Three home insurance endorsements to consider based on where you live

The majority of home insurance policies include coverage for your home's structure, contents, and liability if anyone gets hurt on your property. 

While this is a good starting point, you may wish to add more coverage in the form of homeowners insurance endorsements to cover risks not included in a standard home insurance policy. And, depending on where you live, you may benefit from extra coverage to protect you from risks specific to that area.

"We see across the country, depending upon where people are, certain types of loss are more worrying to them," says Stefan Tirschler, product and underwriting manager at Square One Insurance Services.

Home insurance endorsements enable you to take off-the-shelf policies and beef them up in order to cover costs you aren’t financially capable of handling on your own or prepared for. 

Below we look at some endorsements to consider based on where in Canada you live.

1. Earthquake endorsement 

“A good simple example is in British Columbia,” says Tirschler. “People are far more likely to purchase the earthquake endorsement because everyone in B.C. is aware that we're sitting on a very potentially dangerous fault line here, and everyone is more aware of that risk.”

In fact, according to the Insurance Bureau of Canada (IBC), there is a 30% chance of a significant earthquake in B.C. in the next 50 years. IBC also says there is a 5 to 15% risk that a powerful earthquake will hit the area from the St. Lawrence River Valley to the Ottawa Valley, which includes Quebec City, Montreal, and Ottawa.

Because earthquake harm is typically not covered by a standard home insurance policy, homeowners who live in these areas might consider adding the earthquake endorsement to their existing coverage. When applied, it covers your house, outbuildings (like your detached garage or garden shed), and personal belongings in the event they’re damaged by an earthquake.

The earthquake endorsement can also cover the cost of getting your home up to current building codes during the reconstruction process, as well as other costs, such as debris removal, depending on your insurance company.

2. Overland water endorsement

In 2020, severe weather caused $2.4 billion in insured damage, with floods in Fort McMurray and hailstorms in Calgary topping the list.

While some water-related damage is covered by standard home insurance policies in Canada, such as unexpected and accidental burst pipes, no standard policy in the country covers overland flooding. This means flooding caused by external sources, such as rivers or lakes, can leave many homeowners exposed to out-of-pocket repairs if they are unprepared in the event of a disaster. 

If you live in a flood plain or an area that is highly prone to flooding, such as Ontario or Alberta, you may want to consider this endorsement. An insurance broker can help you determine if it's worthwhile or not. 

For an extra cost, most insurance companies offer the option of purchasing sewer backup insurance, which is additional coverage that varies based on several factors, including how close your home is to a body of water. Sewer backup covers you for damage caused by things like excess rain, water backup from a septic tank, eavestrough, or drain. The cost of this optional endorsement, as well as the amount of coverage available, will vary from one insurance provider to the next.

"One company might only give you $15,000 worth of coverage for sewer backup, while the other one might give you your full policy limit for sewer backup,” says Tirschler. “It just depends on the risk and the provider itself."

For an endorsement like this, location is less of a factor.

“It can be tempting to assume that sewer backup is only a problem for those who are connected to a municipal (city or town) sewer system,” says Tirschler. “In reality, sewer backup can occur on any kind of sewer system, including septic systems.”

3. Fire and guaranteed replacement cost coverage

Most insurance providers offer coverage for damage caused by forest fires and wildfires as long as the fire is not set intentionally. However, it’s important to understand what your policy covers and does not cover when it comes to this type of risk. 

For instance, Tirschler suggests asking your broker how your policy would respond if your home were to burn down.

“Will you rebuild the house completely, even if it ends up costing more unexpectedly?” asks Tirschler. “Because that's something that, by default, policies don't always cover.” 

Guaranteed replacement cost coverage is not always provided by a standard home insurance policy. So you would have to opt in to that coverage if you didn't want to be limited to the approximate estimated rebuild cost that's printed on your policy’s coverage summary. 

British Columbia, as well as the Boreal forest areas of Ontario, Quebec, the Prairie provinces, and the Yukon and Northwest Territories, have the highest wildfire frequency in Canada. It’s worth asking your broker if you live in one of these areas if you might benefit from this endorsement. 

Guaranteed replacement cost can be a crucial endorsement in circumstances where entire neighbourhoods are wiped out due to wildfire. Remember the Fort McMurray wildfire in 2016 that prompted the largest fire evacuation in Alberta’s history? In the wake of the disaster, CBC News reported that some of the home rebuilds were stalled by ongoing negotiations between insurance companies and homeowners over coverage limits.

“When everyone wants to rebuild at the same time, the cost of materials and labour escalates,” explains Tirschler. “So you want to make sure that the policy you're buying will give you guaranteed replacement cost on your home so that the insurance company shoulders those extra costs, and you don't.”

Some policies build that in by default, but others will want to do it by endorsement, which helps in circumstances where costs go through the roof after a significant loss.

Before you add any endorsements to your home insurance policy, ask your broker or agent to run through coverage options available to you and discuss which ones matter the most based on where you live.

“If this [disaster] were to happen, how would the policy respond? Do they have any endorsements they'd recommend based upon where you are?” asks Tirschler. “Every contract is different.”