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How Do Multiple Mortgages Affect My Home Insurance?

From the Financial Consumer Agency of Canada (FCAC), more than one-third (35.5%) of Canadians hold a mortgage. Taking a mortgage can help many people afford to buy a home, whether that’s their first or not.

Home insurance is one of the many expenses that come with home ownership. Home insurance ensures that, in the event of an unexpected disaster, break-in, or similar event, your assets are protected. Unfortunately, too few homeowners understand the ways in which many insurance carriers will look at their mortgaging habits; fewer still may know that having multiple mortgages can impact your insurance pricing.

Mortgaging and Home Insurance

Most lenders, banks, and financial institutions require home insurance before agreeing to mortgage your new asset.

On their end, this protects their investment in your home. A mortgage lender has a vested interest in ensuring that, in the event of a catastrophic loss, they aren’t losing out. Mortgages don’t disappear even if a house is destroyed, and so having home insurance protects them and you from monetary loss or even financial hardship.

In the event of a lawsuit, home insurance also provides protection. This protects both the lender and the homeowner. If the homeowner were sued for damages, their policy could pay the difference – all while ensuring they were still in a good financial position to continue paying off their loan. This isn’t the main concern for most lenders, but it does add another layer of financial security.

Different providers, different risk

Many insurance carriers will incentivize homeowners to pay off their mortgages through mortgage-free discounts. The logic here assumes that the homeowner is more financially responsible because they’ve paid off their mortgage already.

Not all insurance providers offer a mortgage-free discount. If you are mortgage-free, it’s worth discussing with your insurance broker to get the best deal possible on your home insurance premiums.

Properties with Multiple Mortgages

Like how some providers will offer mortgage-free discounts, many will price home insurance higher when a property has multiple mortgages. This is because these insurers will associate the multiple mortgages (2 or more) as increased financial risk and potentially complicated liability. Multiple mortgages may indicate higher financial strain on the homeowner, potential for higher risk property use, and a default risk.

Some insurance carriers, like Max Insurance, don’t charge additional premium whether you have one mortgage, two, etc. Multiple mortgages isn’t a reflection of the likelihood of a fire, water damage, or theft, and it doesn’t take into account the quality of the building materials. Multiple mortgages may be viewed as more of a financial detail and less of a property risk. Different providers have various interpretations of risk.

Bottom Line: Your Home’s Mortgaging Situation May Impact Your Home Insurance – But it Depends on the Insurer

In a nutshell, your home’s mortgaging situation (whether that’s having multiple mortgages, no mortgage, or one) may impact your pricing, but it also depends on the insurer that you’re with.

Working with an insurance broker opens up your options to find the insurance provider who offers the best coverage and best pricing for your needs. They’ll find a carrier whose rating system works best for your needs, while also getting you the protection that you deserve.

Understanding ‘Loss of Use’ Insurance Coverage for Farm Machinery

We understand as a farmer, your machinery is vital to daily operations. So, let’s go over some key points about ‘Loss of Use’ coverage, ensuring you’re well-informed and prepared for any unexpected machinery issues.

What is ‘Loss of Use’ Coverage?

Q: What exactly does ‘loss of use’ coverage entail?

A: ‘Loss of Use’ coverage is essentially a safety net for when your machinery is out of commission due to an event covered by your policy. It’s designed to help compensate for lost income by covering costs like renting replacement equip

ment, ensuring your farming operations can continue without significant interruption.

What Does ‘Loss of Use’ Cover?

Q: Which situations are typically covered under ‘loss of use’ insurance for farm machinery?

A: This coverage typically applies when your equipment is damaged by specific events such as fire, theft, vandalism, or certain natural disasters. It helps by covering the cost of renting or leasing equipment or hiring someone to perform those tasks.

 

Q: Are there any limits or restrictions on what this coverage pays for?

