What's the Risk?
Every insurance company wants to know how much the risk is worth. Whether it's travel insurance, automobile insurance, boat insurance, home insurance or life insurance, all risks must be taken into consideration. Let us look at the various problems that people encounter with their home insurance particularly during claim period.
So what risk is usually attached to home insurance? Imagine a retired couple residing in a home. They are suddenly approached by an insurance company, which offers them an enticing homeowner’s policy, guaranteed to cover almost 100 percent of future problems. After the couple signed an application that declares the function and value of their house, the insurance company released a policy based on the given information. Since their home happened to be in the safe zone, they only paid a low premium.
Suppose circumstances were different.
- The couple decide to join the snowbird bandwagon and leave their residence unoccupied for half of the year, or
- They rent out a portion of their home to other people, or
- They take advantage of the Pan Am games (hosted by their city) and rent out their lawn for a particular fee
- They make use of the latest Internet innovations and rent out their house via online platforms like AirBNB; the couple advertises their home for more than 50 times.
Of course, the travel insurance company is completely in the dark about your activities unless you inform them yourself. The aforementioned list implies a “material change” of risk in what the insurance company thought was a secure and normal homeowner’s risk.
The worst that can happen is having a claim on your home insurance, which may end up being denied because you are probably not covered. The insurance company will not hold responsibility over things beyond their knowledge. So the only way for them to know is for you tell them. Have you confessed yet? Tell them as soon as possible! It is easy to guess why you did not, though. The extra premium you have to pay for that additional risk may ruin your budget.
You are surely aware that being away from home for six months only increases the risk of vandalism, broken pipes, illegal settlers, angsty teenagers and vandalism. Should an argument erupt between tenants or one of them decide to throw a massive party (complete with alcohol and cigarettes), your property may suffer a great blow. The Pan Am games participants and audience will surely be arriving home drunk. Who knows someone might crash a car into your garage if not your house. We never know if the people who rented out your house through AirBNB would not leave your home in such a sorry state. Neighbours might call to inform you about what's going on but even then, it might be too late to repair the damage.
You would certainly not pay those claims if you were in the shoes of the insurance company. Given the situation, “That's OK” is not really the appropriate response. Once they DECLINE your claim, you will be in limbo between hundreds and thousands of dollars. All it takes is a simple phone call to make things easier for you.
Do not withhold any information from your travel medical insurance company. Tell them outright and you will be relieved to hear them say “that's OK” sans the extra premium you so dread. Be forewarned, though. There are times when they feel that the risk is far too much for them to handle so at best, you need to find a different insurer. Good news is that you definitely can and will. You will be covered as you had hoped but at a higher price. But maybe you will change your mind and forget about the extra risk and just settle in your lovely little home like other retired couples.