HIGH REAL ESTATE PRICES SPARK A SURGE IN UNORTHODOX HOUSING — AND NEW WAYS TO THINK ABOUT INSURING A HOME
From tiny homes to laneway dwellings, Canadians are embracing an increasing range of unique and unusual abodes. But whatever you choose to call “home,” chances are a team of insurance professionals have been working on coverage specially designed to underwrite you.
Tiny homes are increasingly common, especially in urban areas where housing costs have skyrocketed, says Stefan Tirschler, CIP, product and underwriting manager, Square One Insurance Services Inc.
“In the beginning, tiny homes were lived in by a small community of people experimenting with a new way of living,” he says. “Today, we’ve seen zoning changes across the country, and that’s resulted in a wide range of small dwellings on the market. This includes anything from miniature frame homes, portable frame homes on wheels, tiny homes built from shipping containers, laneway homes— even yurt-style homes.”
Ti rs ch le rn otes that underwriting for tiny homes tends to build on safety standards for existing homes or materials used in the structure.
“For example, a shipping container home is likely to be similar in coverage to a standard home once it’s been delivered,” he says.
Smaller prefabricated or manufactured homes have also become more common. A manufactured home is typically delivered to the site on a chassis, lifted off and mounted onto a foundation. A slight variation, a park model home, remains on the chassis, but can be lived in as a permanent residence.
“The question we ask ourselves as underwriters is, where do these homes fit and to what standard do they need to be built?” says Michael Hewett, senior product manager, leisure and lifestyle, with Aviva Canada Inc. “The Canadian Standards Association, for example, offers standards for manufactured homes and park model homes. We also look to these same standards as a basis to underwrite tiny homes that are built in a similar manner.”
He notes, however, that owners of manufactured homes should seek an appropriate amount of coverage for additional living expenses.
“A manufactured home may have lower value, but it could take up to year to order a new home from a manufacturer,” Hewett says. “We allow customers living in these homes to buy additional coverage for living expenses.” Technology continues to reduce the distance between the customer and the underwriter.
Homes designated as heritage buildings also offer unique challenges for underwriters, says Jackie Murison, FCIP, CRM, ICP, portfolio and innovation specialist with The Commonwell.
“The policy must take into consideration when the home was built, whether someone of cultural or historical importance lived in it, or any unique building materials that must be used in a rebuild,” she says. “You couldn’ t replace plaster walls with drywall or stained glass with regular glass. The homeowner won’t have a choice on that. Properly valuing those rebuilds can be a big challenge.”
She notes that the Town Hall in Lindsay, Ont., is a heritage building that hap- pens to be two feet out of alignment because the builder shifted the surveyor’s pegs.
“If there was an insured loss, that same alignment would have to be considered,” she says.
High-value homes also require custom coverage, says Anthea McFarland, CIP, senior vice- president, personal insurance at HUB International.
“In many cases, we’re talking about homes with an average value of up to $1,000 per square foot, reflecting such building materials as the most valuable marble and granite finishes,” she says. “We send out specialist appraisers to these homes to come up with a number that covers exactly how much i t would cost to replace the custom detail in these homes.”
Often, Canadian owners of high- value homes also own properties in the U. S., the Bahamas or the UK, and brokers such as HUB International work with a global network of insurers to cover all of the dwellings under a single policy.
“High- net- worth insurers also offer a range of additional policy coverage,” says McFarland. “These can cover anything from appliance failure and maintenance, kidnap or ransom insurance, and even cyberbullying insurance, to cover the services of a therapist for child victims. Some clients also request standalone insurance policies to cover specialized art collections, including van Goghs and Warhols. As a broker for this client group, we endeavour to be a one-stop shop.”
Canada’s housing market continues to evolve in fresh new ways.
“Technology continues to reduce the distance between customer and underwriter,” says Tirschler. “We’re much better positioned to take notice of customer needs and expectations and adapt and respond to them much more quickly — wherever and however they choose to live.”