The idea of a tornado destroying your home or property can be terrifying. That’s why many Canadian homeowners do everything that can to protect themselves, including buying home insurance.
Continue reading to learn the answer to the questions “does homeowners insurance cover tornado damage?” and “does renters insurance cover tornado damage?”.
By the way, if you’re looking for home insurance quotes, be sure to reach out to an advisor at Surex — these insurance experts can provide a collection of affordable, quality quotes in a matter of minutes.
What is tornado damage?
Depending on where you live in Canada, the tornado season differs. In Alberta, it is the month of July. There are so many tornadoes in Alberta because the cold winter temperatures give way to a warm spring and early summer, which in turn gives way to sweltering summers.
This causes wind shear (when the wind hits a mountain or obstacle), which sets up optimal conditions for tornadoes. Tornado damage is separate from hail damage, as hail is more prevalent towards the end of the summer in Alberta.
Hail is also very damaging to vehicles and buildings alike. So if you’re renting an apartment or own a home in Alberta, you must know what sort of insurance to get.
Does home insurance cover tornado damage in Canada?
If you live in Alberta and your home insurance doesn’t cover tornado damage, then you’ll need to purchase separate coverage. There are two types of policy coverage that you can get: Actual Cash Value (ACV) and Replacement Cost. ACV is the older form of policy where your deductible will be higher, but the amount that goes towards the cost of the damage will be lower.
Replacement Cost Coverage is newer and usually means that there is no deductible on your policy, and if the price is more than what it would have been for ACV for a similar structure, then you’re going to get paid out more with RC.
What should you look for? You’ll need to look over the policy and see what types of coverage you need. Firstly, you’ll want to see how much coverage will cost on an annual basis. An example of a policy that would be available can be found here, or you can look at the comparison chart below:
How does it affect your insurance rate?
Home insurance companies use the “ratio” to determine your insurance rate. The ratio is said to be split into thirds, with each third being allocated towards earthquake and solar (these are always combined), then weather-related hazards, then property damage coverage.
Tornado damage is classified as part of the same natural event as hail and lightning, so your rate will be determined by this.
With the weather-related hazards combined, the ratio is 10%, with the rest going towards earthquakes. If you’ve got a “high” exposure to this type of damage, then your insurance company may increase your rating to 25%. If you get hail or lightning coverage with your policy, though, then it won’t affect your ratio.
Insurance companies also like to see clean records on file that can prove that you’ve been a good tenant thus far.
The myth surrounding home insurance
There are many myths about home insurance in general and tornados (tornados destroying an expensive house). It’s possible to have insured the house for hurricanes, tornados, and other storms. But tornados, on the other hand, are covered by homeowners insurance only. Some homeowners insurance policies don’t cover you for damage caused by “foreign objects.”
Some only cover damage caused by objects left behind when you move out, or injury is done either inside or outside your home. Some homeowners’ policies don’t even cover damage caused by tornados.
If you have hurricane or other extra coverage, it will be applied between making a claim and when the money reaches you. If a tornado happens at night, it’s not likely that damage done to your house can be covered. Also, suppose something were to happen (and make a claim) in your home that would not be covered under your standard policy.
In that case, whether it’s because of its location or because of its age, insurance will only apply once per year per residence. So if you claim the money after a tornado, you’d be covered the following year again. But the damage caused by tornadoes can’t be covered under this type of policy because they are not covered per residence.
Variation in the offer?
A variation for renters insurance does exist, and it’s called “renters fire and theft” coverage, but it will cost an extra $1 to $3 per month over the standard monthly rental fee for renters insurance. However, it does provide coverage for your personal property inside your apartment and possibly the items on the outside of the premises.
Aside from this, there won’t be any coverage for things like contents in storage units covered by a security agreement or garage loading docks that a tenant has access to besides what is stored inside their apartment.
If you require flood insurance (a trigger event) and you are renting, then that may not be covered at all if it is not considered part of your “residence.” Be sure to contact your insurance company first before buying any products if you need any assistance with this.
Who is responsible for the insurance purchase?
It’s a good idea to know what sort of insurance is available for what you’re renting, as well as the criteria for whether or not you’ll need to purchase it. Some landlords might be able to help you find insurance, but you’ll be responsible for buying this yourself in most cases.
To sum it up
If you desire to be covered against tornadoes and other wind-related risks, get a complete coverage policy and inform your landlord if this is important to you. If your apartment or home suffers from tornado damage in Canada, will your insurance policy cover it? It depends. In the end, it all comes down to the context of the event.