Ontario Government's Insurance Reduction Not All It's Hyped Up To Be...

Yesterday, our Provincial Government announced that they would be introducing legislation that would reduce auto insurance premiums in our province by 15% "on average." Yay! It sounds great, and if we had an election today, it would certainly buy votes. But will it work? It may, but for the average consumer in the GTA, this will actually make things worse in my opinion. There are a couple of things at play, one being the rules by which policies are issued, and the other item is the word "average."

Insurers issue policies in accordance with the rules they have filed with the Financial Services Comission of Ontario (FSCO). If insurers find themselves forced to reduce their overall premiums by 15%, they will almost certainly become more selective about the risks they do take on. "Good Drivers" will find themselves being redefined. Leeway for 1 or 2 speeding tickets will almost certainly disappear. A third conviction will likely see your insurance policy cancelled. If you run a business, with numerous drivers, you'll find yourself paying much higher premiums for every little infraction your employees have whether they occur on your time or not.

Ontario's Insurers will also tighten up on administrative issues. Often times an ownership is requested, or various other types of paperwork are required. If an individual does not submit the paperwork in time, where currently the insurer calls and asks for it a second or third time, they will likely just cancel the policy. Where presently very few vehicles are insured by the Facility Association (Ontario's insurer of last resort) I anticipate a rise in the number of people being forced to purchase their policies from the most expensive place in the province.

The word "average" is also thrown about, and it must be considered. This allows the insurer to increase their premiums in their higher risk areas such as the Greater Toronto Area, while decreasing their premiums in the lower risk areas such as rural Ontario. So long as the net result is a decrease they would be within the 15% average decrease. GTA residents who are likely to want a decrease may actually see themselves paying more under this plan, while those individuals in outlying areas will enjoy a rate decrease.

On another note, we need to see the recommendations of the Anti-fraud task force implemented.　 Currently there is an estimated $1.6 Billion being spent by companies due to fraudulent activities. The health care clinics and towing operations require legislative changes and are such changes are essential for companies to reduce costs and pass those savings on to consumers.

We should also consider what a 15% revenue reduction will mean for foreign owned insurers. It is quite plausible that many foreign parent companies, will make the decision to leave the Ontario marketplace. If this were to occur, it would result in fewer auto insurers in Ontario and the net result would be upwards pressure on the premiums we all pay.

Someone is going to have to offset the reduced premium revenues this plan calls for, and it's likely going to be the very people in the GTA who would tend to support the idea that will be bitten.

Going Away For A Few Days? Do You Know What You’ve Agreed To Do With Your Insurer?

Your arrangements are finalized, your bags are packed, and you've arranged with someone to pick up the mail and clear the snow from the front walk.  You’re all set to leave, or perhaps as I’ve done many times, you've headed up north for a couple nights and it quickly turns into four or five.  Such are the realities of living through a Canadian winter.  Everyone looks for a break from the bitter cold and dampness.

What most people don’t know, and many people in the insurance industry don’t tell you, is that you’ve made a promise to your insurer that you’ll do certain things in the event you leave home for four or more days.  It’s important to note that unlike automobile policies, there is no uniformity amongst property insurance policies.  That being said, I have yet to see a property policy without a warranty along the lines of the following:

“… We cover damage caused by water (they then go on to define what water damage is), but we do not insure loss or damage caused by freezing during the usual heating season, of any part of a plumbing, heating, or air conditioning system or “domestic water container” within a heated portion of your “dwelling” if you have been away for more than four (4) consecutive days…”

It will go on to say, “… However you would still be insured if you:

·     have arranged for a competent person to enter your “dwelling” each day you were away to ensure the heating was being maintained; or

·     shut off the water supply and had drained all the pipes and “domestic water containers”; or

·     if your heating system is connected by a monitored heating alarm to a station providing twenty-four (24) hour service...”

In essence, if you’ll be away for more than four days, you need to take some steps to ensure your insurance policy remains in force.  Ideally, you need to have someone come in and check the heating of the home on a daily basis, or, alternatively, you need to drain all of your “domestic water containers” which include your hot water tank and toilets.  You would also have to drain all of your pipes.  If we’re being honest about it, I personally don’t take the second option. I just am not comfortable messing around with the plumbing system in my home.  The third option above is the one that I see used the least.  A monitored heating alarm is an additional expense and isn’t practical for most home applications.  It is more common in a commercial setting when the business operation is a temperature sensitive one (food processing facilities comes to mind).

The easiest and most practical option the insurer gives you is the first one.  Arrange for someone to check the property to ensure the heating is operating properly.  The key is you need to plan it, and be able to show you’ve taken the necessary steps if required to.  If the person you’ve made the arrangements with doesn’t follow through and the unmentionable occurs, then your policy would still respond (if worded as above), but your insurer would be in a position where they might be able to recover a portion of the damages from the person you made your ‘arrangements’ with.

The insurer puts this clause into the contract to protect themselves from a property being unwatched for days on end.  The longer water flows the more it will cost them in the end.  If a situation is discovered and promptly dealt with, it works out better for everyone involved.  I would suggest you get your insurance policy out, review the water damage section and the statutory conditions section to verify what your exact situation is.  If you’re unsure, contact your insurance advisor and verify exactly what your obligations are, and follow up in writing. A conversation and some planning ahead of time can be your best defense against a very stressful situation later.

