Property Damage Insurance and Direct Compensation Property Damage in Ontario

Wooden block representing property damage insurance protects a model house

Property damage can happen any time, for all kinds of reasons. While most of the claims we deal with are the result of fires, floods, and natural disasters, those aren’t the only causes of property damage that can affect your home or business.

What Is Property Damage?

A property damage claim can be made any time personal property, such as a car or building, is damaged. There are different types of insurance for different types of damage, such as fire insurance coverage, liability, or collision insurance. Not all perils or property are treated equally.

Fault needs to be determined in property damage claims that involve two or more parties. A claims adjuster may need to speak with you and conduct an investigation to determine fault. Property damage claims can also be difficult to file if you do not know who caused the damage.

Types of Property Damage

There are several types of property damage that can affect your home, business, or other property that you own. These are just some examples of what can happen.

#1 Damage to a Landlord’s Property Caused by Tenants

What happens when fire or flood damage is the result of a tenant? For example, if a tenant starts a fire in the kitchen that damages the building, does tenant insurance cover damage to a landlord’s property?

In Ontario, a tenant must pay for any damage that is not the result of normal wear and tear, whether it is caused by themselves or a guest, and regardless if it was an accident. The landlord will need evidence that the tenant caused the fire.

Tenant insurance covers liability and should cover the cost of repairs. Tenant insurance should also cover their own fire smoke damage restoration costs, as the landlord’s insurance does not cover the loss of any of the tenants’ own belongings. Renters can submit their Proof of Loss and Additional Living Expenses to their own insurer. The landlord is not responsible for those costs.

If they do not have tenant insurance, the landlord can pursue the tenant directly, but if they do not have the money to pay for the repairs, there may be little the landlord can do to collect.

#2 Damage from a Neighbouring Property

It can be a difficult situation when your property is damaged because of something that happened on your neighbour’s property. There are many circumstances in which you can find yourself embroiled with the neighbour due to property damage. A windstorm may topple a tree that should have been removed onto your roof, construction work can negatively impact your property, or surface runoff from the neighbour can wind up flooding your basement or damaging your yard.

How this is handled depends a great deal on both context and where you live. For example, in Ontario, uncollected surface water flowing from one property to another is not grounds for a lawsuit, but the act of collecting the surface water (i.e., pointing downspouts to a neighbouring property) can trigger liability.

Major construction projects on adjoining lots can also cause major issues for your home. When a neighbouring foundation is removed, soil can shift and cause major structural movements to your home. If you live in a semi-detached or a row house, your property can easily be affected by neighbouring construction.

If you have concerns about construction affecting your property, it may be a good idea to contact the neighbour or the builder about the issue. Ask if they have liability insurance that would cover the type of damage you’re concerned about. Relationships with a neighbour can quickly become sour when these situations arise.

Police car stops traffic after a vehicle causes property damage

#3 Property Damaged in a Car Accident

Vehicle collisions don’t just affect other road users. Automobiles crash into homes and businesses more often than you might think, and they can cause extensive damage. If you’re lucky, you may only have to worry about a broken fence or damage to your lawn. But there are also cases where you may be left repairing or rebuilding your home after an extreme collision.

With vehicle collisions, the party at fault is liable for damages. In the case of a building collision, the driver would be responsible for paying for the damages, but the property owner may quickly find that the damage exceeds the driver’s insurance limits.

If the driver’s insurance is not enough to pay for the entirety of the damage, your own home or business insurance will kick in and cover the remaining costs.

What Is Direct Compensation Property Damage?

Direct Compensation Property Damage (DCPD) is a standard part of a no-fault auto insurance policy that is mandatory in some but not all provinces. There is Direct Compensation Property Damage in Ontario, Quebec, Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador. DCPD automatically pays to repair the driver’s property when the collision is not entirely their fault. It pays for repairs to simplify the process, cutting down on the need to contact various insurers and payments.

If someone damages your home or property in their vehicle, DCPD does not come into play, but it is their liability insurance that covers repairs to your property. Unfortunately, if it’s a hit-and-run situation and you can’t identify the culprit, you won’t be able to collect from their liability insurance.

How to Handle the Property Damage Claims Process?

In an accidental fire or natural disaster, you work with your insurance company on a claim to help you recover. But when property damage is caused by someone else, the process can be more complicated, as there is a higher potential for a lawsuit.

When you file an insurance claim for a significant amount of damage, it makes sense to work with either an insurance public adjuster or property damage lawyers. Either can help you with the paperwork of your claim and negotiating with the insurance company, but when third-party liability is involved, a lawyer may be more useful.

While a public adjuster’s help is limited to the scope of the claim itself, a property damage lawyer can also handle suits against the responsible party.

Property damage insurance claims can be complicated. There are no cut-and-dry answers, and much depends on the unique circumstances of the case. There are several issues that may arise during the process, and another party’s insurance may be included in the process if they are at fault for damage to your property.