Fire deaths are highest in the winter months as people spend more time indoors, increasing lighting, heating and appliance use. For example, supplemental heaters pull the same 1,500 watts of electricity as a hair dryer, and are often used for longer.

The deadliest house fires begin in main living areas. Common culprits include heaters, high-tech games, computers, speaker systems and decorative lighting.

These are dome of the leading causes of home fires:

• “Fixed wiring” (faulty outlets, old wiring), which includes ungrounded extension and appliance cords, plugs, receptacles and switches
• Light fixtures, lamps and light bulbs
• Misuse of cords (overloaded circuits, poor maintenance, adapters and running cords under rugs in high-traffic areas)

To avoid an electrical fire and keep your family safe, follow these simple safety tips:

Update your circuits or dedicate a circuit for high-powered appliances

Older homes may have a mix of old and new wiring — some grounded, most not. This sometimes leads people to get creative with circuits in order to power high-tech toys and conveniences. Unfortunately, such creativity leads to problems.

Using 3-to-2 adapters, multiple receptacle strips or additional plug-ins on extension cords can quickly overload a circuit breaker box, causing the breaker to trip frequently. This indicates the circuit is overloaded. Another sign that your circuit is overloaded is if the lights dim when you turn on appliances.

A qualified electrician can upgrade a couple of circuits to properly power your devices. It might cost a few hundred dollars, but that’s a bargain compared to replacing your entire home.

Install specialty outlets and cords to safeguard older systems

For houses that are not grounded, specialty outlets and cords are available. These work from outlet to outlet and are reasonably priced and easy to install.

Install and test ground fault circuit interrupters (GFCIs)

Appliances used in wet areas like kitchens and bathrooms should be GFCI protected. A GFCI is designed to protect you from shock or electrocution if something goes wrong with an appliance or tool. Use GFCI test buttons regularly to ensure they still trip properly.

Unplug appliances after use

Unplug appliances like hair dryers and toasters when you’re done using them. Even after they’ve been unplugged, they can transfer heat and burn you, countertops or nearby combustibles.

Check wiring for damage

Visually inspect wiring, lamps and switches for frays, exposed inner wires or damage. If a lamp or appliance switch is hot to the touch, turn it off until you can correct the problem.

Unplug power cords with care

Never yank a cord out of a receptacle. This damages the inside wires and the plug, creating a shock hazard.

Keep cords out of high-traffic areas

An extension cord or cord plugged in at floor level is a trip-and-fall hazard. Cords close to the floor can also attract small children and pets, creating risk of electrical shock.

While it may be tempting to cover cords and wires with a rug to avoid obstructing walkways, you’re just substituting one hazard for another. Damaged cords hiding underneath a rug present an unseen fire hazard.

Don’t use extension cords long term

Extension cords are not for permanent use. They are designed for short-term use, not as permanent line fixtures.

Check your smoke alarms and replace batteries

Ensure your smoke alarms are working and check batteries regularly.

Electrical shock is a real risk, even when you’re relaxing at home. Following these simple safety measures will help keep you and your family safe.

This content is for informational purposes only and not for the purpose of providing, financial, medical or legal advice. You should contact your attorney, doctor, broker or advisor to obtain advice with respect to any particular issue or problem. Copyright © 2022 Applied Systems Inc. All rights reserved.

Use this flood cost estimator, a U.S. resource, to see how your costs rise with each inch of standing water in your home. If the expense seems overblown, think about the contents of your basement or first floor (if you don’t have a basement). Then consider the cost of having a professional repair or replace the equipment. When the water rushes in, what will you lose?

Everything in your basement adds up

Even if your basement is unfinished, and you think your storage items aren’t valuable, consider the value of the equipment that makes your house run such as:

• Washer and dryer
• Water heater
• Heating, ventilating and air conditioning unit and boiler
• Water softener

Replacing and installing these items can easily cost thousands of dollars. In the meantime, you’ll need to act fast to get the water out of your home and dry the area as quickly as possible, before mold sets in. Hiring a professional to assist with cleanup is well worth it, especially if there is a clause in your policy requiring you to do everything you can to remediate the issue.

If you have a finished basement, your flood troubles just got exponentially worse. Make sure to add coverage by endorsement and set your limits high enough to cover the cost of rebuilding the entire basement — drywall, paint, flooring and furnishings. That cost is in addition to the usual household equipment mentioned above.

Don’t assume you’re safe because you live outside a flood zone

Flooding can and often does happen outside of flood zones. A flash rain, for example, dumps several inches of water in a short amount of time, saturating the ground. Once the ground can no longer absorb the water, it will travel to the lowest possible point. If your home is situated on a low part of your property or the grading runs toward your house, you’re a potential candidate for a flood.

