Tuesday, September 25, 2012

Get in the know...

I feel like I'm back in school and it is exam writing time. Just like in those nightmares we've all had where you're totally unprepared for an exam I have to admit that is how I was feeling when I was recently given these three questions to answer from the Insurance Bureau of Canada.
 
Image Courtesy of the Insurance Bureau of Canada
 
  • Q1: Are Ontarian paying more for auto-insurance, but getting less coverage?

  • Q2: Is the money I pay for insurance set aside just for me to cover any claims I may have in the future?
     
  • Q3: Is flood damage caused by a spring thaw covered by your home insurance?

Here are my answers:

 
  •  A1: Yes. We are paying more but our coverage has gone down in the last few years. I know that the insurance industry has changed the limits for accident benefit coverage and that the definition of what is considered a catastrophic injury has changed.
     
  • A2: No. The money we pay for insurance is pooled so that it grows at a better rate for the insurance company and can be accessed by those that require it.
     
  • A3: Yes. Your home insurance will cover flood damage.

Well, it turns out that I did know more than I thought but I definitely didn't score an A on this test.


  • Q1 Explained - I had insight into the changes in auto insurance coverage because our policy renewal (and increase) came with information about the updates (ahh, it pays to read the inserts). What I had forgotten was that these changes were put in place to keep the cost of our policies from increasing further. So, in reality, yes, we are currently paying more and getting less than we had in the past. 
     
    What shocked me though was the information about fraudsters. Did you know that there was a gang that had a $25 million staged collision ring out there making claims from our collective insurance money???? Despicable!
     
  • Q2 Explained - I was right. Everyone's money is pooled together. So our insurers 'spread the risk' by using the payments of many to cover the losses of a few. Good to know it is there for you when you need it.
     
  • Q3 Explained - I was totally wrong. I thought that water damage was water damage but it turns out that a Spring Thaw is considered "floodwater" and it isn't covered by your home insurance. It goes back to the explanation above about 'spreading the risk'. This type of water damage is only a risk to a small population (those close to rivers, streams, and bodies of water) so there aren't enough people to spread the risk across, therefore it isn't included.
     
    Keep in mind, freezing pipes (indoor or outdoor) are not usually covered nor is damage caused by melting snow and frost. Not good news when you see all the basement waterproofing signs on peoples' front lawns this year. So what water damage does my home insurance cover???  I was happy to read that water damage from a sudden and accidental escape of water (i.e. indoor plumbing, heating, air conditioner, appliance) is covered by most policies.  Good news as those are the situations most of us would be likely to experience.   

Insurance isn't something we like to think about or something we really like to pay for. It often feels like we're paying out money but getting nothing in return. I don't often give a lot of thought to my current insurance coverage and my potential insurance needs. This was a good exercise that made me really read the fine print and assess whether we should be making changes that better suit our family. Reading up on insurance may not be the most exciting job you've had lately but it is important and it is always better to know upfront what to expect rather than getting an unwelcomed surprise down the road. You can find more information at:  http://getintheknow.ibc.ca/Insurance-Explained.aspx
 
 
  







 
Although this post has generously been sponsored by the Insurance Bureau of Canada,
the opinions and language are all my own, and in no way do they reflect
the Insurance Bureau of Canada.



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