Frequently Asked Questions

For your convenience, we have assembled the answers to many frequently asked questions. If you are unable to find the answer to your question, please feel free to contact our office and one of our Professional Insurance Advisors will be pleased to assist you. Comments or suggestions on how we can continually improve the content of our website are welcome. Please e-mail us with your comments.

General Insurance

What does "replacement" value mean?
Why did my premiums increase when I haven't had a single claim on my policy?
A friend of mine claimed more than she lost in a fire. She says the insurance company can afford the exaggeration. Isn't this fraud?
How big is fraud?
I have paid premiums for years. I finally now have a claim and the insurance company says I'm not covered. What's with that?
Can I be sued for more than the limit of my liability insurance?
What are my options for the payment of premiums?

What does "replacement" value mean?

For home insurance, the replacement value guarantee allows you to replace the insured item with a new item of the same kind and quality if that object is destroyed or rendered unusable due to an insured loss. The insurer does not apply any depreciation in this case. As with all policies, there are restrictions and limitations for this coverage to respond.

For automobile insurance, the owner of a new vehicle can also take out a Waiver of Depreciation Endorsement. Various options are available in the case of a total loss, ranging from the reimbursement of the initial purchase price to the replacement of the destroyed vehicle with a new vehicle that has the same features. This insurance protection is typically offered in the first two years when a brand new vehicle is purchased or leased.

Why did my premiums increase when I haven't had a single claim on my policy?

The calculation of premiums is based on several things and is not linked just to your own personal claims history. The insurance industry will look at all the claims in a class of business such as personal automobile or personal property. Actuaries for the insurance companies try to predict how many claims will come in the next year based on those numbers. They also factor in the costs of fraudulent claims, as well the impact of the increasing number of natural disasters. Once the claims costs have be forecasted, the premium is calculated. The cost of inflation and global economics will also come into play, which means the premiums increase even when you have had no claims at all.

A friend of mine claimed more than she lost in a fire. She says the insurance company can afford the exaggeration. Isn't this fraud?

This was most definitely fraud. What your friend doesn't realize is that she is taking money out of your pocket. One of the factors when calculating basic premiums is the cost of claims that will be paid. That number is based on what was paid before, plus a forecast built in for such things as inflation, natural disasters, fires, thefts, accidents, etc. Every claim that is exaggerated, even if only by a small amount, means that the amount used in calculating next year's premium is that much higher. Smaller claims mean significantly more than one would think. For every large claim, there are easily a thousand smaller ones. If each of those smaller claims was exaggerated by $100, that means $100,000 more was paid in claims than should have been. Following is a short list of fraudulent acts; there are a significant number more:

  • Claiming for something that was never owned
  • Claiming for something of a much higher value (eg: claiming for a Blaupunkt car stereo when a Pioneer had been stolen)
  • Claiming to be hurt when there was no injury
  • Claiming for lost wages when there was no time off work

How big is fraud?

The Property and Casualty insurers of Canada believe that at least 10% to 15% of household, automobile and commercial business claims are fraudulent - either completely fabricated or exaggerated. That equates to approximately $1.3 billion a year in fraudulent claims that must be paid from the premium of policy holders. The cost of insurance fraud rises another approximately $1 billion if police, court, arson-related fire-fighting and other social costs are considered.

Excerpted from Insurance Council of Canada 1998 "FACTS"

I have paid premiums for years. I finally now have a claim and the insurance company says I'm not covered. What's with that?

Your insurance company receives a premium from you in return for their promise to pay your claim should certain events happen. However, sometimes exclusions apply and the insurance company doesn't pay for everything. It is important to read your policy carefully and ask your broker or insurance company if there is something that you do not understand. Examples of things that are not covered would include, but not be limited to, wear and tear, damage from nuclear radiation and damage from war or civil unrest. If you require coverage for some of the exclusions listed in your policy, it is advisable that you speak with your broker.

Can I be sued for more than the limit of my liability insurance?

Yes. The amount of liability insurance you have is never disclosed to anyone during a lawsuit. If you are successfully sued for an amount greater than the limit of your liability insurance, you will be required to make up the difference from your own personal assets. This could mean the loss of your home, investments, RRSPs and ultimately bankruptcy. You should review your liability limits with your professional insurance advisor who can help you determine what is appropriate for your circumstances.

What are my options for the payment of premiums?

We offer many different payment options (these may vary slightly depending on which insurance company you choose) for you to choose from:

  • Annual Payment
  • 3 Payment Plan
  • Automatic Debt Monthly Payment Plan (via the insurance company)
  • Visa Payments via MMR or the Insurance Company
  • Debit Card Payments with MMR
  • Telephone Banking with MMR
  • Internet Banking with MMR

Check with your insurance professional to determine if a service charge from the insurance company applies to any of the payment plans offered.