​​​​​​​​​​Insurance telematics – also known as usage-based insurance (UBI) or pay-as-you-drive – represents a shift in how insurance is administered and how premiums are calculated. Telematics has the potential to reduce your premium costs and generate significant benefits to society.​

How to Drive Your Premiums Down with Telematics

Telematics technology customizes insurance to your pattern of driving. It works by monitoring your real-time driving behaviours to provide an objective picture of your driving habits.  

Some insurers use telematics to monitor the key risk factors associated with driving a car. The technology assesses your driving habits, including: 

  • ​The distance you drive
  • The time of day when you are on the road
  • When and how you accelerate and brake

If you exhibit better driving habits or improve your driving behaviour, you can potentially save on insurance premiums. A telematics device creates an objective, personalized profile based on specific criteria. 

How Telematics Technology Works

Telematics was first used for auto insurance in Canada by one insurer in 2013 and has since grown to be included in a number of insurers’ product offerings. The telematics program gives you a small wireless device that acts as information and communication technology that can be quickly and easily installed in your car’s diagnostic port (typically under the steering wheel). 

The data collected is subject to strict privacy policies and not used for any other commercial purposes without consent. The insurer analyzes your data solely to determine savings and assesses typically the three driving habits listed above. 

With some programs, you can then track your driving habits and savings online, have your online information dashboard updated daily, and have your telematics discount calculated monthly. 

​Telematics programs are voluntary and you are fully informed of the variables your insurer collects for use in the program. Before signing up, you provide your express, informed consent for the collection, use and disclosure of the information used by the insurer.

Other Benefits of Telematics

According to the Victoria Transport Policy Institute​ in British Columbia, widespread adoption of telematics has other potential benefits as a result of people driving less. They include: ​​

  • Reductions in congestion, traffic accidents, pollution, energy use, road and parking costs as well as more people walking instead of driving, which promotes health and fitness 
  • Opportunities for urban planners to explore other land-use objectives  

The Telematics Forecast

The number of insurers offering telematics is expected to increase. Canadian insurance companies are learning from the experiences of their counterparts in the U.S. and Europe.

In 2012, IBC conducted a survey in Ontario that found that the majority of those polled would be in favour of telematics. The option to choose telematics was most popular among people who drive less than 10,000 kilometres a year.


Where Liability Insurance Fits into Bicycle Accidents

If you have clients who are riding their bikes this summer, how does liability insurance work if they get into an accident?

“Specialty cyclist insurance policies do exist, but my understanding is they are not very common,” said Ari Krajden, a partner with Toronto law firm Kawaguchi Krajden LLP.

Liability for bicycle accidents is “typically” covered under a home insurance policy but motorized scooters and other types of vehicles may not be, Krajden said Tuesday in an interview.

Cyclists who are unsure of their coverage should be asking their insurance broker or agent, said Krajden, whose areas of practice include personal injury and insurance coverage.

Unlike auto insurance, the wording of home insurance policies are not stipulated in provincial regulations.

“They can differ from insurer to insurer. It’s important to read your policy,” said Krajden.

Suppose a cyclist collides with a pedestrian, no motor vehicle is involved, and the pedestrian decides to launch a personal injury lawsuit.

“If a cyclist is sued, and the allegation is that they are negligent and caused a personal injury, (the cyclist) would likely turn to a home insurance policy or a renter’s policy first,” said Krajden.

If a plaintiff suing a cyclist alleges that the cyclist is at fault in an accident, the plaintiff must prove the cyclist owes a duty of care. Whether a duty of care exists depends on the facts in that situation, said Krajden.

In addition to proving the cyclist has a duty of care, the plaintiff would also have to prove the cyclist somehow failed to meet the standard of care required by civil law.

“The standard of care is determined by considering what would be expected of an ordinary, reasonable and prudent person in the same circumstances,” LexisNexis reports.

So if you have a duty of care towards someone, and if you fail to meet the standard of care and the other person is injured or suffers property damaged, you or (your insurer) could be forced to pay that other person.