A: Yes, there are usually limits on the duration and total amount the policy will cover. For example, it might cover up to a certain number of days or a maximum dollar amount per day. In the event of a total loss of the machinery, most insurers cover loss of use until an offer is made for payment. At Block’s Agencies, we offer a solution with ‘Extended Rental Expense’ through our partner, First Acre Insurance. ‘Extended Rental Expense’ provides an increased period of time for machinery rental expenses when the delay to replace lost machinery is outside of your control. It’s crucial to review your policy thoroughly to understand these specifics. Different insurers may offer different types of coverage in this scenario.

What Does ‘Loss of Use’ Not Cover?

Q: Are there any common exclusions to watch out for in ‘loss of use’ coverage?

A: Absolutely, there are common exclusions. Typically, this coverage won’t extend to issues like machinery breakdowns due to normal wear and tear, lack of maintenance, or mechanical failures unless your policy explicitly states so.

Q: Does this coverage apply to all types of farm machinery?

A: Not always. Coverage can vary depending on the type and age of your machinery and the specifics of your policy. Some policies might exclude older models or specialized equipment, so it’s important to check what your policy specifically covers.

How to Ensure Adequate Coverage

Q: How can farmers ensure they have adequate ‘loss of use’ coverage for their machinery?

A: To ensure adequate coverage, you should regularly review your insurance policies and assess the value and types of your machinery. It’s also a good idea to consult us to make sure your coverage aligns with your needs. Remember to update your policy as you acquire new equipment or as your farm’s conditions change.

In conclusion, while ‘Loss of Use’ coverage can be extremely beneficial in minimizing disruption, understanding the details of what is covered is essential. Proper management of this insurance can help protect your finances and keep your farming operations running smoothly, even when unexpected challenges arise. If you have any more questions or need further assistance, feel free to reach out!

Protecting Your Business Against Cyber Threats

 

As the world becomes increasingly digital, the threat of cyber attacks and data breaches has grown substantially. These attacks can have devastating consequences for businesses, including financial losses, reputational damage, and legal liabilities. That’s why it’s more important than ever to invest in cyber insurance coverage. In this blog post, we’ll explore what cyber insurance is, how it works, and provide a hypothetical story on where the coverage was useful.

What is Cyber Insurance?

Cyber insurance, also known as cyber liability insurance or data breach insurance, is a type of insurance that helps businesses mitigate the risks associated with cyber threats. Cyber insurance policies typically provide coverage for a range of losses related to cyber incidents, including:

  • Business interruption losses
  • Data restoration costs
  • Legal and regulatory expenses
  • Notification costs
  • Public relations expenses
  • Cyber extortion losses

How Does Cyber Insurance Work?

Cyber insurance policies can vary widely in terms of coverage, limits, and premiums. Generally, businesses can choose from two main types of coverage:

First-party coverage: This type of coverage provides protection for losses suffered by the insured business directly, such as lost income or data restoration costs.

Third-party coverage: This type of coverage provides protection for losses suffered by third parties, such as customers or vendors, due to a cyber incident involving the insured business.

Most cyber insurance policies also include a range of additional services, such as risk assessments, breach response planning, and incident response services.

Where Cyber Insurance Coverage Was Useful?

Let’s consider a story of a small e-commerce business that sells handmade goods online. The business had been running smoothly for a few years until one day, a cyber attack hit, resulting in a data breach of customer information.

The cyber attack had a devastating impact on the business, causing it to shut down temporarily to investigate the breach and assess the damage. The business also had to notify all affected customers, which resulted in a significant loss of goodwill and reputation. Furthermore, the business had to pay for credit monitoring and identity theft protection for all affected customers, which proved to be a significant financial burden.

Fortunately, the business had purchased a comprehensive cyber insurance policy a few months before the cyber attack. The policy covered the business for the following expenses:

  • Business interruption losses due to the temporary shutdown
  • Data restoration costs
  • Notification costs
  • Credit monitoring and identity theft protection for affected customers
  • Public relations expenses to mitigate reputational damage

Thanks to the cyber insurance coverage, the business was able to recover quickly from the cyber attack without incurring substantial financial losses. The policy also provided the business with access to expert incident response services, which helped the business get back on its feet.

