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alexanderstreet1.JPGIf you’re like me, you’ve gulped when your property insurance renewals arrived in the mail. It’s not a big rip-off, and insurance agent Grace Catao, owner of Habitat Insurance, gives us some straight-up intel on why it’s happening and what we need.


With surging property prices in the Lower Mainland, homeowners who bought into the market in the last few years are sitting pretty: their assets have appreciated spectacularly.

However, increased property values have resulted in substantial increases in property insurance premiums. In some cases, we have seen increases as high as 50% to 100% in the last year.

This, of course, leads to much dismay for homeowners when they get their renewal policies.

When faced with a much higher premium, a property owner may be tempted to cut corners and insure the property for less than its market-related value.

What owners need to keep in mind is that since October 2003, construction prices have increased at a rate of approximately 1% to 2% per month. This scenario is unlikely to change in the near future, with market conditions demonstrating continued high demand for construction materials, services and trades.

In the event of a major peril occurring – such as a fire in which the entire home is destroyed – the property owner who scrimped on insurance may well find himself entitled to an insurance claim that will be insufficient to rebuild his home.

A homeowner who is concerned about rising premiums should speak to his broker about 1 to 2 weeks before the policy expiration date. A good broker will review the policy and explain the reasons for the increases. This will also be an opportunity for the broker to look for better rates with other insurance companies or restructure the policy.

Ultimately, a homeowner must keep in mind that his home is probably his single most valuable asset and must be appropriately insured: this may save a lot of heartache and money in the future.

Copyright© 2007 – All rights reserved – Grace Catao

Habitat Insurance Agencies Ltd.

“We’ve got you covered”

2152 Kingsway
Vancouver BC V5N 2T5


Tel. 604-438-5241
Fax 604-438-5243
Cell. 778-997-2583
e-mail Grace at habitat insurance dot calm

About the Author

Imagine if Canadians were known for being all over their money. Engaged. Proactive. Getting out of debt. Savvy. Saving. Generous. Nancy wants to help. Nancy started her own journey with money over 15 years ago, and formed her company “Your Money by Design” in 2004 to help others along the same path. It’s not the usual financial advising/investment stuff. It’s about taking control of day-to-day finances –managing monthly cashflow effectively, spending appropriately, getting out of debt, saving. If you're ready to take control over your finances, pop by her business site, YourMoneybyDesign.com


  1. Traciatim

    My home insurance policy (through TD) has an interesting feature where the replacement value is listed as ‘Up to 1,000,000’ and it would be replaced at the then current construction cost for an equal sized property.

    I’m not sure if this just sounds good on paper and when a loss happens they will say my replacement value isn’t the value I thought, but about 50% of that. I sure hope I never have to find out either.


    Oct 20, 2007
  2. Hi Traciatim — Grace’s response to your post is:
    Based on the information that you’ve provided, you would have a valid claim for an amount up to $1-million for replacement cost at the current constructions costs provided that you:

    a) have a valid claim, based on the provisions and exclusions of your policy; and

    b) have not underinsured your property. If your property is valued at $1-million and you insure it only for $500,000, in the event of a total loss you will not be entitled to a claim of $500,000. I can’t emphasize enough how imperative it is insure for the true replacement value of your property; and

    c) construct on the same property (or adjacent to) on which you had the building that was destroyed.

    You should also keep in mind that insurance companies technically only have to pay out claims once replacement has been made. However, as the costs of construction are particularly burdensome, many insurance companies would assist claimants by making partial payments during the course of construction.

    Please note that should you decide not to build again, you would only be entitled to the actual cash value (ACV) of the property. There are several ways to determine ACV; to keep things simple, you can think of it as replacement cost minus depreciation. This amount will typically be significantly less than the replacement cost and therefore not satisfactory to claimants.

    It’s important to understand your policy now, before you have a claim – contact your broker so that she may explain anything that you may be unclear about. That’s what a broker is for!


    Oct 22, 2007

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