In Ontario, bike riders must share the road with others and obey all traffic laws, notes Toronto-based Ambridge Law. The Highway Traffic Act stipulates a bicycle is a vehicle, so cyclists have the same rights and responsibilities as drivers and cannot carry passengers.

What happens if a motor vehicle is involved?

“All cyclists in Ontario involved in car accidents have access to accident insurance benefits, even if the accident was their fault,” reports Ottawa based Grenier Law, whose areas of practice include pedestrian and bicycle accidents.

“Bicycle accident cases can get very complicated and involve a number of parties, including motor vehicle operators who may be held liable,” Grenier Law notes. “It is worth noting that a car doesn’t even have to be moving for you to have a collision; ‘dooring’ [is] when a motorist opens their door without looking, and a cyclist runs into it. As well, some cycling accidents can be caused by dog attacks.”

So what happens if a cyclist gets into an accident on private property, and no vehicles, pedestrians or other bikes are involved?

This is where the Occupiers’ Liability Act could come into play.

In this scenario, if the cyclist wants to sue a property owner or manager, alleging that dangerous conditions on the property caused the accident, the cyclist would have to prove the property occupier failed to meet the legal standad of care, suggested Krajden.

“If I am operating any type of business and I am inviting people on to my premises, a duty of care is already established by the Occupiers Liability Act to maintain the premises so as to be reasonably safe.”


Are Autonomous Cars Coming Soon?

If you are led to believe most of your clients will get around in self-driving cars within a decade, you might want to think again.

“Autonomous vehicles will likely not be on our roads for at least another 25-30 years, and that is a conservative estimate,” said Kristine D’Arbelles, senior manager of public affairs for the Canadian Automobile Association, in an interview. She was referring to fully autonomous vehicles where no human is controlling the car.

A Google search of “self-driving sooner than you think” yields more than 25 million results. Topping the results are published reports suggesting that fully autonomous vehicles are coming “sooner than you think.”

An evolution to self-driving cars would change the insurance business model. The current auto insurance model is predicated on the notion that vehicle drivers and owners carry liability risk and that accidents are usually caused by bad driving.

A few years ago, some were saying that by 2021, we would have fully autonomous vehicles, suggested D’Arbelles. She predicts that when her son (who just turned four) has kids, those kids may not need driver’s licences when they grow up.

But there is a difference between the automated features on some of today’s vehicles (such as lane departure warning) and fully autonomous vehicles that do not have pedals or a steering wheel.

“That is where the lack of knowledge and confusion from Canadians comes from right now” D’Arbelles said.

A majority (83%) of Canadians is “just vaguely aware of what’s coming in autonomous vehicles,” she said.

Ottawa-based CAA, a federation of eight independent clubs, released Monday results of a poll in which about 2,000 Canadians were asked about autonomous vehicles. In the survey, conducted this past December, Canadians where asked both about autonomous vehicle benefits and about their concerns with autonomous vehicles.

When respondents were asked if they had concerns, the options they were given were hacking, unauthorized access by a third party to data, and accountability in the event of an accident. They were also given the choice of saying they had no concerns or they do not want to answer.

Fifty-nine percent said they were concerned about hacking, and 53% were concerned about the potential for third-party access to driver-generated data. Multiple responses were allowed. The results are considered accurate to within 2.2 percentage points 19 times out of 20.

D’Arbelles said she recently rented a car that had an advanced cruise control feature. Unlike traditional cruise control, the one on her rented car would slow the car down if the vehicle in front slowed down. “It’s not autonomous in the sense that I can sit back and start watching a movie and start playing with my phone,” she said. “I actually have to be fully aware of what’s going on around me.”

Ontario has had an automated vehicle pilot program for three years. But participants must ensure a human is able to bring the vehicle to a safe stop.

“Theoretically, there could be a fully autonomous vehicle ready to go on the road, but a lot of kinks have to be worked out before we are in a society where fully autonomous vehicles sort of take over our road,” D’Arbelles told Canadian Underwriter.

For example, roads will require traffic control signs and pavement markings that can be read not only by humans but also by the vehicle-borne computers.

