Archive for June, 2011

How much is enough Liability Insurance?

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Liability insurance is mandatory, but you can adjust the level to make sure your needs are met. Ask your broker for more information about liability insurance and how to obtain the right level of coverage.


Liability insurance covers the cost of damages (for accident benefits, medical costs, lawsuits and awards) in the event of personal injury or death from an accident involving the insured party. In other words, you are financially protected if you are held liable for an injury or loss by others arising from the operation of your vehicle.


Many provinces in Canada now have some level of no-fault insurance in which each person’s own insurance company pays for injury or damage up to a certain limit.  This applies regardless of whether or not the insured person was at fault. In Quebec and Manitoba, for example, there is a pure no-fault. In Ontario, however, there is a threshold system in which the no-fault clause only applies up to a certain threshold of liability. So, if you are involved in an accident and injured, your own insurance covers the associated costs of treatment, living expenses, loss of work and pain and suffering.


The recommended level of liability insurance coverage is usually about $1 million. There are some situations in which you might want to increase your liability limit depending on the use of your vehicle. For example, if you drive into the U.S. on a regular basis, where liability settlements are generally higher than in Canada, you might want to consider higher coverage. If you carpool to work or drive groups of children in your car to school or after-school events, you might want to increase your coverage to reflect the higher risks to which you are exposed.


You can purchase an Umbrella Liability Policy that provides additional liability coverage to your home and car insurance.  For example, If you have $1 million on your home and $1 million on your car, but don’t feel it is sufficient, instead of adding $1 million to each, you can buy an Umbrella Liability Policy for an additional million that covers both.


Getting an Insurance Quote?

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Whether you are transferring your insurance from another province, seeking to change insurers or owning a car for the first time, the process of getting an insurance quote can be daunting. In general, the more the insurer knows about you and your driving record the better off you will be, even if your record is less than perfect. Full disclosure at the beginning will save any risk of misrepresentation if you do need to make a claim in the future.  This is an area where your broker can be of particular assistance, helping you to navigate the terrain. There are three main categories of information required:


• Names of the drivers of the vehicle to be insured. This usually includes all licensed members of your household since it is assumed that they will use the car. Provide their names as shown on their license, the number of years licensed and the percentage of time they will use the vehicle.

• Driving records of all applicants will be screened to identify applicants with undesirable driving records. This will include driving convictions in the last three years and accident claims in the last six years.

• Insurance history for the preceding three to six years must be provided; including any cancelled, declined or refused insurance.

• License history of all listed drivers must be provided for the preceding six years, including suspensions, cancellations or lapses.

• In provinces that have public insurance, all required information is already captured by the government.


Full information about the make, model and year are required as well as the Vehicle Identification Number or VIN.  Also include the details of a lease if you have one, the purchase value, whether new or used, and the value of any modifications to the vehicle.  If any other party has a financial interest in the vehicle this should be recorded so they are protected in the event of a loss.


Finally, you will need to provide information of how the vehicle will be used. Is it for pleasure or business? If it is for commuting, what is the daily estimated distance? What will the annual distance be? If for business use, will you be carrying paying passengers, renting the car out to others or transporting any goods?  You will also need to indicate your choices regarding your coverage, for example, your preferred deductible, liability limit and coverage for any special situations, including storing the car or driving in the U.S.


Am I Covered?

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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

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, and 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.


Who Needs Business Insurance?

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The right insurance is an important tool to protect any business. Let your broker help you plan and arrange the right insurance for your business.

Anyone operating a business, whether it’s home-based, a large industrial operation or a professional services office, needs commercial insurance as part of an overall risk management strategy.


Your commercial insurance should be designed to protect against the most prevalent risks to the assets and capital in your business. Your broker can help you itemize and quantify those risks, and determine the level of coverage you should consider.

Risks include:

Property loss. Insurance against property damage or theft protects the physical assets that support your business including buildings, equipment, vehicle fleets and inventory, as well as intangible assets such as licenses, patents and accounts receivable. To arrange the right level of insurance you must know your rights and obligations as an owner, tenant, leaseholder, and landlord or mortgage holder.

You must also take into account local bylaws on standards for physical repair and reconstruction.

Liability loss. Every business is exposed to liabilities and should be protected against the major ones, including personal injury, product failures or negligence.

Personnel loss. Group health and benefits insurance can help to improve employee retention and well-being thereby reducing the cost of turnover and lost time.

Net income loss. Some businesses are exposed to specific perils that are beyond their control and that would cause critical damage to the viability of the business. For example, a food services operation might insure against a major electrical outage that would result in spoilage of their inventory.


An experienced commercial insurance broker can help you read the risks in your business, advise you on how to reduce some of the more manageable exposures and suggest an insurance mix that takes your risk tolerance and financial situation into account.