Cyber threats are an ever-present risk for businesses of all sizes. Cyber insurance can help mitigate the risks associated with cyber incidents, providing businesses with the protection they need to weather the storm. By investing in a comprehensive cyber insurance policy, businesses can ensure that they are prepared for the worst, and can recover quickly and effectively from any cyber attacks that may occur.

What are the most common causes of fire damage to your home or business?

For many years, it has been called “Fire Insurance” for a reason. Up until recently, Fire was the number one cause of insurance losses in Saskatchewan and Canada. More recently, water losses have surpassed this peril, however, it is still one of the primary reasons for loss.

Whether it is your home, business, vehicle, equipment, hay/feed, machinery, fire can occur and directly impact almost everything. Concrete, steel, wood, asphalt, styrofoam, and almost every other material (if hot enough), can be destroyed by fire.Too often we hear about someone removing insurance off of a structure built out of steel or concrete with the idea that it can’t burn. However, as we have seen time and time again, if it gets hot enough, or there is an accelerant nearby, everything and anything can be severely damaged.

What are the most common losses when it comes to fire?

  • Cooking
    1. This is the leading cause of home fires and fire injuries, causing over 20% of home fires, according to the Canadian Firefighter data of 2012. It is also the leading cause of loss in restaurants.
    2. Grease vapour produced from cooking can accumulate throughout the kitchen and cause a high exposure for fire. Grills and deep fryers can contribute to the spread of fire and how easily it can engulf a restaurant kitchen. This is why insurance companies require an automatic fire extinguishing system and regular maintenance on the extinguishers and ventilation systems.
  • Heating
    1. Heating equipment fires account for 10-15% of all home fires, following cooking losses.
    2. The leading factor contributing to home fires was failure to clean and maintain the unit and chimney (primarily solid-fueled heating equipment, aka. Woodstove, wood fireplace, outdoor wood boiler).
    3. A main contributor to ignition of these home fires, is having equipment too close to combustible materials, such as furniture, clothing, mattress or bedding.
  • Arson / Intentional Fires
    1. These are important to mention as your insurance can be handled very different in this situation. If they prove that you were intentionally set fire to your property, they can deny your insurance coverage. If you were vandalised and you had no connection to the arson, your insurance would cover the loss. The fire inspector will do a thorough investigation to see the cause of the fire and if he sees that there were accelerants used or other signs that may point to arson, this will open up a serious investigation into why.
  • Electrical 
    1. This happens in many outdated structures. Sometimes the wiring or breaker boxes are old and the connections have started to wear and have become faulty. This can cause arching issues. 
    2. Sometimes people use high wattage appliances in outlets that don’t support that wattage.
    3. Plugging in too many appliances into one extension cord. This happens frequently, especially around the Christmas holidays as people will plug in lights and christmas trees into one extension cord. If the cord is worn or tattered, these should be replaced as well.
    4. Using older appliances. These use more power and can sometimes overheat and start a fire.
    5. Space Heaters – Make sure these units are kept away from flammable material and objects. If these are your primary heat source for your home or building, unless they are hard-wired into your building, most insurance companies will not allow them as a primary heating source.
  • Smoking
  • Candles
  • Appliances
  • Child fire-play
  • Combine / Baler Fires – Commonly due to heat from dry straw gathering near hot bearings, belts or wiring. 

How can I help prevent these major types of losses?

Not all of these items are easy to prevent. If you are subject to an act of vandalism such as an arson fire, there is little you can do to anticipate such an incident.

Here are some things you CAN DO, to help prevent a fire in your home.

