Always "Insure to Value" – A True Story

Anthea Personal Property Insurance

At 4 a.m. one morning, Dave and his family were awakened by their smoke alarms.

I’ve had emergency training, but when I crawled on my hands and knees and opened the bedroom door, I was absolutely amazed at the clouds of smoke in my home. If it hadn’t been for the smoke detectors, none of us would be here today.

Dave and his family were fortunate, they were able to crawl to the door, get out of the house and call the fire department.

The fire in Dave’s home was caused by a crack in the electrical cable coming into his home, which short-circuited and the arcing caused the subsequent fire, which began at the electrical box and moved through the false ceiling of his basement’s recreation room. Dave and his family escaped in their pyjamas.

At this point, it is important to note that Dave had done all the correct things with his insurance. He had filled out the appropriate forms and was insured to what he believed was to value – $150,000 on his home and $110,000 on his contents. Because the damage to the basement weakened the foundation, Dave’s insurer paid $170,000 to replace the dwelling since he had a replacement value clause in his policy.

Contents were an entirely different matter…

Dave said the most important thing you have to remember, is that whatever value you insure for also includes sales tax. Therefore, he suggests that you remember whatever amount of insurance you have on contents, the limit is approximately 87 per cent of that value since sales taxes must be paid. Most people would admit that $110,000 on contents and $150,000 on one’s home is more than adequate – not according to Dave.

What about out-of-pocket expenses?

He remembers some of the immediate out-of-pocket expenses for which he was not prepared – two pairs of glasses, three sets of contact lenses, dental retainers and prescription drugs. He also found it surprising that he had to hire a locksmith to come and cut new keys for his cars, which had to be broken into and pushed out of the way for the fire department.

Other things, such as identification, licenses, credit cards, and passports had to be replaced. They had no keys, no place to live, no identification and no credit cards. His insurer responded within hours with a cheque for $3,000 to tide them over while they found temporary living quarters and shopped for clothes.

What does this mean for you?

Dave is not wealthy, does not have extravagant tastes, but he does insist that insurance on contents be increased to adequately cover his possessions. May we suggest that you closely review the value of all your contents including personal items, a partial list of which has been mentioned above, to ensure that in the event of accidental loss, your insurance will be in a position to replace all your goods.

Dave’s comments were that the least of his worries were things like jewellery – he was happy to get out alive.

As a note, when Dave’s house was re-built, he did insure it and his contents fully to value and within a few months of moving back in, thieves entered his home in broad daylight and stole most of his new electronic equipment, stereo, TV including some items of jewellery that he had replaced for his wife. Dave’s comment however, is if anyone wants to hear why they should insure to value, he’d be only too happy to tell them.