Any water that enters your home from the outside is normally considered a flood and not sewage backup, so don’t assume that part of your policy will kick in. If an adjuster determines the water came from outside the home, your sewage backup claim will likely be denied.

Get Peace of Mind Today

Contact us for a rundown of your homeowners coverage, and ensure your policy is equipped to protect your valuables in case of a flood.

This content is for informational purposes only and not for the purpose of providing, financial, medical or legal advice. You should contact your attorney, doctor, broker or advisor to obtain advice with respect to any particular issue or problem. Copyright © 2021 Applied Systems Inc. All rights reserved.

What is life insurance?

Life insurance is a benefit that pays a specific sum of money upon the death of the insured. The benefit is paid to the beneficiary, or beneficiaries, named by the policyholder.

There are three basic types of life insurance:

• Term life insurance
• Whole (permanent) life insurance
• Universal life insurance

How you purchase life insurance coverage is up to you. You may also purchase individual life insurance coverage, as well as coverage for your dependents. According to CLHIA, in 2022 83% of life insurance premiums came from individual policies.

Let’s look at each type of life insurance separately.

Term life insurance

Term life insurance is usually the most simple to understand and the most affordable. It provides individual coverage for a specific number of years. The most common terms are 10, 20 and 30 years. If you die within the term of the policy, your beneficiary will receive the full death benefit.

For example, say you purchase a $1 million term life insurance policy that provides coverage for 20 years. If you die during year 17 of the policy, your beneficiary will receive $1 million. If you do not die within the 20-year term, your policy expires and no benefit is paid.

There are three types of term life insurance:

• Level-term life insurance offers you a fixed premium and a fixed death benefit.
• Yearly renewable term life insurance offers you a premium for a year at a time. Your premium will increase as you age, but you may renew your policy without evidence of insurability.
• Decreasing term life insurance offers you a fixed premium with a death benefit that decreases over time.

Regardless of which type of policy you choose, there is no savings component and benefits are paid upon your death.

How much does it cost?

Because you are only purchasing coverage for a specific time, term life insurance is the least expensive of all life insurance options. Premiums are based on the amount of death benefit you purchase and the term of your policy. The insurance company will also consider your age, sex, health and life expectancy.

And your policy will remain in force until the end of the term, as long as you continue to pay the premiums on time.

What happens at the end of the term?

If you outlive the term of your policy, you will have a few options.

• You may renew the policy for another specific term.
• You may convert the policy to a whole life benefit.
• You may terminate the policy.

Group term life insurance

As mentioned earlier, 38% of life insurance premiums are term life policies issued as part of a group benefits program.

If you have coverage through your employer, your coverage will last as long as you are employed and pay the premium. The death benefit is either a specific dollar amount (e.g., $10,000) or a multiple of your salary (e.g., two times your base salary). And it is often a guaranteed issue policy. That means you cannot be denied coverage if you are not healthy.

If you terminate your employment, you may be offered the option to convert your coverage to an individual policy. In most cases, you will not need to provide proof of good health, but your premiums may increase.

Voluntary group supplemental term life insurance

Your employer may offer supplemental term life insurance that goes beyond your group term life coverage. You pay the full cost of this insurance, which is often offered in increments of $5,000 or $10,000, or as a multiple of your salary.

The plan typically offers a specific amount as guaranteed issue (the amount you may purchase without proof of good health). Any amount above that will require evidence of insurability.

Taxes on term life insurance

If you purchase an individual term life insurance policy outside of work, you are paying the premium with money that has already been taxed. If your employer paid the full cost of the insurance, it would then be a taxable benefit.

As a result, your beneficiaries generally will not have to pay taxes if they receive a death benefit payment. The same is true if you have a term life policy through your employer.

Whole life insurance

Whole, or permanent, life insurance provides a guaranteed death benefit, covers you for your entire life and pays the face value up to the maximum age.

What differentiates whole life insurance from term life insurance is whole life builds cash value over the life of the policy. A portion of your premium is invested and provides you with a minimum rate of return. The cash value grows tax-deferred; you pay taxes on the value only when it is withdrawn.

Some policies may even offer you the chance to earn dividends. These may be taken as cash or reinvested in your policy to help pay the premium, repay loans or increase the death benefit.

How much does it cost?

Because whole life insurance has a cash value, it is more expensive than term life insurance. Your premium is determined by the amount of your death benefit, age, sex, health and life expectancy. As long as you continue to pay the premiums on time, your policy will remain in force.

Can you borrow money against your whole life policy?

One of the benefits of a whole life insurance policy is that you can borrow money against its cash value. Some policies allow you to withdraw this money with no limitation. All you have to do is repay the loan with interest. If you fail to repay the loan, the final payout of your policy is reduced by the outstanding amount.

