Why do we need property insurance?
The largest purchase most people will ever make in their lifetime is that of a home. Most will finance their home through a lending institution and its loss or damage could be financially disastrous to most people. This is where the real value of insurance is, peace of mind that you are protected should the unthinkable happen.
Who sells property insurance?
You may purchase property insurance from a licensed:
- Insurance Broker - Selling insurance on behalf of a number of different insurance companies.
- Insurance Agent - Usually represent only one insurance company.
- Direct Writers - These are insurance companies that sell their own insurance directly to consumers.
Whether you choose a Broker, Agent or Direct Writer, you should feel comfortable with your purchase. The cheapest rate is not always the best choice. You should select a Broker, Agent or Company who takes the time to answer your questions and assist you if you need to file a claim.
Personal Property Insurance Policies
As soon as you become the legal owner of a home or move into an apartment, you should consider insuring your property. Fire remains the major reason people seek to insure, however much more than just fire protection is offered. The main types of property insurance policies are:
- Named Perils (Good) - Provides coverage only for those perils which are specifically included in the policy wordings (i.e. Fire, theft, windstorm…).
- Broad Policy (Better) - Provides “All Risk” coverage on the building and “Named Perils” coverage on the contents.
- Comprehensive Policy (Best) - Provides “All Risk” coverage on the building and its contents.
Of course, all policies including “All Risk” policies have some exclusions and limits on amounts, regardless of the reason for the loss. Examples of some exclusions would be:
- Wear and tear, rust, corrosion, or gradual deterioration.
- Water damage caused by flood, underground water or water that enters through cracks in your foundation.
- Damage caused by snow slide, landslide or other forms of earth movement (i.e. Earthquake)
- Damage caused by insects or rodents (i.e. Termites, squirrels, mice, birds…)
- Intentional or criminal acts (fraudulent claims)
The Basic Policy
A typical property policy is designed to protect you with amounts of coverage for most things that you would find in a typical home. This would include coverage to replace your building, any shed/garage on the premises (homeowner policy only), coverage for your personal belongings, as well as additional living expenses (hotel costs in the event of a fire) and comprehensive personal liability.
Optional Coverages
The basic policy is designed to cover most of the needs of a typical homeowner or person in an apartment. However, you can customize your policy to suit your own unique needs by adding optional coverages, called endorsements. These might include sewer backup, jewelry coverage, stamp collections or watercraft coverage if you are a boat owner.
Making Claims
If you have suffered a loss for which you are insured, inform your insurance Broker or Agent of the nature of your claim right away
Frequently asked questions
Q: What is a deductible?
A: This is the initial amount of every claim that you agree to pay. Deductibles help make insurance more affordable for everyone by eliminating minor “nuisance” claims. A typical property insurance deductible is $500.00.
Q: Am I covered against “Acts of God”?
A: This is a phrase typically associated with weather related perils such as windstorm, tornado, flood, etc… If you have an “All Risk” policy (see personal property insurance) then “Acts of God”, such as windstorm or tornado are covered. Flood is usually excluded from coverage since the location of the property on a flood plain or low lying area makes it susceptible to recurring losses on a regular basis. Insurance is not designed to cover this type of exposure.
Q: How will a claim affect my policy?
A: Many policies have a claims free discount of 10-15%. This discount will no longer apply upon renewal after payment of a claim. Another claim within a short time period will generally result in an increase in your deductible (applied to future claims) or other underwriting action. For more specific information you should check with your broker.
Q: What is a peril?
A: This is an event which causes a loss covered by the policy, (i.e. fire, windstorm…).
Q: My house is assessed for less than I have to insure it for. Why is that?
A: The market value of your home or the amount it is assessed for has nothing to do with the cost to rebuild your home, should there be a loss. In order to adequately protect you, your insurance broker will insure your home to 100% of its replacement cost.
Q: I go away for a few months in the winter. Is my house still covered?
A: If you go away for 4 or more consecutive days, you must make arrangements for someone to check your house daily. You can ask your broker for further options or details.
Q: Why does my insurer want my oil tank replaced?
A: As a tank ages it becomes more susceptible to rusting, deterioration and leakage. This usually occurs on the inside of your tank, unobserved by a casual inspection. If fuel leak occurs, the environmental cleanup can be immense, sometimes exceeding $100 000.00. Due to this exposure, most insurance companies will not insure your home if your tank is over a certain age (15-25 years depending on its location), unless you are willing to replace it.
Q: How is my price for insurance determined?
A: Insurance companies will look at many factors to determine a rate, including such things as:
- Location & Fire Protection - Proximity of fire hydrants and fire halls and where the property is located.
- Claims history - How many claims have occurred.
- Age of Property – If the home is older, have the roof, wiring, plumbing and heating systems been updated.
- The amount and type of insurance purchased.
- Type of heating (electric, oil, wood) used in the home.
This information helps your insurance company assess the risk (chance of loss) and set a base price. Discounts may then be applied depending on your individual profile.
Why do we need automobile insurance?
In Canada, if you drive a vehicle, by law you must insure that vehicle. An automobile owner/driver needs protection for damage they may cause to another driver or person and to protect them from what could be financial ruin, should an accident occur.
Where can you purchase automobile insurance?
You may purchase automobile insurance from a licensed:
- Insurance Broker – Selling insurance on behalf of a number of different insurance companies.
- Insurance Agent – Usually represent only one insurance company.
- Direct Writers – These are insurance companies that sell their own insurance directly to consumers.
Whether you choose a Broker, Agent or Direct Writer, you should feel comfortable with your purchase. The cheapest rate is not always the best choice. You should select a Broker, Agent or company who takes the time to answer your questions and help you if you need to file a claim.
