Insurance 101: Ways you can invalidate your property insurance policy

No matter what type of home insurance policy you have, whether it be your primary home, a condo, or your vacation property, there are several ways that you can invalidate your policy. After all, no insurance policy covers everything, and property insurance is no exception. Ultimately, you will need to review the terms and conditions of your specific property insurance policy carefully to determine exactly what circumstances will invalidate.

Here are some common ways that you can invalidate your property insurance coverage:

Non-Disclosure of Home-Based Business Operations

Operating a business from your home might seem harmless, but it can potentially compromise your coverage. Traditional home insurance policies are designed for personal use, not commercial activities. If you suffer a loss or damage related to your home-based business, your insurer may not cover it. If you run a business out of your home or often work from home, you should confirm with your agent or broker that you have the right coverage added to your policy. Alternatively, you may also be able to purchase a separate commercial insurance policy. Please note that home business insurance isn’t just suited to policyholders who run home-based businesses. It is also useful for employees who spend a lot of time working from home, especially if you have customers visiting your home or have expensive business equipment in your home.

Misrepresenting Home Features

Honesty is the best policy, especially when it comes to insurance. Misrepresenting the features of your home could lead to inadequate limits of insurance, denial of a claim or even policy cancellation. Always provide accurate information about your home’s heating, plumbing, electrical systems, construction type, size, age, and other unique features.

Overvaluing Personal Belongings

Your personal belongings are protected under the contents portion of your policy and coverage is calculated as a percentage, however you may choose to add additional coverage for high-value items such as fine art or jewellery. Providing an accurate valuation of your belongings is critical. Overinflating the value could lead to suspicions of fraud, potentially resulting in claim denial or policy cancellation. Take the time to correctly assess the value of your possessions to avoid this pitfall.

Engaging in Unlawful Activities

Illegal activities in the home can quickly invalidate your home insurance. Insurance providers often have explicit exclusions for criminal activities. Even if a loss hasn’t occurred and/or the loss was not related to the criminal activity, your insurer can cancel your policy if they discover criminal activities in your home.

Failure to Notify Insurer About Major Changes

If you’re planning significant changes to your home or personal circumstances, notify your insurer. This could include leaving your property vacant for an extended period, renovating your home, renting out a room, installing a pool or trampoline, or purchasing high-value items. While there are coverages you can purchase to protect yourself in some of the circumstances above, if you fail to inform your insurer about these changes so they can update your policy and adjust your premium accordingly, they could invalidate your policy.

Renting Out Your Home or a Part of It

If you plan to rent out a room in your home or the entire property, you’ll need to inform your insurer. Standard homeowners’ insurance doesn’t typically cover rented rooms or short-term rental of a property. Contact your insurer to advise them. Some insurers have additional endorsements for purchase so you can protect your property in these circumstances.

Alterations to Your Home’s Security System

Changes to your home’s security system can impact your home insurance. If you’ve benefitted from a discount on your policy because of your home security system, even seemingly small changes should be reported to your insurer. On the bright side, upgrading your security system might lead to cheaper premiums.

Leaving Your Property Vacant

Leaving your property vacant for extended periods can jeopardize your coverage. Typically, if your property is left vacant for 30 consecutive days or more, and a loss or damage occurs during this period, your policy could be invalidated. Be sure to notify your insurance company before going away on an extended vacation and adopt home safety practices, like having a neighbour or friend check on your property frequently while you are gone.

Home Renovations

Renovating your home, whether you are updating your kitchen or adding an extension, can be cause for a voided policy if you fail to notify your insurer. Since renovations can significantly alter your home, not to mention put your home at an increased risk of damage, basic home insurance won’t cover them. For this reason, it is important to notify your insurer before you begin making any renovations. This will give you a chance to purchase renovation coverage, should a loss occur during the renovation process. It will also ensure your policy remains valid once the renovation is complete, as your insurer can evaluate your property and adjust your premium based on the renovations done and the new value of your home.

Exaggerating on Insurance Claims

Exaggerating on insurance claims is a form of insurance fraud. Always be honest and upfront with your insurer to avoid invalidating your policy.

Failing to Maintain Your Property

Neglecting your property can also lead to the denial of a claim or a refusal to continue to insure your home. Regular maintenance is critical to keep your home in good condition and the continuation of your insurance coverage.

Failing to Properly Secure Your Property

Before leaving your home, always ensure that all windows and doors are securely locked. Leaving a spare key near your front door, even if it’s well-hidden, could result in theft.

Tips to help you avoid an invalidated home insurance policy:

Maintain your property year-round

Year-round property maintenance is important if you want to avoid a cancelled home insurance policy. Home maintenance can be done on your own or you can hire someone to do it for you. Examples of basic home maintenance include cleaning the gutters, cleaning your dryer vent, having your chimney and HVAC units inspected annually, and adopting basic fire safety practices, such as regularly testing your smoke detectors and replacing the batteries as needed.

Lock all windows and doors before leaving your home

Closing and locking all windows and doors before you leave the house is another thing you can do to avoid invalidating your home insurance plan.

Change your locks if you lose your house keys

If your house keys end up going missing, do the responsible thing and have the locks on your home changed. While this can be costly, it is worthwhile, especially if you have no idea where or who your keys may have ended up with.

Activate your security system before you leave the house

If your home is equipped with a burglar alarm system, make sure that you activate it every time you leave the house. Failing to activate your alarm can lead to a denied home insurance claim.

Tell your insurer about any material changes to the property

Whether that’s changes to the property itself in the form of renovations, the use of your property by renting out a room or an extended absence, advising your insurer will alleviate concerns about your policy being invalidated.

In conclusion, maintaining home insurance coverage is not merely about paying premiums, but also about adhering to the terms and conditions set by the insurer. By being aware of these potential pitfalls, as a property owner you can ensure that your insurance remains valid and provides the necessary protection when you need it most.

GIO is an independent body set up to help Canadians find a fair resolution to disputes with insurance providers. GIO can provide advice on dealing with your insurance company as a first step. If you are not satisfied with the decision from your provider, GIO may be able to help resolve your concerns. 


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