Taxes on whole life insurance

Whole life insurance benefits are not usually taxable to the beneficiary. However, there are some instances where the benefit may be taxed. For example:

• If you take an early payout on the cash value of the policy, you may be taxed on the amount that exceeds what you have paid in premium.
• If you receive dividends, they may be taxed if they exceed the amount you have paid in premium.
• If you fail to pay back a loan, any outstanding amount may be considered a taxable gain.

If you have questions about how your life insurance policy could be taxed, visit the Canada Revenue Agency website.

Universal life insurance

Universal life insurance combines the benefits of term and whole life insurance. These hybrid policies enable you to build savings over time, but offer the flexibility to invest your savings and earn cash value on the policy. Some people refer to universal life as a savings account with a life insurance policy attached.

Policy flexibility

You decide how to manage your savings and earnings with a universal life policy.

• You may choose to deposit more than the premium, increasing your savings.
• You may choose to use investment earnings to pay the premium and any administrative costs.
• You may add earnings to your death benefit.
• You may take a loan against the cash value of the policy.
• You may withdraw savings at any time to pay for larger expenses like a down payment on a home or college tuition.

There just has to be enough in the account to pay the monthly premium.

Indexed universal life insurance

The value of a universal life policy depends on the stability of the stock market. If the market is doing well, your account should reflect that. If the market takes a tumble, so may the value of your policy. Fluctuations are to be expected.

As a result, you may want to consider indexed universal life insurance. It can provide safer investment options and is considered less risky than traditional universal life insurance.

Taxes on universal life insurance

Universal life insurance benefits are not usually taxable to the beneficiary. However, there are some instances where the benefit may be taxed. For example:

• If you take an early payout on the cash value of the policy, you may be taxed on the amount that exceeds what you have paid in premium.
• If you receive dividends, they may be taxed if they exceed the amount you have paid in premium.
• If you fail to pay back a loan, any outstanding amount may be considered a taxable gain.

If you have questions about how your life insurance policy could be taxed, visit the Canada Revenue Agency website.

Dependent life insurance

Dependent life insurance covers your spouse or domestic partner and your children. Spousal coverage is often available in dollar increments of $10,000 or $25,000, and children are covered at a fixed amount. You are automatically designated as the beneficiary of these supplemental policies.

Individual life insurance policy rider

If you already have an individual life insurance policy, your insurance company may offer a rider that provides coverage for your dependents. Coverage may be purchased just for your spouse, just for your children, or both.

Premiums for your spouse will be higher than those charged for your children. Some insurers may require evidence of insurability, which typically requires you to complete a form about the general health of your family so they can evaluate any medical risk.

Supplemental group life insurance

If you purchase dependent coverage through your employer, your spouse is usually eligible for coverage equal to 50% to 100% of your covered amount. Children are typically covered for a fixed dollar amount. Premiums for spouses depend on the face value of the policy and your spouse’s age. You may also be required to provide proof of good health. Premiums for your children usually cover all your children for one rate.

Taxes on dependent life insurance

Dependent life insurance benefits are generally not considered taxable income if you pay the full premium. If your employer pays any portion of the premium, dependent life benefits may be considered a taxable benefit.

For more information, visit the Canada Revenue Agency website.

Evidence of insurability

Some insurers ask for proof of good health, or evidence of insurability, before issuing a policy. This may be required if:

• You purchase a policy with a high death benefit.
• Your medical history, or family medical history, shows a high level of risk.
• You are planning to or often travel in certain areas of the world deemed risky.
• You participate in dangerous hobbies such as skydiving, race car driving, bungee jumping, etc.
• You have other risk factors such as a poor driving record.

The insurance company will want to get a clear picture of your physical condition before agreeing to sell you a policy. They may request medical records or send a nurse to your home to conduct an in-person health screening. These exams will include a measure of your cholesterol, blood sugar, blood pressure, thyroid function, etc.

The insurance company may also review your personal credit history, business credit reports (if you own a business) and criminal background.

Coverage becomes effective once your evidence of insurability is approved.

Beneficiaries

One of the most important things you must do when purchasing a life insurance policy is designate a beneficiary. This is the individual who will receive the benefit in the event of your death.

You may choose to leave the entire death benefit to one person, or you may designate several. If you name more than one beneficiary, you will need to determine the percentage of the death benefit each individual will receive. If you do not, the benefit will be divided equally among them all.

You will also need to designate a secondary or contingent beneficiary. This is the individual who will receive the benefit in the event your primary beneficiary is no longer living. Again, if you name more than one contingent beneficiary, you will need to determine the percentage of the death benefit each individual will receive. If you do not, the benefit will be divided equally among them all.

