Posted March 31, 2025
Most property owners assume they’re fully covered until they find out the hard way: their insurance policy has significant gaps. Whether it’s flooding, a sewer backup, or an earthquake, the absence of the right protection can mean paying out of pocket for damages that are financially devastating.
The reality is, standard home insurance policies often leave critical exposures unaddressed, especially in today’s changing risk landscape. If you own property—whether it's your primary home, a rental, or a condo unit—this guide will help you understand the most common (and costly) insurance gaps, and what you can do to close them.
Overland Water Coverage: The Misunderstood Threat
One of the most misunderstood exposures is overland water. This refers to surface water entering your property due to heavy rainfall, river overflow, or snowmelt—not to be confused with burst pipes or sewer backups. Most basic insurance policies exclude it.
Why it matters: With shifting weather patterns and the rise in atmospheric rivers and urban flooding, more regions are becoming high-risk zones. A single event can cause significant structural damage and even impact the foundation of your home.
What to do: Confirm whether your policy includes overland water protection. This coverage typically needs to be added as an endorsement and is well worth the investment.
Sewer Backup: Often Excluded, Always Expensive
Sewer backups can cause extensive damage in a short time. When municipal systems are overwhelmed, wastewater can back up into your home through toilets, floor drains, and sinks.
Where the gap is: Many homeowners are unaware that sewer backup coverage is optional and often carries a cap or sub-limit, which might not reflect the actual cost of cleanup and repairs.
Action step: Review your policy to ensure sewer backup is included and verify the coverage limit. If you're in an area with older infrastructure or a history of backups, consider increasing the limit.
Earthquake Insurance: High Deductibles, But Essential
British Columbia is in a seismically active zone, yet many property owners have no earthquake coverage at all. And those who do are often surprised by the deductible—typically 5% to 20% of the building’s insured value.
Risk example: For a home insured for $1 million, a 15% deductible would mean paying $150,000 out of pocket before coverage even kicks in.
What to consider: Earthquake coverage is not automatically included and requires a separate endorsement. Speak with your broker about what makes sense for your risk profile and financial tolerance.
Replacement Cost vs. Market Value: A Costly Confusion
Insurance should be based on what it would cost to rebuild your home—not what you could sell it for. But some policies are still based on outdated or incorrect replacement values.
Why this matters: Rising construction costs, labour shortages, and supply chain issues have all pushed rebuild costs significantly higher. Underinsurance can lead to serious financial gaps during a claim.
Solution: Have a current replacement cost evaluation done by a qualified appraiser or broker. Make sure your policy reflects today’s building conditions.
Contents Coverage: Sub-Limits You Didn’t Know Existed
Your policy may list a generous limit for contents, but that doesn’t mean every item is covered equally. Many policies include sub-limits on high-value categories such as jewellery, fine art, musical instruments, bicycles, or electronics.
Real-world example: A $100,000 contents limit might only include $5,000 for jewellery unless additional coverage is purchased.
Next steps: If you own valuables or operate a business from home, talk to your broker about scheduling these items or adding a rider to extend coverage.
Loss of Use and Rental Income: Not All Policies Cover It
If your property becomes uninhabitable due to an insured event, your policy may offer compensation for additional living expenses or loss of rental income—but only if these coverages are included and adequately capped.
Why it’s important: In cities with high rental rates, temporary accommodations can be costly. For rental properties, a few months of lost income can significantly impact your cash flow.
What to do: Make sure your policy includes sufficient loss of use coverage for owner-occupied homes or rental income protection for investment properties.
Strata Property Insurance Gaps: A Commonly Overlooked Exposure
Condo owners often assume the strata corporation’s policy will cover everything. In reality, unit owners are responsible for personal contents, improvements and betterments, and potentially a portion of the strata's deductible.
Why this matters: Strata deductibles in some buildings can exceed $100,000. If a claim originates from your unit or is tied to your suite, you could be responsible for a significant share.
Advice: Ensure your policy includes strata deductible coverage and review the strata’s bylaws to understand your responsibilities.
Vacancy and Unoccupancy: When Your Coverage Quietly Slips Away
If your property is vacant or unoccupied for more than 30 consecutive days, your insurer may void or restrict coverage unless you’ve made arrangements in advance.
Common scenarios: Extended travel, renovations, or waiting for tenants to move in can all trigger these provisions—sometimes without the owner realizing.
Pro tip: Notify your broker if your property will be vacant or unoccupied. You may need a vacancy permit or special endorsement to maintain coverage.
Mould and Gradual Damage: Typically Excluded
While sudden and accidental water damage may be covered, most policies exclude gradual damage, like slow leaks that cause mould, rot, or deterioration over time.
The issue: Homeowners often assume all water damage is covered. But if it’s considered a maintenance issue, your claim may be denied.
What you can do: Perform regular maintenance checks, especially in basements, bathrooms, and under sinks. Early detection and mitigation are key to avoiding denial of coverage.
Detached Structures and Laneway Homes: Only Partially Protected
Garages, sheds, workshops, and laneway homes may fall under the umbrella of your main policy—but often with much lower coverage limits than the primary dwelling.
Why it matters: If you’ve invested in a finished laneway home or use a detached building for storage, business, or rentals, limited coverage could lead to major shortfalls.
Recommendation: Verify the coverage limits for detached structures and speak with your broker about increasing them if needed.
After the Property Loss: Who You Call Matters
Even with the right insurance coverage in place, the aftermath of a property loss can be overwhelming. Coordinating emergency services, working with insurance providers, managing timelines, and ensuring high-quality restoration all require experienced support.
At Premium Restoration, we specialize in insurance restoration—helping property owners recover from fire, flood, wind, and structural damage with confidence and clarity. Our team works directly with your insurer to keep the process smooth, transparent, and stress-free.
From emergency mitigation to complete rebuilds, we’re here when you need us most. Proudly serving the Lower Mainland and surrounding areas.
Need help with a property loss? Call Premium Restoration 24/7 at 604-943-7673 for fast, professional support.
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