  • Cooking
    1. While cooking, make sure you always stay in the kitchen when frying on the stovetop. If you see wisps of smoke or the oil smells, immediately turn off the burner and carefully remove the pan from the burner. Smoke is a dangerous sign that the oil is too hot.
    2. Always cook with a lid beside your pan. If you have a fire, slide the lid over the pan and turn off the burner. This will help smother the fire. Do not remove the cover because the fire could start again. Let the pan cool for a long time. NEVER THROW WATER ON THE FIRE.
    3. For an oven fire, turn off the heat and keep the door closed.
    4. If the fire has become uncontrollable, GET OUT and call 9-1-1. Close the door behind you to help contain the fire.
  •  Heating
    1. Proper cleaning and maintenance of your heating system will prevent most potential fires. Having your chimney swept, your furnace filters changed frequently and having an inspection from a licensed heating contractor is a great way to keep your heating systems in good working condition.
  • Electrical
    1. Updating your electrical is a good idea if you have an older home or building. Some homes have knob and tube wiring (which is very dangerous) and others have  aluminum wiring in them, and even though this is still allowable by code, aluminum wiring is softer and is easier to damage or “nick” which can cause hot spots in the conductor causing overheating and a potential fire risk.
    2. Updating your breaker panel. Over time, connections can become loose and fail. So it is important to check your panel and your wiring to make sure things are connected correctly.
  • Machinery Fire – Keep your equipment clean (as clean as you can). By frequently blowing out the machine with an air compressor and checking your equipment for any hot spots, this could help prevent a future fire on your machinery as you harvest this year.
  • Other helpful tips
    1. Fire extinguishers – have them in your home and in your business. Placed or hung up in an easy area to access.
    2. Make sure you keep combustibles or flammable materials are kept at a safe distance away from any hot appliances or open flames.
    3. Have an exit plan. If you do have a fire (especially at night), make sure you and your family understand what the protocol is when exiting the house. Have the exits well lit in your place of business so people know how they can exit your business.

These aren’t the only ways a fire can get started. Grassfires, wildfires, forest fires are some well known causes, especially in BC or California. We have seen them close by in northern Saskatchewan & Alberta (Fort McMurray, Slave Lake). This is why insurance is important. No matter how much you do to prevent a loss, you can still be exposed by elements outside your control. Please contact us if you want to know more or would like some information on fire insurance. Take care!

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What do I need to know when buying a new home?


Buying a home is one of the most exciting and stressful moments in our lives. It is a monumental moment that we will never forget and when you have finally decided to purchase, there are a number of things to consider. Things you should know before buying, what to know during the purchase process, and what to know after you’ve bought the home. So let’s get started on some pointers to help you out as you navigate these waters.

“Window Shopping”

In the beginning phase, you are looking for a variety of homes that fit the mould that you have envisioned in your mind. Make sure you do your research on the following items so you understand what’s important. Having a credible realtor is a huge benefit when searching for your dream home.

  • Location
    This is one of the most important rules to follow when purchasing a home. “Location, location, location” is the mantra in real estate. The reason is for resale value. Many people want to believe that the home they purchase will be their forever home, but time will show you that your life and your needs change over time and you may need to adapt to those requirements. (ie. You have children and no longer fit your home).

    Whether you purchase in a rural area, small town, or urban area, this will impact the cost of the home and the resale ability.

    It’s also important for your ease of access for personal reasons. Ie. Where you work. Where your daycare/school is. Where your family lives.
  • Price
    Before you get too deep into searching for a home, you’ll want to go to a financial institution to find out how much you can reasonably afford. The bank will use your assets and liabilities along with your income information to find out how much borrowing power you have and what value of home you can realistically afford. They will then tell you your “pre-approved limit.” Now you know your budget and can start looking at homes in your price range.
  • Type of Construction
    The year built, heating type, foundation, framing material, etc. are important factors to note in how the home was built. You do not want to buy a house that could possibly fall apart shortly after purchasing it due to years of depreciation or poor workmanship (unless your plans are for demolition).

    This is where you will want to hire a certified building inspector. They will inspect the integrity of the home and will point out any potential threats or issues in the home, such as moisture/mold issues, poor foundation, unsafe fireplace, outdated furnace, or a roof that has hit its life expectancy. If the home has issues, you can use these factors to negotiate a fair price on the home, or if they are too major to fix, this inspection has saved you the headache of buying a home with serious issues. Most realtors have inspectors handy for your use.
  • Lot Setbacks & Surveyors Certificate
    When a house is built, there are general construction rules that are in place to make sure the home is built to building code and to the regulations set out by the municipality. In most areas, you are required to have building permits and documentation indicating you’ve followed their bylaws when the home was built. Finding out this information can prevent headaches if the detached garage or fence was built across your property line or on your neighbours property. Civic disputes can cause frustrations between neighbours and will cause financial hardship if you have to tear down buildings or fences to meet the building bylaws. Again, the realtor is your friend here and will help make sure the home is built to the guidelines of the municipality.

