What a State of Emergency Means for Home Insurance

By Gary Hilson
Stay Home COVID-19

The COVID-19 pandemic certainly isn’t what you’d called a typical natural disaster such as an earthquake or flood, for example. But no matter the reason, a state of emergency in your city or province has ramifications for your home insurance as it may change what you’re doing at home or even if you can stay there.

Both Ontario and Alberta have declared states of emergencies due to the coronavirus pandemic and the risk to public health it poses.

If you live in one of those provinces, now is a good 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 end up spending a lot more time inside your house. Either way, it can affect your insurance coverage.

If You Must Evacuate Your Home

Many natural disasters that prompt a state of emergency may result in the destruction of people’s homes — the Alberta wildfires that devastated Fort McMurray in 2016, and the tornadoes that touched down in the Ottawa area in 2016, for example.

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. However, the COVID-19 lockdown imposed by the federal and provincial governments does not require you to leave home, it requires you to stay home to stay safe.

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. Although home insurance will not cover you for a pandemic, if you can no longer live in your home, you may need to monitor your house regularly to keep it adequately insured. Which highlights the need to create a home inventory in advance to ensure its contents are covered.

It’s 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

If the state of emergency requires you to stay at home, your insurance coverage may need to be adjusted to reflect what you’re doing while you’re there for longer periods.

You may end up running a commercial business out of a residential property for a while, and typical home insurance may not account for every liability. For example, you may have employees and clients coming in and out and may have even moved some equipment or inventory into your home. Even if the business is only part-time, you should consider augmenting your current policy with home-based business insurance so that you’re 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.

Many insurance providers recognize the COVID-19 pandemic has a unique impact on how people are using their homes and providing flexibility to accommodate policyholders with little to no financial penalty. However, for some people, it means they’re just staying home without any income and wondering how they will pay their premiums.

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.

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.

The coronavirus pandemic is a reminder for every homeowner to review their home insurance needs and make sure they have the coverage they need.