Aunt Bea has always had the odd habit of collecting money and putting it in an antique milk jug. And she’s not the only one. Many people have a change jar somewhere in their home that they use to dump all their spare change. Whether it is their only form of savings or just a habit, they believe their money is safe if they put it in a home safe, or maybe even under an old mattress. Am I exaggerating? Not really… but, in any case, these people are responsible and are insured, so they can sleep safe and sound… or can they?
Well, not really. Insurance contracts have what are called “limitations in coverage”. These limitations “limit” the amount the insurance company has to pay for a specific set of goods based on the type of claim.
Let’s do a simple exercise. Which of the following people do you think would be affected by these limitations in coverage?
- Hector, a retired arts merchant
- Peter, a cyclist
- Lucy, who is constantly ordering CDs from mail-order music companies
- Andy, with his fine palate for wine
- Gilbert, who owns the complete collection of Star Wars figures
- Lastly, Bea and her change jar
Answer: All of them.
All of them?
Yes. All of them.
The Insurance Bureau of Canada recently studied this problem and more clearly defined a term that was often a contentious issue when it came to claims: limitations in coverage. These limitations are divided into two parts in your contract:
- For any one loss caused by an insured peril
- In case of theft only
And why is this so?
Because insurance companies establish estimates based on which an insured has largely the same property as another insured. In this way, insurance companies can provide a standard rate for nearly everyone without having to look at every miniature spoon collection or every new bicycle, as long as everything has a relatively low value. So make sure you check your contract.
Ask yourself the following question: At home, do you have property in quantity or in quality that perhaps sets you apart from other people? If so, there is a way of dealing with this.
There is a policy available that will insure specific property. These policies are generally very affordable and easy to combine with your home insurance contract. For a few dollars a month, you can have peace of mind… but if you decide not to take this policy, you should at least take the necessary precautions to reduce your risk.
Limitations in coverage generally affect the following (a non-exhaustive list):
Type 1: For any one loss caused by an insured peril
- Change and dollar bills
- Boats, sailboats and windsurfing boards
- Pets, including birds and fish
- Professional property
- Wine and spirits
- Lawnmowers, tractors and snow blowers
Type 2: In case of theft only
- Stamp and coin collections, sports cards collections, etc.
- Jewellery, precious stones, watches
- CDs, DVDs, video games, etc.
- Gold or pewter items