I’ve found my house! Now what? 

After you’ve found the perfect house, in the perfect location, you can start the purchasing process. With the help of your realtor, you can make an offer to buy the home, and if seller accepts, you can start on these next steps.

  • Financial Requirements
    After the offer is accepted, there will be a timeline for your meet the list of requirements to close the sale. This means you need to obtain financial approval for the house you’ve made an offer on. The financial institution will likely do an appraisal of the home to see what the value of the home is and if the offer you made is appropriate or not. If it is, and it fits within your budget, they will hopefully approve your loan. A down payment is generally required and can vary between 5-25% of the home value. You may have access to CMHC, which will insure your loan and allow you to have a lower down payment. (However, they charge a large fee for this service that is amortized in your mortgage payments). 

    Rule of thumb – the bank will want to make sure that the loan payments and debt load you carry are no higher than 40% of your monthly income. That way you can still survive and don’t become “mortgage broke.”

  • Insurance Requirements
    At this point, the financial institution has approved your purchase to buy the home. Now you need to make sure the home is actually insurable. This is where you need to find a reliable insurance broker (us!) to help get you insured. Insurance companies have set criteria that need to be met when insuring a home. If the home is in too rough of shape, too old, has unsafe heating or construction, the home may not be insurable.

    Our online insurance provider – Mello Insurance – is a quick & easy way to see if your home will be able to be insured or not. In under 10 minutes you’ll know if you can easily insure your home or if it does not meet the basic standards. If that is the case, you may need to contact one of our brokers to do a more thorough investigation to find a solution on how to insure the home (if there is one). For example, if the home has a freestanding wood stove in the living room. Most insurance companies will require it to be inspected by the broker, or sometimes from a certified WETT inspector. Mello’s algorithm cannot quote a home that has this type of heating risk prior to it being inspected, therefore would require broker intervention. If the wood stove later passes inspection, the home would then be insurable.    If the house is a bit older (1960 or older), insurance companies typically require updates to be done to your plumbing, heating, roofing, windows & electrical to obtain Guaranteed Replacement Cost. This is important when buying an insurance policy, as you want to make sure if your home burns down, you have coverage to rebuild your home to the way it was prior to the loss with new/similar material. Once the insurance requirements are met, your lawyer and financial institution will require confirmation of insurance in order to finalize the mortgage.

YAY! I’m in my new house. What else is there to worry about? 

Very exciting, you are now a proud new homeowner. Now that the searching and purchasing process is over, you have the responsibility to maintain and look after this home. Here are some basics that you’ll need to know.

  • Taxes & Utilities
    These are now your responsibility. You are required to pay the annual property taxes, power, heat, internet/phone, insurance, mortgage and other monthly expenses that come with owning a property. Make sure you research what those average costs can be, because they can start to add up. Depending on the location, your property taxes alone could be $300-$500 per month.     
  • Maintenance
    Insurance is there to cover you for any sudden and accidental insured peril. They are not a maintenance policy. This can sometimes generate confusion. For example, if your asphalt shingles are 25 years old and need to be replaced, but a hail storm comes along and damages your roof. The insurance company may pay you for some damages, but the settlement might be minimal as the life expectancy of the roof has reached its limit. This may also cause a problem if the roof is missing shingles and you do nothing to repair the roof, and it begins to leak, the insurance company may notice you have not properly maintained your property and could limit/exclude coverage because the roof was not maintained.

