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Commonly asked questions

Answered


What is insurance and why do I need it?

Insurance has many forms and functions, but really just one purpose – to provide peace-of-mind.

Four good reasons to insure

In some cases, insurance is mandatory - to obtain a mortgage, for example, or to drive a car. Otherwise, the choice is yours, but it's a wise choice for four main reasons:

  • Reduces worry. With the right type and amount of insurance, you can be protected from the risks to property and person that are inherent in everyday life.
  • Makes it easier to obtain credit. Lenders may be more willing to extend personal or commercial credit if they know that proper insurance is in place.
  • Helps to prevent loss. Brokers and insurers work to help prevent loss with information and advice on road safety, anti-theft, fire prevention and fraud reduction.
  • Frees up capital. Because insurance protects your assets, you do not have to put money aside in case of future losses.This security applies to individuals and businesses.

Three main types of insurance

In addition to life and health insurance, there are three main types of property and casualty insurance in Canada:

  • Automobile insurance whereby vehicles and their equipment are covered in cases of accidents and theft.
  • Property insurance in which home and business assets and property are protected from perils such as fire, theft and accidental damage.
  • Liability insurance that protects people who are responsible for injuries or damages to third parties.

Two key players: your insurer and your broker

Insurance is sold in a number of ways, some of which make it easier for customers to get objective advice and rapid service. Some insurance companies will sell directly to customers through their sales forces or agencies. Brokers, on the other hand, are not tied to any one company, but are independent advisors whose best interest is long term customer satisfaction. Brokers can comparison shop across insurance companies to find good rates or special insurance products and assist in assessing your risk.

Your broker can tell you more about the basics of insurance in order to make sure your needs are covered.

Home insurance

How does my policy really work? Don't wait until it's time to make a claim to get a full understanding of how your insurance works. The following definitions explain a few of the major building blocks of home insurance.

Acts of God

Acts of God are considered natural disasters that could not have been reasonably prevented or avoided. Most standard forms cover the perils of hurricanes and tornados. Lightning and hail are classified as named perils. Coverages for floods or earthquakes are not included in standard policies. In some cases, earthquake coverage may be available for an additional premium, and is likely to be more expensive and difficult to obtain in areas susceptible to this peril.

Deductibles

Deductibles are the amounts you pay to cover a loss before you are entitled to payment by your insurer. Just about every policy has a deductible, usually ranging from $500 to $5,000. Deductibles are designed to discourage small claims, since the purpose of insurance is to protect you from catastrophic losses, not minor inconveniences.

Exclusions

Quite simply, exclusions are items, perils or situations that are not covered by your policy. Your insurer might exclude anything from long-term mould damage to natural disasters, computer data or high-speed watercraft. Other common exclusions include avoidable damage from termites or rodents, water seepage, frozen pipes, intentional damage and high value items such as art and jewelry.

Liability–in the home and away from home

Although liability insurance is part of your homeowner policy, it also protects against third party claims for bodily injury and property damage caused (unintentionally) by you when you are away from home.

Depreciation

Depreciation is a measure of the loss in value of an item over time resulting from wear or obsolescence.

Valuations

Your insurer will likely want to conduct a valuation of your home in order to set the right replacement value and coverage level. Unlike an appraisal, this does not determine the market value of the property, but rather the likely cost to rebuild the dwelling and other structures to original standards in the event of a complete loss.

Your broker is an insurance expert, so you don’t have to be.

Auto insurance - am I covered?

Every policy is different, but there are some common situations to be aware of.

Your vehicle insurance policy likely has some flexibility built in to ensure you are covered in different situations. You should check your policy or ask your broker to be sure.

Renting a car

If you drive a rented car or any vehicle that is not owned by you, your existing policy automatically extends accident benefits and third party liability coverage to your rented car. These limits are the same as those on your own car. You can purchase additional coverage by way of an annual endorsement to your own policy that provides physical damage insurance for any rented vehicle during the policy term. It is important to note that this endorsement usually has a limit of $50,000. So, if you rent a luxury car, you should be aware that the cost of repairs are limited.This endorsement is simple to arrange and far more economical than the costly damage waivers offered by the rental companies.

Traveling outside the province or country

Your insurance will apply if you take your car on short trips to other provinces or into the continental U.S., as long as you engage in normal use of the vehicle.

Moving to another province

If you are relocating long-term or permanently, you must inform your insurer and arrange for new coverage that reflects the risks in your new location.

When the car is "in the shop"

Under most insurance policies, you are not entitled to a replacement vehicle while your car is in the shop for normal maintenance or repair. If you lose the use of your car because of an accident, then you might be entitled to a loaned vehicle depending on the situation.

When driving someone else's car

If you borrow someone else's car, you are covered by the insurance on that car. However, if you are involved in an accident, the owner's record, not yours, will be affected. If you borrow a car on a regular basis, ask your broker to arrange a special clause in your policy to cover your use.

When someone else drives your car

Remember that when someone else is driving your car, you are still responsible for it. Any at-fault accidents or claims will go onto your driving record and affect your future premiums.

Ask your broker for more information about liability and how to obtain the right level of coverage.

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