Staying informed is the best insurance
By Blake Eligh • Bankrate.com

Does the colour of your car affect your insurance rates? Are you covered for damage caused by floods or tornadoes? What happens if you don't report that minor fender-bender to your insurance company?

If you don't know, you're not alone. According to a recent poll by the Insurance Bureau of Canada, many Canadians are confused and misinformed about their own insurance coverage, often at their own financial peril.

As an information officer for IBC, Frits Wortman offers practical advice to confused consumers navigating the sometimes-choppy waters of insurance coverage. With more than 50 years in the insurance business behind him, Wortman has heard just about every question and says the best advice is to read your policy carefully.

"No policy covers everything," he says. "There will always be exclusions. People don't look at the documents when they get them and don't understand that it's important until they have to file a claim.

After the flood
According to the IBC poll, 39 percent of Canadians think they're covered for flood damage, but Wortman has fielded countless calls from consumers who are surprised to find they aren't covered for everyday events like overland flooding.

"Water that runs into a house from above ground isn't covered in Canada," Wortman says. That includes water from rising rivers, leaky swimming pools, spring runoff or melting snow. Seepage and leaks that could be prevented by homeowner maintenance are also excluded.

"In America, flood insurance is covered by the federal government. In Canada, provincial governments make good on some of the damage," Wortman says. In major disasters, like a tsunami, tidal wave or other water-related catastrophe, the provincial government may step in, but the coverage is usually limited to the actual cash value, not the current replacement value for damages.