaust fans
• HRV systems
• heating and cooling equipment
• exterior sealants
• balconies
• drains
• windows and doors
• humidity controls
• plumbing fixtures

This isn't simply housekeeping advice.

Under BC's Homeowner Protection Act Regulation, warranty coverage can take homeowner maintenance into consideration where specified maintenance requirements have been provided to the original owner.

Your 2-5-10 warranty protects you against qualifying construction defects.

It does not mean you can ignore the maintenance needs of the building for ten years.

The Question Every Homeowner Should Ask Their Insurance Broker

Instead of asking only:

"Am I insured?"

Ask:

"What are the circumstances most likely to cause a claim on my home to be denied, limited or subject to a different deductible?"

Then ask about your specific property:

• What are my water-damage exclusions?
• Do I have sewer-backup coverage?
• Do I have overland-water coverage?
• Do I have earthquake coverage?
• What is my earthquake deductible?
• What happens when I go away on vacation?
• How often must someone check the house?
• Do I need to shut off the water?
• What happens if the property becomes vacant?
• Do you need to know before I renovate?
• Is my home-based business properly disclosed?
• Are there limitations relating to my plumbing, electrical or heating systems?
• Do I have adequate coverage for the strata's insurance deductible?
• Is my replacement-cost coverage sufficient?

Those questions can produce a much more useful conversation than simply shopping for the lowest annual premium.

The Takeaway

Homeownership involves more than paying the mortgage, property taxes and insurance premium.A home is a collection of interconnected systems: plumbing, electrical, heating, ventilation, drainage, roofing and building envelope. Each needs some degree of maintenance.

A good home inspector can identify many of the warning signs.

A good insurance professional can explain where your financial protection begins and ends.

A new-home warranty provider can explain your responsibilities under the warranty.And homeowners should understand all three.

The most important lesson is probably the simplest:

Don't wait for a loss to discover what your policy says.

Pull out your insurance documents. Read your new-home maintenance manual if you have one. Ask questions about the parts you don't understand. Keep records of improvements and maintenance. Take photographs of your belongings. Deal with small leaks and moisture problems before they become large ones.

Because the most expensive home problem isn't always the dramatic one.

Sometimes it's the slow leak behind the washing machine, the bathroom that never gets properly ventilated, the renovation nobody told the insurer about, or the house that sat empty longer than anyone realized.

And those are exactly the kinds of details worth understanding before something goes wrong.This article is intended for general educational purposes and is not insurance, legal, building, inspection or warranty advice. Insurance policies, deductibles, exclusions and underwriting requirements vary by insurer and property. Homeowners should review their own policy with a licensed insurance professional and consult their specific new-home warranty documents and maintenance requirements where applicable.