How Property Insurance Saved Me At Least $50,000

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“I don’t want to alarm you, but there’s a huge leak in the ceiling and the condo’s filling up with water. It may even be sewage water.”

This was the text message that I received from my tenant. I didn’t know how to react to this or who to contact first. I was worried about the cost of dealing with this situation. I wasn’t sure of how to deal with such an issue during a global pandemic. I also panicked at the thought of what would happen to my tenant now that the place was ruined.

I had never dealt with anything like this before. Everyone tells you to get insurance, but you don’t imagine that you’re ever going to actually use it. No one thinks that their condo is going to get flooded.

Luckily, my property insurance company helped me figure everything out after one urgent phone call. I wanted to share how property insurance saved me and why you need to have it.

What are the expenses that come with a property insurance claim?

Property insurance claims vary from burglary to accidental destruction. You could have your place broken into and damaged or you could have an accidental kitchen fire that destroys the unit.

In my situation, the accident was caused by the condo corporation. They had a plumber working on the unit above mine who caused a flood. The damage caused was insane, and the costs associated with fixing everything was just jaw dropping. Here are just some of the costs involved:

  • Tearing out everything that was impacted. You have to gut an entire place after a flood. This includes the floor and the walls.
  • Replacing the personal property that was destroyed. You don’t want to sit on a couch or touch anything that was covered in sewage. It’s important to go over your possessions to see what was damaged or destroyed.
  • Replacing the kitchen cabinets. If they get damaged, they have to be replaced.
  • Replacing the flooring. The flooring will likely have to be replaced after a flood. Flooring isn’t something that can be slightly modified usually. You have to change the entire floor.
  • Covering the damages to the units around you. If you cause a flood or kitchen fire or anything else, you’re on the hook for the damages to the other units that are impacted by this.
  • Any potential legal fees or medical bills from someone getting injured on your property by accident. Luckily, I didn’t have to deal with this.

As you can see, there are a lot of damages that could occur from one little leak or any kind of accident.

Even though the damage was done due to no fault of my own, technically speaking, the condo corporation was only responsible  for replacing the damages to the structure that they caused. That may sound ridiculous, but that’s why you need to have insurance to cover everything else.

To be clear, I would have spent over $50,000 to get everything replaced. Some other situations where you could possibly need property insurance include:

  • If your home is burglarized and damaged.
  • An accidental kitchen fire destroys part of your home.
  • Your toilet leaks and you flood the unit below.

These scenarios may sound far-fetched, but they’re not out of the realm of possibility. 

How property insurance saved me

In a panic, I called my insurance company to report the claim. I debated waiting or looking around for other options. However, I quickly realized that this was something that had to be dealt with promptly and that I wasn’t suited for figuring it out on my own.

The property insurance company immediately sent an adjuster to the condo. They then called a cleanup crew to handle everything. The crew worked diligently all night to determine what could be salvaged and what had to be replaced.

It’s not like I have experience with any of this stuff, so it was pretty reassuring to have someone take care of everything. Also knowing that the costs would be covered definitely made me sleep better. I don’t even want to imagine how many hours I would have had to spend if I had to take care of everything myself.

To make matters worse, I wouldn’t even know where to start. You don’t want to mess around with mold. Oh yeah, did I mention there’s a global pandemic where physical distancing is encouraged?

How property insurance works

  • The insurance company sends a site inspector to go over everything.
  • A cleanup crew shows up immediately
  • Insurance pays for accommodations and meals while you’re out of your home.
  • All of the valuable items were replaced up to the coverage limits.
  • Your unit gets renovated with all new units such as appliances, flooring, tc.

I didn’t have to stress about finances. I didn’t have to spend any money out of pocket. The policy covered everything. I only had to deal with my deductible. Dealing with any kind of property damage isn’t something that I would wish upon anyone. I was just relieved to know that the expenses were being covered.

What’s covered with property insurance?

As mentioned, property insurance and renters insurance can cover quite a few different things. It’s a good idea for you to understand each feature, do you don’t decline it just to reduce your monthly premiums.

Personal belongings/contents coverage

How much is your stuff worth to you? Property insurance covers your personal items. This ranges from your couch to your running shoes. You don’t realize how many items you have until you start itemizing everything that was damaged or potentially ruined by the sewage water.

If you actually made a list of all your possessions and added up the value, you might be shocked at how much everything is worth. Some people are proactive and have a master list of their possessions along with images so they can quickly make a claim if required. Interestingly enough, property insurance will even cover your things when you’re travelling with them. For example, did your laptop get stolen while on vacation in Mexico? Your property insurance would cover you.

Personal liability

Did you know that you could get sued for any damages that occur on your property? Liability coverage usually starts at $100,000 and it covers everything from a legal perspective. Once again, you may think that this is unlikely, but you don’t want to be stuck dealing with a legal case because a friend fell down while visiting you or because someone tripped when working on your place.

Loss-of-use coverage

There are different names for this but the cost of living/loss of use is where you’ll save the most money sometimes. I actually first heard of this concept when I found out that a buddy was living in a hotel. He informed me that his place flooded so they were putting him up in a hotel. Your property insurance will cover your living expenses up to your coverage limit when you can’t stay at home due to a covered damage.

What to look for with home insurance?

So now that you know why you need property insurance, here are some things to consider before your purchase a policy. 

Your coverage limits

According to Dan Olson of Insurance Dodo:

“When buying homeowners insurance, make sure you pay attention to the coverage terms being offered. Many home insurance companies will not automatically provide a detailed quote. They just give a basic outline of coverage and pricing. This can be bad if you need to make a claim because there could be hidden limitations in the policy.  So when you’re shopping around for quotes, make sure to ask the agent for a detailed quote that includes all the coverage and limitations. Once that is provided, go over it with the agent and ask her to clarify any terms that don’t make sense in common language.”

You have to go over your policy to see what kind of coverage you have. We actually didn’t have that much coverage for loss-of-use. It was barely enough. Luckily, the personal property coverage was enough to replace every item.

Here’s what I want you to think about when it comes to property insurance coverage limits:

  • How much stuff do you own?
  • Do you have any expensive items?
  • Do you need to increase the coverage?

Your policy options

You don’t have to go with the first home insurance property that you hear of. I would start by contacting your current insurance provider to see if they offer discounts for bundling insurance policies.

Then you can look into other companies online. You can easily find quotes online in minutes for property insurance coverage. The trick is to shop around and to customize your property insurance policy to match your lifestyle and budget. 

Final thoughts

That’s how property insurance saved me at least $50,000. Have you ever had to file a property insurance claim? Hopefully, the answer is no. That said, maybe the better question is, do you have property insurance? If you said no, you may want to get a quote now. 

How Property Insurance Saved Me At Least $50,000

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

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