There are various levels of vehicle autonomy. For example, the Society of Automotive Engineers defines Level 0 as having no automated features whatsoever while Level 5 means the vehicle can go at all times without human intervention.

SAE level 4 means the vehicle is capable of performing all driving functions under certain conditions. The driver may have the option to control the vehicle.

Level 3 means the vehicle manages most safety-critical driving functions but the driver must be ready to take control of the vehicle at all times.

Level 2 means partial automation. At least two automated tasks are managed by the vehicle, but the driver must remain engaged with the driving task.

Level 1 means there are some features for driver safety and comfort and a human is required for all critical functions.


Sump Pump Maintenance Check

Water damage is one of the worst problems the average homeowner will have to deal with. Irreplaceable possessions can be completely destroyed, cleanup is difficult and expensive, and the musty smell can linger for weeks. And in the battle against water damage, your home’s sump pump is the often unsung hero keeping disaster at bay.

If you’re a new homeowner who is just learning the ropes of home maintenance, you might not know if your home has a sump pump or where it’s located. But it’s important to get to know this device and how to take care of it throughout the year because it’s your most important defense against basement flooding.

What is a Sump Pump?

In a home with a basement, a sump pump typically sits in a small sump “pit” at the lowest point of the basement floor. The job of the sump pump is to catch groundwater that seeps in through a foundation drainage system and pump it away from the home, either into a storm drain or a nearby area that drains naturally. During rainy seasons, flooding events and even plumbing-related floods, a working sump pump can evacuate hundreds or even thousands of gallons of water per hour.

Types of Sump Pumps

Residential sump pumps fall into two broad categories: submersible and pedestal.

  • Submersible pumps sit in the wet sump pit all the time, which makes maintenance a messier job and adds a lot of wear and tear. They are, however, much quieter than pedestal pumps.
  • Pedestal pumps are cheaper, longer-lasting and easier to maintain, but the noise they produce during pumping may make them impractical for many homes, especially those with finished basements.

Sump Pump Backup Systems

Beyond the basic choice of submersible vs. pedestal, you have more choices when it comes to backup pumps. Though not all sump pumps have accompanying backup systems, it is very important to choose one that has this feature — if the main pump fails for any reason, including a power outage, the backup pump should save the day.

Many sump pumps have a fully integrated battery backup system that self-charges while the power is on so that it can operate even when the power is off. Other models may require you to supply your own battery, often a car or boat battery. Another type of backup system connects to your home’s plumbing and uses water pressure to keep groundwater moving when the electricity is off.

Whichever type you own, you should familiarize yourself with the maintenance and replacement schedules that are specific to your model. Maintenance steps can vary, especially when it comes to taking care of those ever-important backup batteries.

Sump Pump Annual Maintenance Checklist

Keeping your sump pump in tip-top shape is a small job — so small it’s easy to overlook. Since the consequences of sump pump failure can be huge, it’s recommended that you maintain your sump pump at least once per year, ideally during spring cleaning, when seasonal rains really put the pump to work.

Here’s your essential sump pump maintenance checklist:

  1. Make sure your primary pump is connected to power and turned on. If your pump is plugged into an outlet rather than hard-wired, make sure the ground fault circuit interrupter (GFCI) on the outlet has not been tripped.
  2. Test your pump for functionality by pouring a bucket of water into the sump pit. The pump should turn on automatically and pump the water away in seconds. Sump pumps use a float to detect water, and this float can become stuck due to dirt and sediment. So if your pump is powered on but doesn’t start pumping during the test, try to loosen the float before calling for service.
  3. Disconnect and clean the pump. Disconnect the pump from its power source and discharge line. Remove the pump from the pit and carefully clean all accessible parts of dirt, sediment and small stones. If possible, remove the grate at the bottom of the pump and clean it separately. If the sump pit is messy, clean up the area while you have the pump removed. Model-specific instructions on how to clean a sump pump may be helpful, but most pumps can be safely cleaned with a garden hose, paper towels and a stiff-bristle brush.
  4. Check the pump’s discharge line for obstructions. Small particles usually flow through, but sometimes small rocks get wedged in the pump, grate or discharge line where they can inhibit the flow of water.
  5. Perform model-specific maintenance to the battery backup system as needed.

