The insurance clauses customers most often overlook 

Canadian homeowners can find themselves caught off-guard by a series of insurance clauses they may not know about, one expert shares.  

That’s where brokers should step in to help homeowners understand if they’re properly protected.

“Homeowners often believe their policy protects them in every scenario, but in reality, coverage depends on meeting certain conditions and understanding where limits apply,” says Fleur Dsouza, licensed insurance broker and LowestRates.ca expert.  

“Reviewing your policy carefully and asking the right questions can mean the difference between being financially secure and facing a devastating expense.” 

Commonly overlooked clauses 

One of the most overlooked insurance clauses concerns vacancy restrictions. 

If your home is vacant for more than 30 days without notifying your insurer, coverage can be restricted or entirely voided. 

“It surprises many homeowners that simply leaving a property empty for a few weeks can affect their insurance. Even an extended trip could trigger this clause if you don’t inform your provider,” says Dsouza. 

Another commonly overlooked clause pertains to coverage limits on valuables.  

Many policies place coverage for jewellery, art or collectibles at a few thousand dollars without discerning their actual value. 

“If you have a $15,000 engagement ring and your policy caps jewellery coverage at $6,000, you’re on the hook for the difference. That gap only becomes obvious when people make a claim,” Dsouza says.  

Next, policyholders may not realize they have coverage caps for any detached structures or renovations on their property. 

Sheds, garages, garden suites, or new renovations to the main building may only be insured up to a percentage of the main home’s value.  

“A homeowner might spend tens of thousands renovating a backyard studio, but if they don’t update their policy, it may only be partially covered,” says Dsouza. “The same goes for major renovations — if the insurer isn’t aware, your coverage may not reflect the rebuild cost.”  

And finally, policyholders may find themselves covered for flooding or backup, but not other types of water damage.  

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Many policies exclude overland flooding, groundwater seepage, or water damage maintenance issues unless policies have been updated to include those endorsements.  

“Homeowners assume ‘water is water,’ but insurers draw clear distinctions. A sewer backup may be covered with the right add-on, but groundwater seepage likely isn’t. These distinctions can add up to tens of thousands in repair bills,” says Dsouza.  

Dsouza says she often encounters homeowners who assume they are automatically covered for the above clauses, and only realize they aren’t when they go to make a claim.  

That provides brokers with an opportunity to serve as trusted advisors and make clients aware of their gaps before a claim happens.  

Alyssa DiSabatino

Alyssa Di Sabatino has been a reporter for Canadian Underwriter since 2021, covering industry trends, market developments, and emerging risks.