Holiday Shopping & Theft From Your Vehicle...

It’s that time of year again. The mercury is dropping, the daylight hours are shorter and many people find themselves shopping more and more as the holidays near. Though each of us may or may not celebrate a specific holiday at this time of year, most of us do celebrate in the sales and promotions that retailers make available to us. 

Interestingly enough, honest people are not the only ones celebrating.  For the criminal element the holidays represent parking lots full of goodies just ripe for the taking, and almost all of it is brand new, and some of it is even gift wrapped!

The holidays can bring out the best and the worst in some people.  Most of us spread cheer and joy and are in a gift-giving mood; other individuals might wish to exploit the opportunity provided by an unoccupied vehicle loaded with items.  If you find yourself to be a victim of a theft of items from your vehicle where do you make your claim?  Is it your car insurance?  What about your property insurance?  The correct answer:  Both.

In order for you to receive coverage for your vehicle, your policy will need to include a “Comprehensive” or “All Perils” clause.  These optional coverages will respond to the break-in to the vehicle and the damage caused by the forced entry.  It is important to note that Section 7.2 of the Ontario Automobile Insurance Policy (Loss or Damage We Won’t Cover) states, “We won’t pay for loss or damage to contents of automobiles and trailers other than their equipment”.  The automobile policy was designed to insure vehicles only.

It only stands to reason that your property policy will cover those personal possessions which were stolen.  You will need to make an additional claim under this policy.  Both policies will require you to report the theft to the police.

Also remember that owning a home is not a condition of having property insurance; condominium owners and tenants can also obtain this coverage.  Speak to your insurance advisor if you’re unsure.

In the above example you have one occurrence but two claims to make under two policies.  You will also have a deductible applied to each policy.  In some cases you may find yourself dealing with two separate insurers as well.  A simple remedy to this type of hassle can be to insure your property and automobile with the same insurance company.  In most instances if an insurer covers both claims they will only apply the higher of the two deductibles, rather than charge you twice.  You will also have the benefit of only having to deal with one insurer rather than find yourself caught between two companies each stating that a particular item is the responsibility of the other.

In the end it is best to avoid this situation altogether.  Try and park in well lit areas, and avoid storing items in your vehicle then returning to the mall for more shopping.  If the thieves are watching you, they have all that they need to make your holidays that much more difficult.  If you find that you need to drop off some items to your car, get in and relocate it to another area of the parking lot.  The thieves will think you’re leaving and will move on to some easier prey.

Always remember why you went shopping in the first place.  You intended to have an enjoyable experience and make the holiday season brighter and happier for yourself, your friends and family.  A little caution and foresight can help keep it that way.

What to do Post Superstorm...

Superstorm Sandy is upon us, it's a storm that's been widely anticipated on the north eastern seaboard of the United States. It's trajectory will bring a great deal of wind and rain into Ontario as well. The insurance industry has been watching this storm closely as well, and many insurers in Canada have suspended the writing of new property insurance policies until the storm passes.

For the moment, it may be too late for you to secure loose items such as patio furniture, various decor items, or any other loose items you may have on the premises of your business or home. If as you read this it is safe to go outside and secure such items, it is highly advisable that you do so.

High winds and rain typically cause flooding in low lying areas, or in older areas with older storm water infrastructure. For the GTA this storm hits at a rather inopportune time, I say this because we've had rain for several days now, and the ground is likely already saturated, making flooding more likely. Should you be in a situation where you need to leave the premises, it is best if you turn off the gas, water and electricity before you do so. Keep an eye on water levels and be sure to keep children and pets away.

If you find yourself with downed trees, power lines, or other types of damage do what you can to prevent further damage from occurring. Check your policy to be sure you have coverage for what has happened, if you're unsure, call your Broker or Insurer and ask. If you're able to, take lots of pictures they could be helpful to have after the fact. Do your best to stay safe and calm, so long as it's property damage, it's just damaged stuff, and that we can get through together.

Pardon me Officer, I Don't Mean to be Rude, but 'No Points' still counts...

Living in Canada, we have many benefits that people throughout the rest of the world envy. Amongst those things are highly intelligent Police forces with integrity and more than a high school diploma and a football trophy. The purpose of today's post is to assist our finest with two pieces of information, that is often passed along to the driving public from a misinformed officer.

During my career, I can not count the number of times a person has told me, yes, they have a conviction on their driving record. They continue on, "don't worry, it's no points, so it doesn't count." Many clients have repeatedly told me that the Police officer issuing the ticket told them not to worry, it's no points, so it won't affect their insurance. This simply is not true.

Section 6 of The Ontario Application for Automobile Insurance asks for "details of all convictions of the applicant or any listed driver arising from the operation of any automobile in the last 3 years." This is explicitly clear, there is no mention of points. Points or no points, a conviction is a conviction and it does count.

Officers also tell members of the public that an accident was no one's fault, or that it was the road conditions or the weather. Unfortunately, the insurance industry disagrees. An accident is always someone's fault, the vehicles don't drive themselves. Parked cars don't just collide with one another, someone has to drive the vehicle. Likewise, it is incumbent upon the driver of a vehicle to drive it in such a manner that the weather and road conditions are being respected. If the road conditions result in a single vehicle being involved in an accident, it isn't the weather or the road's fault. It is the fault of the person who drove the car into the ditch.