In addition to annual maintenance, it’s worth testing your sump pump with a bucket of water at least once per month, especially during the rainy season. If something goes wrong with your pump, it’s better to find out during a controlled test than during a heavy rainstorm.

To help make a plan for replacement, check your sump pump’s original documentation (or find it online by searching for your model number) to see what replacement interval the manufacturer recommends. It may also be helpful to schedule an annual visit from a licensed plumber to inspect and maintain both your sump pump and water heater. Just be sure to remind your plumber of your sump pump’s age and ask for a professional opinion about when replacement is warranted.

When to Replace Your Sump Pump

No sump pump lasts forever, and your pump could fail due to old age in the middle of a major rain event. With that in mind, it’s a good idea to estimate your pump’s lifespan and replace it proactively.

As a general rule, submersible pumps last 5 to 15 years and pedestal pumps last 20 to 30 years. Frequency of use plays a large role in the lifespan of a pump, so if you live in a wet area with a high water table, expect your pumps to wear out on the lower end of that spectrum.

To help make a plan for replacement, check your sump pump’s original documentation (or find it online by searching for your model number) to see what replacement interval the manufacturer recommends. It may also be helpful to schedule an annual visit from a licensed plumber to inspect and maintain both your sump pump and water heater. Just be sure to remind your plumber of your sump pump’s age and ask for a professional opinion about when replacement is warranted.


Top Threat Facing Canadian Businesses

Cyber attacks and data breaches are the Number 1 threat to businesses in North America, according to Aon plc’s newly released 2019 Global Risk Management Survey.

Aon surveys thousands of risk managers across 60 countries and 33 industries every two years to identify key risks and challenges their organizations are facing. Cyber attacks/data breach topped the list this year in Canada and the United States (these two countries accounted for 24% of survey respondents). Rounding out the Top 5 were:

  • Damage to reputation/brand
  • Economic slowdown/slow recovery
  • Failure to innovate/meet customer needs
  • Business interruption

“This year’s survey results illustrate the escalating concerns over the rapidly changing business environment and the potential for unwelcome surprises Canadian organizations face that can disrupt their business model over time and damage reputation almost overnight,” said Bill Besse, chief client officer of commercial risk solutions with Aon in Canada.

Although difficult in the current environment, risk preparedness is key for Canadian businesses, according to the survey.

“Those firms that anticipate, plan and prepare will minimize earnings volatility and maximize profitability and will have a competitive advantage in today’s business world,” Besse noted in a press release Monday.

Globally, the top two risks were economic slowdown and damage to reputation/brand. Global risk managers are reporting their lowest level of risk readiness in 12 years; many of the top risks, such as economic slowdown and increasing competition, are uninsurable. As a result, risk managers need to embrace risk management as opposed to risk transfer to mitigate these threats and protect their organizations from potential volatility.

The survey also asked global businesses for their projection on what the top risks would be in three years. In Canada, the Top 5 future risks are:

  • Cyber attacks/data breach
  • Failure to innovate/meet customer needs
  • Failure to attract or retain top talent
  • Economic slowdown/slow recovery
  • Aging workforce & related health issues.


Insurance Broker VS Agent

What is a general insurance agent or broker?

Home insurance comes under the financial sector known as Property and Casualty (P&C) Insurance. In Ontario, general insurance agents, also known simply as insurance agents, are people who are licensed and regulated by the Financial Services Commission of Ontario (FSCO) to sell a variety of insurance products including home and auto insurance, and they are employed by one insurance company. To see if an insurance agent you want to work with is licensed, visit FSCO’s Agents Licensed in Ontario database. Alternatively, ask an insurance company for the name of an agent authorized to sell their products.

An insurance agent is different from an insurance broker. An insurance broker may sell insurance on behalf of more than one insurance company and works to find you the coverage that best suits your needs from any of the companies they represent. Insurance brokers are licensed by the Registered Insurance Brokers of Ontario (RIBO). To learn more about insurance brokers, visit the RIBO website .

