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Why Homeowners Should Always “Insure to Value”


The fire in Dave’s home was caused by a crack in the electrical cable coming into his home which short-circuited; the resulting electrical arc 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 pajamas. At this point, it is important to note that Dave had done all of the correct things with regard to his insurance. He had filled out the appropriate forms and was insured to what he believed was to value – $250,000 on his home and $175,000 on his contents. Because the damage to the basement weakened the foundation, Dave’s insurance carrier paid $270,000 to replace the dwelling since he had the replacement value clause in his policy.

Contents were an entirely different matter.  Most people would admit that $175,000 on contents and $250,000 on one’s home should be more than adequate – not according to Dave.

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.

Dave is not wealthy, does not have extravagant tastes, but he now insists 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 of your goods.  

As a side note, when Dave’s house was re- built, he insured it and his contents fully to value.  Within a few months of moving back in, thieves in broad daylight entered his home and stole most of his new electronic equipment, inclduing stereo equipemnt, computers, TVs, and some jewelry that he had replaced for his wife.  This time Dave was prepared.  If anyone wants to hear more details on why they should insure to value, he’d be only too happy to tell them!