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Advocacy. Tailored Insurance Solutions. Peace of Mind
Volition
Properties
Coverage pitfalls to look out
for in your investment
property insurance policy

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Most Common Pitfalls
• Named Perils/Fire & Extended Coverage vs. Broad Form Coverage
• Actual Cash Value vs. Replacement Cost
• Permission for vacancy period
• Limited Coverage during vacancy
• Vandalism caused by tenants
• Rental Income Insurance
• Sewer Back-up, Flood & Earthquake, and failure of sump pump coverage.

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Named Perils/Fire & Extended Coverage vs. Broad Form
There are two forms that your investment property may be currently insured
under:
• Named Perils Coverage This form is limited to the causes of loss that are
named on the policy. Named Perils form is a more “restrictive” coverage form.
You do not get as much coverage as you would get on a Broad form.
OR
• Broad Form Coverage This form is highly recommended as it covers “all
causes of loss” unless excluded.

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Actual Cash Value vs. Replacement Cost
Methods by which your insurance company may calculate the settlement
amount are as follows;
• Replacement Cost is the cost to replace the property with new materials of
like kind and quality, without depreciation. This is the most favorable.
• Actual Cash Value is the cost to replace the property minus deduction for
depreciation. Also known as market value. It represents the dollar amount you
could expect to receive for the item if you sold it in the marketplace excluding
the land value.

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Vacancy Allowance Period
Most policies have an exclusion on the policy that indicates that if the home was vacant for
more than 30 consecutive days, a loss would not be covered. You must notify your insurance
broker if your property is vacant for more than 30 days. They will have to add a vacancy permit
to your policy. There is typically a charge for this. However, some insurance packages
designed specifically for investment properties may have a longer vacancy period allowance.
This is certainly helpful considering a rental property may be vacant until tenants are found.
• Conditions to keep in mind relating to this permission:
• All doors and windows be securely closed and locked.
• All rubbish be removed from within the described buildings and premises.
• Buildings must be checked a minimum of once a week or more depending.
• You have shut off the water supply and drained the system and appliance of water, or you have
maintained heat in the building and have made arrangements to assure heat is continued.

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Damage/Vandalism Caused by Tenants
• This is a common exclusion on most rental property policies. You retain the
loss if your tenants damage or vandalize the building. It is recommended that
you double check with your insurance carrier to ensure that this is included.
• Damages can be significant. From our experience we notice this is most
common during an eviction process.

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Rental Income Insurance
• After an insured loss and during the period of restoration, rental income insurance
will reimburse you for the rental income that you were getting prior to the loss. Check
with your insurance broker or agent to be certain that you have this coverage.
• Is the Rental Income Insurance on an Actual Loss Sustained basis? Actual Loss
Sustained basis means that there is no limit on the rental income. However, this
does not mean an unlimited source of payment for your loss. The loss must still be
proven and the proof is the amount that will be paid.
• There is also a limit as to when the rental income coverage is paid out. For
example,12- 24 months. It varies between policies.
•

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Sewer Back-Up, Flood & Earthquake
Always ensure you have these as part of your insurance package.
• Sewer back up – Loss or damage caused directly by the backing up of
sewers, sumps or drains.
• Flood – waves, tides, tidal waves, and the rising of, the breaking out or the
overflow of any body of water, whether natural or man made.
• Earthquake – snowslide, landslide, or other earth movements occuring
concurrently with and directly resulting from an earthquake shock.

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Tenants Insurance Recommendation
• Always recommend that your tenants have tenants insurance. It is not
uncommon to ask for a copy of their policy for your own peace of mind.
• If there is a loss and the tenants are negligent, your insurance company can
recover the loss from their insurance company if they are insured. This avoids
the payout from showing on your record.
• If there is a slip and fall incident and your tenant was negligent, it will likely be
your policy that responds if your tenant does not carry insurance. Even if
there is no payout, there is still defence costs that are involved in lawsuits.
This means that the claim will be shown on your loss history report, hence
could result in higher insurance premiums on renewal.

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How much should you insure your building for?
• You should insure your building for the amount of money it would cost to re-
build the structure. The cost of land or the market value of the property does
not have any bearing on the cost to rebuild.
• Don’t forget to take into consideration Detached Structures – Coverage for
sheds, detached garages and other structures not connected to the main
dwelling itself.

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Contents Insurance Limit
• You should insure your contents for the figure it would cost to replace them.
Being a “landlord”, there may be some items such as appliances and furniture
that you own and would want to replace following an insured loss.
• The tenant should be insuring their own contents. Your policy does not cover
their contents.

12. © 2017 HUB International Limited.1212 Advocacy. Tailored Insurance Solutions. Peace of Mind
Introducing Investment
Property Asset Protection
Program for Investors:

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What type of properties are eligible?
1. Single Family Homes
2. Duplexes/Triplexes/ Etc.
3. Apartment Buildings
4. Commercial Buildings
5. Rent to owns
6. Student Housing
7. Condominiums

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Highlighted Coverage Benefits
1. Broad Form/All Perils Coverage
2. Replacement cost
3. Vandalism caused by tenants -$50,000
4. Permission for vacancy – Up to 120 Days, all other carries offer 30
5. Days.
6. Flood, sewer back up, and earthquake included up to the limit of the policy

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Highlighted Coverage Benefits, continued…
6. Loss of rental income for 12 months
7. Building by law upgrades
8. Contents coverage of $5,000 free
9. Ice Damming coverage
10. Debris Removal – Additional limit of $25,000
11. Liability coverage of 2 million dollars with option to increase to 5 million

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HUB Commitment to Investors
1. Dedicated Sales/Service Team only for this investors
2. Internal Claims Handling free by claims specialists
3. Knowledge and expertise in the Real Estate sector, example rent to own,
law office relationships
4. Free review of your current policy
5. We offer educational workshops and presentations.

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Thank you.
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