What is a P&C insurance company?

A property and casualty insurance company, also known as a general insurance company, issues and sells home and auto insurance to individuals through its agents or brokers, and promises to pay benefits to holders of those policies. In Ontario, insurance companies are licensed and regulated by FSCO. For a list of licensed companies visit FSCO’s Licensed Insurance Companies in Ontario database.

FSCO’s role

FSCO licenses and regulates insurance agents and companies in Ontario to ensure consumers are protected and to enhance their confidence in the insurance sector. If an insurance agent is licensed and regulated by FSCO it means that they had to meet certain requirements that are in place to protect you.

As well as checking that the general insurance agent or company you want to work with is licensed by FSCO, you should also check FSCO’s Enforcement Online database to see if any enforcement action has been taken against them in Ontario. Enforcement actions like having their licence suspended, or being fined (Administrative Monetary Penalty) means that there have been some issues in regards to compliance with the law that resulted in these sanctions. You might also want to check out the Canadian Insurance Regulators Disciplinary Actions  database that offers public access to regulatory decisions issued by insurance regulators across Canada. 

Insurance agent and company responsibilities

General insurance agents, brokers and companies have obligations and responsibilities to you, the insurance buyer. Visit the RIBO website to understand a broker’s responsibilities.

Insurance agents and companies are required to:

  • be licensed by the Financial Services Commission of Ontario to sell property insurance in Ontario;
  • comply with the Ontario Insurance Act ;
  • make treating you and other consumers fairly a core component of their governance and business culture;
  • have policies and processes in place to handle your complaints in a timely and fair manner;
  • protect your private information and immediately inform you of any breach;
  • if an agent, have successfully passed the qualifying examination conducted by the Insurance Institute of Ontario (agents are exempt if they have a Chartered Insurance Professional designation); and
  • if an agent, must disclose to you in writing any conflicts of interest that they may have.

In addition to licensing requirements, insurance agents and companies should follow industry best practices. They should:

  • act with due skill, care and diligence when dealing with you and when recommending home insurance policies to you;
  • promote home insurance policies and other related products in a manner that is clear, fair and not misleading or false;
  • recommend suitable home insurance policies by assessing your property, content and liability, taking into account your disclosed personal circumstances and financial situation;
  • provide continuing service to you until all obligations have been met;
  • ensure that a licensed insurance agent is always available for consultation during business hours;
  • provide their contact information, licence number, and other information that you request; and
  • draw your attention to all relevant information before you buy a home insurance policy.

Your rights and responsibilities

When you purchase a home insurance policy, you enter a contract which gives you the following rights and responsibilities:

You have the right to:

  • understand your policy, and to receive explanations in plain language from your insurance agent or broker.
  • receive clear information about the claims process.
  • file and resolve any complaints.
  • protection of your privacy.

You are responsible for:

  • paying all premiums as outlined in the policy.
  • disclosing information about the value of your home and contents. If you undervalue your home or contents when buying the policy, you might not have enough coverage. If you overstate the value when making a claim, your policy may be cancelled or voided.
  • disclosing information about renovations or home-based business activities, no matter how small.
  • disclosing full and complete information on your home insurance application, including previous home insurance claims.
  • reviewing the application thoroughly before signing and submitting.

Questions to ask an insurance agent or broker about home insurance

When purchasing a home insurance policy, use these questions as a guide when speaking with a home insurance agent, broker or company.

