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General Insurance FAQ’s
Why is my insurance so Expensive? Why has my premium gone up so much?
There are many factors that affect insurance premiums. The cost of an insurance premium is largely based on statistics, and partially on individual history. Premiums are in part determined by your individual loss history, costs to repair or replace property, the legal environment (increased legal judgements) and historical claims data based on regions and exposure. It’s also important to remember that a policy with a low premium may not be the best option as it may have reduced coverage. This is quite common amongst those insurance companies that widely promote ‘big savings’.
What’s the difference between ‘value’ and ‘replacement cost’?
Actual Cash Value is the value of a piece of property at the time of a loss subject to its age and condition (depreciation). Replacement Cost is the cost to replace a damaged piece of property with another of like kind and quality.
What is a broker vs. an underwriter vs. an adjuster?
A broker is an independent business person who may place business with any number of insurers (insurance companies). This individual seeks out clients and tries to bring about the best match between each client and the insurer that can best meet the client’s needs. An underwriter is someone who reviews the individual risks on behalf of an insurer. It is his or her responsibility to accept or reject the risk for the insurance company. An adjuster is someone who investigates, negotiates and settles claims.
Are there premium payment options available?
Most insurance companies offer various payment options, which include spreading the premium over a few installments or a pre-authorized monthly payment plan. Here at Tannas Insurance, we also have access to several financial companies that offer premium financing.
Are there taxes on insurance?
There is no tax payable on insurance premiums in Alberta.
Why do I have to pay a deductible if I already pay high enough premiums?
The deductible is the amount you must pay before the insurance company’s coverage begins. This is part of the policy whereby the insurance company can avoid paying relatively small claims as a method of keeping premium costs down. This also leads to a higher degree of loss prevention by the consumer as they are responsible for a portion of the loss. The amount of the deductible is proportional to the premium. If you wish to have a lower deductible you must accept a higher premium and, conversely, lower premiums can be obtained if you carry a higher deductible. An exceptionally low premium rate may signal an equally exceptional high deductible amount. It is important to find a balance between affordable premiums and a fair deductible when buying insurance.
What is a 43( r ) and how does it relate to my personal/commercial vehicle?
When this endorsement, or addition to the policy, is purchased, the insurer waives the application of depreciation for the repair or total loss of the insured vehicle should it be damaged by an insured peril. The waiver applies for a specified time after purchase when the vehicle is purchased new and the insured is the original owner. In the event of a partial insured loss, no depreciation is applied to the replacement cost of required parts. If the vehicle is a total loss, the insurer pays the original purchase price of the vehicle. This endorsement may not be available on all vehicles.
What is a 13D?
Glass claims use up a good part of Comprehensive premiums. Insurers offer reduced premiums if this endorsement (change) is used to limit glass coverage under Comprehensive, or an underwriter may insist on this endorsement if an insured makes several windshield claims. This endorsement reduces the coverage by deleting loss or damage to glass unless caused by fire, lightning, theft or attempt thereat, windstorm, earthquake, hail, explosion, riot or civil commotion, falling or forced landing of aircraft or parts thereof, rising water, or the stranding, sinking, burning, derailment or collision of any conveyance in or upon which the automobile is being transported on land or water. In addition, coverage is provided for loss or damage caused by vandalism to windows other than the front window.
What is a SEF 40?
This standard endorsement (change) form applies a deductible to insured claims resulting from the peril of fire or theft of the entire vehicle.
What is a SEF 44?
When the insured cannot fully recover his damages for bodily injury or death, this standard endorsement (change) form covers the difference between the value of the insured’s claims and the third party’s limit of insurance. When a third party is at fault, it covers the shortfall when the third party is inadequately insured to cover the insured’s claims or when the third party is uninsured.
What do you mean by co-insurance? (Are you adequately insured?)
Inflation is known for increasing the cost of general goods and services, but it also has substantial impact on insurance coverages. What cost $250,000 to replace 4 years ago, may cost $400,000 to replace now, and the current coverage may no longer be sufficient. Inadequate insurance can be as disastrous as no insurance at all, as you may be penalized in the event of a partial loss. You then have the option of Co-Insurance.
Co-insurance is a provision under which an insured who carries less than the stipulated percentage of insurance to value will receive a loss payment that is limited to the same ratio that the amount of insurance bears to the amount required. For example, most standard commercial property policies contain a 90% Co-Insurance clause. This clause requires that insurance is maintained to at least 90% of the value of the property at the time of the loss. At the time of the loss, if insurance is carried to at least 90% of the property value, the insurance company will pay for damages, up to the limit stated in the policy.
If insurance is not carried to 90% of the value, the claims settlement is calculated by using the following formula:
Amount of insurance carried x Amount of damage Amount of insurance required
Value of the property: $500,000
Insurance required (90%): $450,000
Insurance at time of loss: $350,000
Amount of Loss: $125,000
Claims settlement would be calculated as follows:
$350,000 x $125,000 = $97,222
In the above example, the insurance company would only pay $97,222 of the $125,000 loss. This means that as the insured, you would be penalized for not insuring the property to value and would be required to contribute $27,778 to the total amount of the loss.
What are accident benefits and can I take off this coverage?
Accident Benefits (up to a limit of $50,000 per loss) provide weekly payments for lost income (maximum 52 weeks) and compensation for expenses such as medical, rehabilitation treatment, or funeral costs. This coverage, along with Third Party Liability, is mandatory, and coverage cannot be deleted unless the vehicle is being parked permanently and will not be driven.
Is one million liability enough insurance or should I carry two million?
The world is becoming more prone to lawsuits than it used to be. And lawsuits are reaching higher dollar values than seen in the past where just the cost to defend these lawsuits could easily exceed one million dollars. With companies working in the oilfield, many of their contracts require a minimum of $5,000,000 liability. The price to increase your liability policy is inexpensive compared to the coverage it will provide at the time of a loss.
If I need a liability certificate, what are they asking for?
A liability certificate provides confirmation of the liability limits you or your business has in force at that time.
If I stop paying for my insurance is it automatically cancelled?
No. As an insurance policy is a legal contract, we are required to get signatures and/or the return of policy documentation in order to cancel the contract, especially mid-term. So, you should contact your insurance broker in all circumstances where a policy is to be cancelled at any time during the policy term or when it’s time for renewal. If you do stop making payments for your insurance, your policy will be cancelled for non-payment by registered letter by the insurance company, and this will adversely affect your ability to obtain insurance in the future.
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Denis Duchesneau (780) 227-2910
Trevor Duchesneau (780) 210-5294
Tannas Insurance Brokers Inc.
4902 50th Street
St. Paul, Alberta T0A 3A0
780-645-2901 Local Calls
866-645-2901 Toll Free