The following are examples of common risk drivers:

• Heavy reliance on limited sources of income

• Dependence on one or a few people to run the business

• Elaborate and specialized physical assets

• Extensive international operations

• Sensitivity to factors outside your control, such as weather and commodity prices

• Labour unrest

• High levels of inventory

• Large vehicle fleets

• Rudimentary workplace health and safety practices

• Dangerous materials handling


What Extra Coverage should I be Aware of?

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Special policies can cover the risks unique to your business. These are just a few of the special coverage’s available for special situations; your broker can tell you more.


This form of insurance provides you with the funds required to protect your business financial position if your operations are interrupted by an insured loss such as a fire.  Features and costs will vary considerably depending on whether you insure for named perils, a specific timeframe, specific costs or just a portion of the income you lose. This form of insurance is highly customizable and can include coverage for extra business expenses, rental income lost, gross earnings lost, payroll and professional fees.


A consequential loss is not caused directly by damage to property but is a consequence of other damage. For example a cold storage facility might experience significant inventory losses if an on-site transformer station failure cuts out electricity supply or a fire damages the refrigerators. A greenhouse operation or a winery might require constant temperature and humidity to be maintained and would insure against the consequences of an extreme change in those factors.


Many named perils and broad commercial property insurance policies will exclude coverage of breakdown or damage to highly sensitive or specialized equipment including high-pressure boilers, control systems and computers, diagnostic equipment and more.  Special machinery policies can be obtained to cover equipment for sudden and accidental breakdown, which is advisable if loss of use is a significant risk for your business.


It is common practice to protect company directors and senior managers from personal liability for actions that are the responsibility of the company they direct. While insurance does not remove their fiduciary duty, it does provide some financial protection from legal liability for a claim made against them for an alleged or wrongful act. A wrongful act is any error, misstatement, misleading statement, act, omission, and breach of duty or neglect allegedly committed or attempted.

Errors and omissions insurance is usually used in professional services firms such as law, accounting and consulting to protect professional staff from the impact of errors and omissions in their work.


There are as many forms of specialized coverage as there are risks to your business.

A broker can help you assess the probability of experiencing a loss and determine whether or not you should purchase specialized coverage. Talk to your broker to see if there are risks unique to your business that require extra protection.

For example:

Crime – designed to protect against loss of money or securities, including theft overnight or on the way to the bank. This also includes employee dishonesty.

Electronic Data Processing Systems – protects your computer and its data.

• Sewer Back-up – covers loss or damage caused by the backing up of sewers, sumps, septic tanks or drains.

• By-law Coverage – covers additional expenditures resulting from by-laws regulating construction when reinstating a building after a loss.


How can I Reduce Risk in my Business?

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A risk management program is the best way to systematically reduce the impact of risk. Your commercial insurance broker has the experience to help you manage the insurance risks in your business.

An experienced commercial broker knows how to identify and manage many of the risk factors in your business and translate that knowledge into a cost-effective risk management program. There are four key steps:

1. KNOW YOUR RISK EXPOSURES:  The first step is to accurately identify and analyze the risk exposures to your tangible and intangible property, your income, personnel and liabilities. These can be determined in a thorough audit of your office, warehouse or shop floor to identify all perils, probabilities and potential financial consequences.

2. CONSIDER THE RISK MANAGEMENT ALTERNATIVES:  You can save money by scaling down.  Insurance is one form of “financing” your risk, but there are other alternatives to explore.  These include eliminating the exposure, loss prevention, loss reduction and contractual transfer of responsibility for losses, for example, when a lessee assumes the liability for damages to leased space. A thorough risk management plan will examine all these alternatives before getting to the issue of insurance. Commercial insurance is the most widely used of all risk financing techniques because of the cost-effective protection it provides. General and specialized policies can cover just about any peril. Another way to manage risk is to be financially prepared for a loss.

One way to do this is to accumulate your own capital reserves to cover the loss, but this can tie up large amounts of capital at low rates of return.

3. IMPLEMENT YOUR PLAN:  With loss prevention and reduction plans in place, your broker can help you implement your insurance program with one or multiple insurers.

4. MONITOR AND ADAPT YOUR PLAN:  Make sure to adapt your plan to match the changes in your business including geographical expansion, physical growth, and new lines of business or increased complexity. Consider an annual review of your needs with the help of your insurance broker.

DON’T JUST MANAGE YOUR INSURANCE, MANAGE YOUR RISK:  A bit of planning and an ounce of prevention can save you time and money.


What is Insurance and why do I need it?

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Insurance has many forms and functions but really just one purpose – to provide peace-of-mind. Your broker can tell you more about the basics of insurance and can help you make sure your needs are covered.


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:

1. 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.

2. 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.

3. Helps to prevent loss. Brokers and insurers work to help prevent loss with information and advice on road safety, anti-theft, fi re prevention and fraud reduction.