  1. What does this home insurance policy cover and to what extent?
  2. What does this home insurance policy exclude? Can you give me an example of when an exclusion would happen?
  3. I have the following valuables: [list off items you consider valuable]. Does this home insurance policy cover these valuables? If not, how much would it be to get an endorsement for the valuables? Do I need to get appraisals done for these valuables when they’re insured?
  4. I have a locker/storage unit/shed/garage. Is it covered under this policy?
  5. What liability does this home insurance policy cover?
  6. How much are the deductibles in this home insurance policy?
  7. Does this home insurance policy cover replacement cost or actual cash value?
  8. Do I qualify for any premium discounts?
  9. Are there any discounts you offer for making my home more disaster resistant?
  10. If I combine my home and auto insurance, is there a discount?
  11. Are the premiums paid monthly or annually?
  12. When does the policy coverage begin? For how long?
  13. If I need to make a claim, how do I do this?
  14. I’ve heard floods are on the rise. Does this home insurance policy cover floods, also known as overland water?
  15. Am I covered for sewer backup? If so, to what amount?
  16. Do you have any tools or resources such as a home inventory document that can assist me in making better decisions and protecting my home?
  17. Do I live in an area that is more prone to risks? Is there anything I can do to protect my home against these risks?

What to do if you have a complaint

If you have a question or complaint about a service or product that you purchased, you should speak with your insurance agent, broker or the insurance company first and see if they can resolve the issue. 
If you want to file a complaint about an insurance company or agent, you can follow the three steps on FSCO’s website: How to Resolve a Complaint about Insurance. Keep in mind the following when asking FSCO for assistance:

  1. FSCO reviews complaints for non-compliance with the Insurance Act and its regulations. FSCO cannot adjudicate claims, review contractual disputes or impose a settlement. We also cannot assist in obtaining compensation.
  2. FSCO does not deal with concerns regarding claims, interpretation of policy coverage and policy processing and handling. For these concerns, please contact the General Insurance OmbudService (GIO). GIO is an independent organization who assists consumers in resolving concerns or disputes with their home, auto or business insurers. They may be reached at 1-877-225-0446 or through their website at .
  3. FSCO cannot review consumer concerns regarding insurance premiums. Like many insurance products, property insurance is sold in a highly competitive environment. Each insurance company has its own unique set of underwriting guidelines which outline the risks it will insure and will not insure. As a result, the premiums companies charge and the coverages provided will vary from company to company. If there has been a change in risk, or if a risk has had a number of claims within a certain period of time, an insurer may use discretion when deciding whether to renew or cancel a policy, and what the premium would be.

If you have a complaint against an insurance broker, visit RIBO’s website  to learn more about their complaint process, or contact a complaint officer at 416-365-1900.


Do Speeding tickets affect your insurance?

No one wants to get a speeding ticket, yet it continues to be the most common traffic infraction in Canada year after year. Why? For many people, they simply do not give themselves enough time to get to their destination and resort to speeding to make up the time, and others have this misconception that getting a speeding ticket is nothing to worry about.

True, a minor speeding ticket will likely not be a high stress occurrence, but even a small speeding ticket could:

  • Increase in your insurance rates
  • Lead to fines
  • Cost you demerit points

One thing is for sure though; receiving multiple speeding tickets will increase your insurance rates, even if they are minor infractions. Getting a serious speeding ticket (such as 50km over the limit) will definitely increase your insurance rates and could get your in some serious legal troubles as well.

Keep in mind that your decision to pay your speeding ticket is an admission of guilt. If you are going to dispute the ticket, make sure to get some legal counsel.  If you pay, the infraction will go on your driving record.

“If you have been caught for speeding in the past, when it comes time to renew your auto insurance policy always be totally upfront with your insurance company about past speeding tickets,” says Glenn Cooper from Aviva Canada.  “If your insurance company checks your motor vehicle report and find you have not disclosed previous tickets, your rates will likely go up, a claim may be denied or your policy could be cancelled.”

Slow down, make the roads safer, and reduce your chance of getting a ticket. Speeding tickets can and will impact your auto insurance rates. A conviction free driving record may qualify you for a reduction of your insurance premium. So, think before you decide to speed. Being five minute late could save you money, stress and time down the road. This article is for general informational purposes only. More detailed information is available from your insurance broker.


What does “No Fault” insurance really mean??

Here’s a common myth: that no-fault auto insurance means no one is at fault. Not so. There are still fault-based rules of the road, enforced by police. If you are at-fault in a collision, your insurance premiums will be affected. Depending on the nature of the collision, you may be charged with an offence. These offences are governed by either provincial motor vehicle legislation or federal legislation such as the Criminal Code of Canada.

