What You Can Do to Control the Cost of Insurance

Ask your insurance representative about the following options for lowering your premium:

• Increasing your deductible, or your share of the cost of a claim. By increasing the amount you are willing to pay, you will decrease your premium.
• Package deals for insuring your home and car(s) with the same insurance company.
• Installing a sprinkler system or a monitored burglar or fire alarm.
• Quitting smoking. Many home fires are caused by careless smoking. Many insurance companies acknowledge that non-smokers have a lower risk of fire loss.

In addition to shopping around and comparing prices and coverage, homeowners can further lower their insurance premium by:

• Building a consistent, claims-free track record.
• Not over-insuring the home by including the market price of the land in the insured value. Whatever the limits of your policy, you cannot claim for more than the actual loss to insured property. “Insured property” does not include the market value of underlying land. You should insure your home for what it would cost to rebuild it in the coming year (replacement costs). Don’t pay extra premiums for nothing.
• Asking about other discounts. For example, some insurance companies provide discounts for seniors.

Take the Insurance Literacy (IL) Quiz

Our homes and cars are two of the largest investments Canadians will make. Learning more about them and their impact on our financial well-being is a wise decision. Congratulations- and enjoy this short quiz:

Home Insurance

1. In a typical policy, you are automatically covered for water damage to your basement arising from sewer back-up.




This is optional coverage, usually advisable in some low-lying areas, particularly those with combined storm and sanitary sewers. Talk to your insurance representative about whether it’s a good idea for you.



2. Which of the following could save you money on your home insurance premium?



1. Increasing your deductible, or your share of the cost of a claim. By increasing the amount you are willing to pay, you will decrease your premium.
2. Package deals for insuring your home and car(s) with the same insurance company.
3. Installing a sprinkler system or a monitored burglar or fire alarm.
4. A non-smoker may be eligible for a discount. Many home fires are caused by careless smoking. Many insurance companies acknowledge that non-smokers have a lower risk of fire loss.



All of the above



3. Earthquake insurance is advisable for all Canadians.




Such insurance is worth considering in quake-prone regions of Quebec and British Columbia. Cost varies according to location and type of construction. Talk to your insurance representative.



4. Replacement cost insurance on home contents means there is no allowance for depreciation.




Insuring your personal property for replacement cost means, for example, if you have a five-year old stereo worth $1700 and it’s stolen and you replace it with a new equivalent stereo, you would be paid the cost of the replacement stereo. If you have an actual cash value policy, once depreciation is taken into account, you might only get about $300.



5. Insurers don't pay for damages caused by "Acts of God."




The words “Acts of God” don’t appear on any home, car or business insurance policy in Canada. In fact, insurers frequently pay for claims stemming from events that some call “Acts of God” such as hurricanes, wildfires, high winds and hailstorms.



6. I’m a tenant. Should I insure?




Yes, but only to a $2,000 limit and only while they are in your home. There is no coverage for merchandise or samples for sale. If these limits are a problem, you may wish to consider buying an insurance policy, or an endorsement to your home insurance policy, designed for home-based businesses.



7. Are business equipment, tools and books covered in my home insurance policy?




Think of all the things you own: the furniture, your clothes, household items, toys, electronics, and other things. Imagine replacing everything you own, due to fire or water damage. You would be surprised by how much it would cost you to replace everything. Coverage could provide some protection in the event of a lawsuit, should you cause damage to other tenant’s property or the building. The cost of defending the lawsuit would generally be covered as well as the amount you are found to be liable, up to the policy limit.

Auto Insurance

1. The colour of my car will affect the cost of my insurance.




This has no bearing on premium calculations, contrary to popular opinion.



2. Does my car insurance cover theft of property such as golf clubs?




Contents would be covered under home and tenant’s insurance, another very good reason to have tenant’s insurance.



3. What are some of the overall benefits of adequate automobile insurance?



1. lost income replacement (partial)
2. medical rehabilitation,
3. housekeeping,
4. pain and suffering awards



All of the above



4. Is it true I can’t qualify for income replacement benefits from a car accident?




If you are eligible, this benefit will partially compensate you for the loss of your income if you cannot work because of your injuries.



5. Which of the following could lower your automobile insurance:



1. increasing your deductible (i.e., your share of the cost of a claim) – by increasing the amount you are willing to pay, you will decrease your premium;
2. dropping collision coverage on an older car;
3. getting package deals for insuring your car and home, or more than one car, with the same insurance company;
4. installing an approved theft deterrent system in your vehicle;
5. buying acar with a lower-cost insurance rating – you can see different cars’ ratings in the IBC publication How Cars Measure Up



All of the above