4. 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.


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

1. Automobile insurance in which vehicles and their equipment are covered in cases of accidents and theft

2. Property insurance in which home and business assets and property are protected from perils such as fire, theft and accidental damage

3. Liability insurance which protects people who are responsible for injuries or damages to third parties


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. Your broker can tell you more about the basics of insurance and can help you make sure your needs are covered.


Insurance is a contract in which the insurer agrees to compensate the insured for specific losses and specific perils.


Why use an Insurance Broker?

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Your broker works for you, not the insurance company. They are at your side when you buy or upgrade your insurance or if you have to make a claim.

Finding a broker who understands your needs is an important first step to being properly insured. Take the time to find someone you feel comfortable with.


Insurance brokers are business people whose success rests on your satisfaction with your coverage, price and service.  It’s in their interest to understand your needs and negotiate on your behalf for competitive premiums–even if it means approaching several companies to find the right solution. Because your broker doesn’t work for the insurance company, he or she can also assist you with objective advice if you have to make a claim.


The insurance industry has become more complex with its own language of terms, legal issues and subtle details. You need a knowledgeable expert at every stage of the process to interpret all the rules and what they mean for you. Your broker’s advice can also be invaluable as your insurance needs change and your requirements become more complex.


There is a well developed system of broker licensing in Canada so you can feel confident that your licensed broker is a certified professional. One of the best ways to find a broker is to ask family, friends and co-workers for a recommendation.  Or, if you have access to the Internet, visit and follow the links to a broker in your community.


When it comes to insurance, there is no question too basic. If there is anything you don’t understand, don’t be afraid to ask us.  We are here to help.


How can I Minimize my Insurance costs?

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Brokers can help find ways to control your premiums and still get the coverage you need.  Nobody likes to pay insurance premiums so any chance to control or reduce cost is welcome. Your broker can help you minimize premiums by helping to define your insurance needs and by shopping around for the best policy.


Under-insure and you might be left carrying the cost of damage, theft or loss of property. Over-insure and you will be paying more than you have to. Your broker can help you find the right balance by examining your assets, your risk profile and your insurance history. They can also alert you to choices that could reduce your insurance costs such as installing an alarm system in your home.


One way to control your premiums is to set a higher deductible, which means you accept more risk for covering small losses. Insurers tend to have deductibles ranging from $300 to $1000. Ask your broker to explain the cost implications of different deductibles.

If you drive in the U.S. you might want to consider higher liability coverage due to the higher levels of personal injury awards in that country.


One of the best ways to minimize premiums and obtain discounts is to avoid making claims. One of the best ways to do this is to reduce the risk factors that drive claims.

For your vehicle:

• Avoid car accidents by driving defensively and never while impaired

• Install an anti-theft system

• Never leave valuables in the car

• Keep your driving record clean’

In your home:

• Consider a home security system

• Install smoke and carbon monoxide alarms

• Clear the snow and ice off your walk

• Install good quality locks on your doors and windows

These are just a few examples of ways in which lowering the risk can mean lowering the cost to you.


If you experience a loss that exceeds your deductible, ask your broker what the impact might be on your premiums if you make a claim. The best advice might be to absorb the cost yourself in exchange for lower premiums long-term.


Making a Claim?

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How you make your claim is as important as what you claim.  The right time to make a claim is immediately or as soon as you are able.


If there is any danger or on-going damage occurring, your first priority should be to ensure your safety and limit the damage to your property. At that point, you should take care to act quickly and with the right information.

• Alert your broker and your insurer of an insured loss as soon as your situation permits

• Keep phone numbers available

• Alert the police of any theft or break-in

• Do not alter evidence of the loss, for example, by starting to clean up after a pipe bursts or altering the scene of a break-in. If you absolutely must alter anything take detailed pictures of the damage first


First things first. Should you make a claim?

There are some situations in which you shouldn’t and your broker can help you decide.

• Is it covered? Remember that your policy has limits and exclusions that mean some losses are not covered.

Property belonging to your employer, for example, is probably not covered.

Damage from a fire that was set intentionally might not be covered and theft of a valuable painting could be beyond your insurance limit. Is it covered? Ask your broker first.

• If the loss is less than the amount of your deductible then you cannot make a claim.

• If your loss is covered and above the amount of your deductible, you might still not want to make a claim if your premiums will increase as a result.

Again, ask your broker for advice.


Once your claim has been made, the insurance company may appoint an adjuster to get a clear picture of the circumstances and extent of the loss. They may assist in securing repairs and can help with arrangements for accommodations.

They might also decide to limit the amount of a payment or to not pay at all – depending on the situation. If you are unsure about the role of your adjuster and the information they are using, be sure to contact your broker who can help bring clarity to the situation.