No-fault insurance exists to ensure that those injured in a collision receive compensation and benefits from their own insurance company, regardless of fault.

It’s designed to reduce the delays of an adversarial legal (or “tort”) system, and to provide treatment and benefits to injured victims as quickly as possible.

Most provinces in Canada have some form of no-fault accident benefits that are paid to all collision victims. The difference is the degree to which tort (the right to sue) or no-fault (access to accident benefits) is emphasized. For example, Quebec has a pure no-fault system that eliminates the right to sue, but provides substantial accident benefits. Ontario has a “hybrid” system, which blends no-fault and tort.

Saskatchewan and Manitoba have either pure or hybrid no-fault insurance systems. British Columbia, Alberta and the Atlantic provinces have tort-based systems. It is interesting to note that BC consistently has one of the highest incidences of highway injuries and fatalities of any province in Canada.

While some argue that a tort system provides a deterrent against poor driving behaviour, there is no correlation between the type of insurance system and the road safety record of the jurisdiction. There is no evidence that no-fault insurance leads to increased numbers of collisions or fatalities/injuries.


Do you know what a deductible is? When you need to pay?

Have you ever looked through your insurance policy and felt like you were reading another language? Understanding insurance terminology might seem intimidating, but we’re working on changing that. Let’s break down deductibles.

What is an insurance deductible and how do deductibles work?

In your insurance policy, the deductible is the amount that you agree to pay out of your own pocket before your insurer will step in and pay the remaining balance of a claim (up to the policy limit).

Picture this: A tree branch falls on the roof of your car, and the repair bill is $1,500. If your deductible is $300, you’ll pay $300 to the repair shop and your insurer will pay the remaining $1,200. If your car is totalled or not worth repairing, your insurer may pay you the actual cash value of your car instead — in this case, your deductible would be subtracted from the total payout.

You’ll usually have some say in the amount of your deductible, and the amount (as well as any rules or exceptions) will be clearly stated in your policy.

Do I have to pay a deductible every time I make a claim?

Not necessarily:

  • If your deductible is $0, you won’t have to pay for any portion of your approved repairs or settlement amount.
  • Some policies will waive your deductible when certain circumstances apply. When your total claim hits a certain dollar value, for example, you might not have to pay your deductible.
    • Picture this: After a fire, you make a home insurance claim of $50,000 for repairs. Your home insurance deductible is $1,000, but your policy states that this deductible doesn’t apply if a single claim adds up to more than $25,000. In this case, since the claim is more than $25,000, you don’t have to pay your deductible.
  • Some policies have different deductible amounts for different types of coverage, which means that you may or may not have to pay, depending on the coverage you use for that specific claim. And, if your insurer determines that your claim will be covered by more than one section of your policy, they’ll do the math and determine how much of your deductible you’ll need to pay.
    • Picture this: Your car insurance policy says that your deductible is $0 when an accident isn’t your fault and $500 when it is your fault. You get in a fender-bender and your insurer determines the accident was the other driver’s fault, so they decide to fully cover the damage to your vehicle (up to your policy’s limit, of course) — so you pay $0. In this same situation, if your insurer determined that you and the other driver were equally responsible, you may only have to pay 50% of your deductible — in this case, you’d pay $250. But if your insurer determined the accident was entirely your fault, you’d be on the hook for $500.s

Why do deductibles exist?

Now, you may be wondering why insurance companies build deductibles into their policies in the first place — and it’s a good question. Long story short, deductibles exist to keep insurance as affordable as possible.