An automobile policy is made up of the following coverages:
Mandatory:
- Liability – This section will protect you (up to your policy limit), if someone else is killed or seriously injured, or their property is damaged.
- Direct Compensation (New Brunswick Only) – This section covers damage to your vehicle to the extent that another person was at fault for the accident. Instead of collecting from the person who causes the damage, you collect directly from your own insurer.
- Accident Benefits – This section is designed to protect you with benefits if you are injured in an automobile accident, regardless of who caused the accident.
- Uninsured Automobile coverage - This section protects you and your family if you are injured or killed by a hit and run driver or by an uninsured motorist. It also covers damage to your vehicle caused by an identified uninsured driver.
- Health Services Levy - (New Brunswick Only)
Optional Automobile Coverage: (All are subject to a deductible)
- Specified Perils – Pays for damage to your vehicle caused by specific listed perils such as fire, theft, windstorm etc.
- Comprehensive - This coverage is more enhanced than specified perils and pays for damage other than those covered by collision or upset, such as vandalism or windshield damage.
- Collision or Upset – Pays for damage to your vehicle if it is involved in a collision with another object (including the surface of the ground), another vehicle or roll over.
- All Perils – Combines collision or upset and comprehensive coverages under one section, usually for a reduced price. Also provides extra coverage only available under all perils. Your Broker would be happy to provide more details.
Other optional coverages:
Additional coverages are also available to be purchased. Some of the more common ones are:
- Loss of use (Pays for a rental car)
- Waiver of Depreciation (Pays the purchase price of your vehicle)
- Liability for Damage to Non-Owned Automobiles (provides insurance on your rental care)
- Family protection coverage
Exclusions
Of course, all private passenger automobile policies contain certain exclusions where there would not be coverage. Some examples would be:
- Mechanical breakdown, wear and tear etc.
- Driving a vehicle while impaired.
- Dangerous operation of a vehicle.
- Using your vehicle as a taxi cab
How automobile premiums are determined
Your automobile rates are determined by a combination of factors, including:
- Your personal profile - This includes your experience or years licensed, type of vehicle, driving record (accidents, claims or convictions), how much you drive, and where you live.
- Amount of coverage purchased – Basic amount vs. full coverage.
- Deductibles - The larger your deductible on optional coverages, the lower your cost will be.
- The Insurance Company You Choose – Insurance premiums for the exact same coverage can vary substantially from insurance company to insurance company. Why is this? Insurance works according to a ‘pooling’ concept. You are one member of the risk group in the company you select as your insurer. Your company charges premiums based on the claims experience of the entire group. If an insurance company’s claims experience for a particular risk group is significantly lower (or higher) than another insurance company’s, its insurance premiums will be lower (or higher).
Put simply, if your fellow policy holders have fewer claims than insurance companies policy holders, your rate most likely will be lower.
Frequently asked questions
Q: What is a deductible?
A: This is the initial amount of every claim that you agree to pay. A deductible typically applies to all perils,
Q: Who can insure a vehicle under a standard policy?
A: The only person who can insure a vehicle is the registered/actual owner of the vehicle. The owner can name other drivers to be insured on the policy; however, the insurance company will take into consideration all drivers when determining the price for insurance.
Q: Who is covered by my insurance policy?
A: The simple answer is that anyone who does not live with you and has a valid Canadian driver’s license is covered. It is important to remember that when you lend your car, you lend your insurance. Should that person have an accident with your vehicle you will also be held liable and your rates will be affected.
Q: How will claims affect my policy?
A: Premiums charged are based on claims history, among other factors. It is sometimes best to speak with your agent prior to submitting a claim to discuss the impact it may or may not have on your premium. You may wish to avoid putting through smaller claims that you are able to handle on your own, in order to keep your preferred rating.
Q: Why has my company requested the completion of a medical form?
A: This is sometimes requested in order for the insurance company to identify any potential problems that may affect the safe operation of the vehicle.
Q: What types of vehicles are cheaper to insure?
A: Premiums for vehicles are based on rate groups. Such things as prior claims for that type of vehicle, its cost, the availability and price of parts, frequency of theft, etc. All affect the rate group and thus, the premium you will be charged. As a general rule of thumb, mid-sided, four door sedans have lower premiums than large SUV’s, trucks and vans.
Q: Is there an extra cost if I drive my car in the United States?
A: If you vehicle will be driven in the United States for 30 days or less, there is no additional charge. Should you require coverage for a longer period of time, you will need to contact your Broker.
Q: If I rent a vehicle, will my policy cover the rental car?
If you rent a private passenger vehicle from a rental company anywhere in Canada or Continental U.S., your insurance coverage can be extended to cover this rental car for up to 30 days per policy term. You should speak with your Broker for verification and details prior to renting.
Q: I bought a vehicle in another province. How can I insure it to bring it home?
A: As long as you have proof of ownership and a temporary permit from their motor vehicle department and you have notified us, we will bind coverage for you to drive the vehicle home. You must register the vehicle in your home province as soon as you possibly can.
Q: What happens if I buy a vehicle when your office is closed?
A: As long as you have all of your automobile insurance with the same insurance company, your newly acquired vehicle will be covered up to 7 days. The coverage provided will equal the vehicle with the least coverage on your existing policy. You must still contact your Broker at the first opportunity and advise what coverage you would like.
Q: My policy has been cancelled. What do I do?
A: You should speak with your Broker immediately to determine your best option. Sometimes, coverage can be reinstated if the concerns that caused the cancellation have been rectified. Payment problems or several claims are the most frequent cause of cancellation.
