What a 'state of emergency' means for home insurance

Between the COVID-19 pandemic in early 2020 to the rampant wildfires sweeping Alberta and other provinces this past May and June, Canadians have unfortunately gotten familiar with the phrase 'State of Emergency' over the past few years.

No matter the reason, a state of emergency in your city or province has ramifications for your home insurance as it may change your activities at home or even if you can stay there.

These days, there’s never a bad time to review the language of your policy as it pertains to natural disasters, or talk to your insurance provider or broker for clarification. While you may be covered for severe events such as an unexpected wildfire or hailstorm, most standard home insurance policies exclude earthquakes, flooding, and sewer backups. You need to buy additional coverage for those risks.

Depending on why the state of emergency was declared, you may be forced to leave your home unattended or — as we all did in 2020 — end up spending a lot more time inside your house. Either way, it can affect your insurance coverage.

If you must evacuate your home

Natural disasters that prompt a state of emergency may result in the destruction of people’s homes — the wildfires across Alberta and parts of Eastern Quebec and Nova Scotia, for example, or the tornadoes that touched down in Ottawa in 2016.

But even if your house isn’t under physical threat, having to leave it empty during a state of emergency affects your obligations under your insurance policy and whether your coverage will continue.

In Canada, there’s the “30-day rule.” It applies to homes left empty and unattended for more than 30 days. If you were ordered to leave your home for an extended period due to a state of an emergency, you must let your insurance provider know. If you can no longer live in your home, you may still need to monitor your house regularly to keep it adequately insured.

This is why it’s hugely beneficial to create a home inventory in advance to ensure its contents are covered.

It’s also important to note that a state of emergency could affect and even deny new policies on your property if it’s facing a potential or imminent physical threat.

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When you must stay at home

During the height of the COVID-19 pandemic, many people found themselves running commercial businesses out of their residential property. Typical home insurance may not account for every liability. For example, having employees and clients coming in and out and housing equipment or inventory into your home requires more than the standard home insurance coverage.

Even as we’ve moved out from the restrictions of COVID-19 and many people have returned to their offices, some still prefer to work remotely or keep their businesses running from home. If that’s the case, home-based business insurance keeps entrepreneurs or part-time business owners fully covered. It provides coverage for business inventory on- and off-premise, office equipment, as well as additional liability for employees, clients, and delivery personnel.

There’s also business interruption insurance if anything were to happen to your home.

Keeping up with home insurance payments

For some people, a state of emergency means they can no longer work. Whether they must leave their house or are stuck there, they want peace of mind that their home still has adequate insurance coverage. On the other hand, more claims means higher insurance premium, making affordability a looming concern for homeowners.

Many insurance companies and brokers are open to more flexible terms and payments during these exceptional times, including payment deferrals, the waiving of missed payment fees, and other options for financial relief. No matter what your situation, you should always review any home insurance policies you already have and discuss them with your provider if you have any concerns.

Both the pandemic and extreme climate change events have provided stark reminders for every homeowner to review their home insurance needs and make sure they have the coverage they need — for whatever comes their way.

Related: 7 ways to save on your home insurance