Here are just a few ways deductibles work to save you money in the long run:

  1. Deductibles help prevent fraudulent claims and reckless behaviour. If insurance policies didn’t have deductibles in place, some people could be tempted to damage their own things or act recklessly (two behaviours known as “moral hazards” in the insurance world) just because they know their insurer will protect them. This becomes less tempting when they know that part of the repair bill will come out of their own pocket. Over time, false claim payouts can lead to higher premiums for everyone who has insurance, and implementing deductibles is just one way of preventing them.
  2. Deductibles help prevent minor claims. If an insurance company had to process a $50 claim every time someone found a tiny scratch on their car door, they would need to employ a lot more people — and that could drive up the cost of insurance, since the cost of processing these small claims would far outweigh the actual cost of the repairs. Deductibles help keep minor claims at bay.
  3. Deductibles help keep your money in your pocket. When you set your deductible, you’re agreeing to either fully cover those smaller claims or cover a portion of your repair costs for larger claims. When your insurer doesn’t need to invest in processing those smaller claims or paying the full amount, they’re able to share those savings with you through lower premiums.

How do I know if I’ve chosen the right deductible?

The best way to figure out if your deductible is right for you is to ask yourself one simple question: Would you be comfortable paying the deductible amount out of your own pocket if you made a claim today? If you choose a lower deductible, you’ll be responsible for footing less of the bill if you make a claim — but the cost of your insurance could be a little higher. On the other hand, if you choose a higher deductible, the cost of your insurance will likely be lower — but don’t forget that you’ll be expected to pay the deductible if you make a claim.

Note: Rules and regulations can vary by province, and claims are handled according to the location where the accident occurs — not necessarily the rules in your home province. That means the amount you need to pay for your deductible could be different if you’re involved in an accident outside of your home province.

If you have questions or want to make changes to your deductibles, reach out to your licensed broker today.

Full Article by Economical Insurance:|blog|p|2|en-CA

What you need to know about trip cancellation insurance.

Almost two-thirds of Canadians either don’t buy or are unsure if they have trip cancellation insurance before leaving on holiday, according to a recent study of 960 Canadians by

Assuming that trip cancellation coverage costs no more than 10% of a trip, that’s an insurance premium of about $300 for the average vacation costing about $3,000.

For a significant number of Canadian travelers, that cost is too high, the Kanetix study found. Thirty-six per cent of survey respondents believe that cancellation insurance is too expensive.

The Kanetix study lists a number of other reasons why your clients are hesitant to purchase cancellation insurance.

For example, 28% of Canadians surveyed said they have it on their credit card.

“Value adds” on a credit card such as travel insurance and/or damage to a rental car are typically underwritten by the insurance company with which the consumer’s financial institution has an agreement, Kanetix observed in a follow-up email with Canadian Underwriter. “People should check their credit card agreement documents for the specifics — including the insurance company.”

Another 15% of Canadians said they already have trip cancellation coverage through their workplace benefits. However, that not all policies cover the same limits. “It’s always best to check what your employee group coverage is, versus purchasing privately,” Kanetix advises travelers.

Twelve percent believe that their travel medical policy includes cancellation coverage. But does it?

“They are separate coverages and must be purchased separately,” Kanetix notes. Unless an all-inclusive policy has been purchased, which bundles emergency medical, trip cancellation and baggage loss coverage into one policy, there’s a chance that your clients may not have the coverage they think they do.

It might be worth it for brokers to raise the matter with clients just for educational purposes alone. Thirteen percent of people in the survey had not even heard of trip cancellation insurance.

And then there are the skeptics: 18% of those surveyed said they were not confident a claim would be paid.

Whatever reasons a client may cite for declining trip cancellation coverage, there are plenty of opportunities for brokers to educate the client about the coverage, said Janine White, vice president of marketplaces and strategy at

“For all that trip cancellation insurance covers, it’s an inexpensive way to protect the money you’ve invested into going on vacation,” Smith said in a press release announcing the survey results. “Whether it’s due to a death in the family, being called to jury duty, or a sudden injury or illness that prevents you from travelling, trip cancellation insurance can help you recoup travel expenses that are non-refundable or prepaid should you need to cancel your plans.”

Trip cancellation insurance can also provide coverage if the client is laid off from his or her job, if the home suffers a catastrophic loss like fire or flooding, severe weather, or if the Government of Canada issues a new “avoid travel” advisory, among other reasons why a client would want the coverage.

Full Article by Canadian Underwriter