    Make sure you are doing your part as a homeowner to prevent damage or loss to your home. (Snow removal, cut trees and lawn, clean eavestroughs and furnace filters, install security systems, sump pumps, etc.) By doing these things, it will help build a strong relationship with your insurance provider and if you unfortunately do have a claim outside your control, you will want to have a strong relationship with your insurer.
  • Community & Neighbourhood
    Living in a community requires a certain relationship with those surrounding you. You will want to build strong relationships with those in your community. If you leave on a winter vacation, you will need to have someone checking on your house. No better than your next door neighbour. By attending, helping, and supporting your community, you add security and protection to your home and your family. These qualities are priceless. 

 There are lots of things to think about when buying a home. I hope this breakdown provides insight and some guidance as you navigate through these exciting times. Thanks for reading!

 

Windstorm, the day of “wreck-oning”

Over the weekend and into the beginning of this week, we have experienced some serious windstorms and plough winds across the province. Winds exceeding over 90km/hr in some places.

Many things can go wrong during these windstorms. Debris can go flying into vehicles and damage them. Aka: Shopping carts. More dramatically: Trampolines can go flying into neighbours yards or houses. Been there done that, bought the T-shirt. Therefore, it  is important to carry adequate liability coverage, volunteer property damage, and it is also important to insure your home and belongings in case the wind is strong enough to cause serious damage to your home, belongings or other property you own. 

Well the damage has already occurred, what do I do now? 

If the damage is simply cosmetic, you should try and fix it yourself or hire a contractor to provide an estimate on the damage. We have a “find a contractor” form on our website you can use to find a contractor if you do not have a referral and are unable to find one. Scroll to the bottom of our claims page and clock on the “find a contractor” icon.

If damage is extensive, you should make sure you try to prevent any further damage from happening. Such as tarping & sealing off an exposed roof. Making sure no water can enter the home or further damage can occur to existing shingles. Make sure no trees or other objects will fall or harm any other property. By taking some proactive measures, you’re helping yourself from additional hassle on future damages, as well as helping your insurance company save some money from unnecessary costs in the claim; this will undoubtedly strengthen the partnership between you.   

The next step is contacting your insurance broker. They will begin a claims process with your insurance carrier to assess the damages, review your coverage & deductible, and if everything is covered they will proceed with the claim. The insurer will work with you to either negotiate an actual cash settlement or a strategy to begin replacing/repairing the damage to your home to recapture replacement cost coverage (if applicable). When rebuilding/repairing the damages, the insurance company usually requires 3 contractors quotes to get an adequate idea on the costs to repair the damages. If you cannot find 3 contractors, feel free to use our app again to obtain these quotes.

How can I prevent damage from happening again? 

There is no “sure-fire” way of preventing a windstorm claim. However, using high wind-rated materials, (metal shingles, hurricane truss straps, bin anchors etc) while keeping your belongings anchored or stored in a safe environment will help dramatically reduce the chance of a wind claim.

To show you how extensive wind damage can be, here is an example of a severe windstorm in Ontario and Quebec 2 years ago:

  • May 4-5, 2018, wind gusts of up to 126 km/h in southern Ontario and Quebec, which knocked out power for 600,000 hydro customers. Combining that loss with the tornadoes in those two provinces and insured losses from just those two wind events were close to $1 billion – about half of the approximately $1.9 billion in total insured losses for the year.

These claims costs, unfortunately, impact our national insurance rates and markets. Many insurance companies have scaled to a nationwide size and to mitigate these catastrophic losses, we all end up paying a small portion, in one way or another. In Saskatchewan, we may not have damages that add up to this wild amount, as we are less populated and more spread out, but we can have serious wind losses here as well.

  • For example, in 2010, Saskatchewan had over $100 million of weather related insurance claims alone. 

The forecast helps us be mindful of what could happen, but we can never predict the weather exactly. It is important to use the tools and information we are given to make smart decisions.. All we can do is make the best with what we’ve got. That being said, there are things that are in your control, such as: making sure your policy is “air-tight,” please review your coverage and deductibles to make sure you understand and are prepared for a potential claim, and then make sure you prepare your home, business, outbuildings and belongings so that you can be ready for the next windstorm. 

Thanks for reading. Stay safe out there!