Be sure to provide as much information as possible about the beneficiaries you name. Names, addresses and even Social Insurance Numbers may be required. This makes it easy for the administrator to locate the individuals.

Limitations and exclusions

There are some instances when life insurance benefits are not paid. Be sure to check your policy for the following exclusions:

• Wars or acts of war
• Suicide or self-inflicted injuries, including voluntary use of poison, chemical compounds or drugs, unless used according to the direction of a physician

Many policies will also include an aviation exclusion. This exclusion applies only to individuals killed while flying in a privately owned aircraft, not a commercial aircraft.

Other policies limit coverage if you are involved in dangerous activities, such as auto racing, rock climbing, hang gliding, etc. If you do participate in these activities, you may be able to obtain coverage by paying a higher premium.

Riders and modifications

Some of the most common riders or modifications to life insurance policies include:

• Early access to death benefits if you are considered terminally ill
• Accidental death benefits (also called double indemnity)
• Coverage for dependents

Your policy may also include a disability rider. This prevents you from having to pay the premium if you become totally disabled.

How much life insurance do you need?

Determining how much life insurance you need depends on how you answer several questions.

First, you need to determine who, if anyone, relies on you for their financial well-being:

• Are you married? Does your spouse have their own source of income?
• Do you have any children? If so, how old are they? When will they become financially independent?

Then you need to consider your financial situation:

• How much debt do you have? Does that amount increase every month or do you pay it off regularly?
• How much do you spend every month?
• How much do you save every month? Does that include savings for retirement?

If you are considering term life insurance, you will also want to calculate:

• The amount of income your family would need to replace if you were no longer there to help pay the bills
• The number of years you want the policy to cover expenses like your mortgage and college education for your children

If you are considering whole or universal life insurance, you will also want to determine the funds needed to:

• Pay funeral expenses and medical bills
• Provide for a special needs child
• Cover estate taxes

No matter what type of policy you purchase, you will also need to consider inflation, as the amount of coverage you will need may change over time. For example, while the cost of cars may increase due to inflation, you may not need to adjust the amount of coverage you need because your house is almost paid off.

Which type of life insurance is right for you?

When deciding which type of life insurance product to purchase, there is no one-size-fits-all answer. Everyone has their own answer when it comes to choosing how to protect their family from loss of income. Let’s review the three choices.

Term life insurance

With term life, you can often lock in a low premium if you purchase individual coverage when you are young and healthy. This may even be cheaper than the coverage offered by your employer. However, if you aren’t healthy or are having trouble purchasing individual coverage, group insurance may be the way to go.

Whole life insurance

If you want to leave a legacy for your beneficiaries, then you might want to consider whole life insurance. These policies earn cash value and provide you with a substantial death benefit.

Universal life insurance

Like whole life, universal life insurance enables you to build additional cash value. It also offers you flexible options on premium payment, policy loans and long-term financial savings. However, if you are purchasing this coverage late in life, it may not be the right choice for you.

Accidental death and dismemberment insurance

Accidental death and dismemberment (AD&D) coverage only pays benefits if you are killed or injured in an accident. It can be purchased on its own or as a stand-alone policy, or it may be combined with your life insurance.

The amount of the accidental death benefit is usually a specific dollar amount (e.g., $10,000) or, if you purchase life insurance through your employer, a multiple of your salary (e.g., two times your salary). The portion paid for accidental dismemberment varies according to the type of injury you sustain. For example, you may receive the full benefit if you are blinded by an accident, but only 25% of the value of the policy if you lose a finger. The exact payout will be listed in your policy.

AD&D policies have limitations just like life insurance policies. They do not typically cover accidents that are the result of high-risk activities like skydiving or car racing. Nor do they cover deaths or injuries caused by drug overdoses, driving while intoxicated, complications from surgery or mental illnesses. Check your policy for any excluded activities.

How life insurance and AD&D work together

Many life policies purchased through your employer offer AD&D coverage at the same benefit level. For example, if your policy offers term life in the amount of $100,000 you may also receive AD&D in the amount of $100,000. In this example, if you died of natural causes, your beneficiary would receive a payment of $100,000. If you died in an accident, your beneficiary would receive a payment of $200,000 ($100,000 term life plus $100,000 AD&D).

Other group policies allow you to purchase AD&D as a stand-alone product. In this case, you would purchase a dollar amount or multiple of your salary to be paid in the case of your accidental death or an accidental injury covered by the policy. For example, let’s say you have life insurance in the amount of one times your salary ($50,000). You decide to purchase AD&D insurance in the amount of $25,000. If you died of natural causes, your beneficiary would receive $50,000. If you died in an accident, your beneficiary would receive $75,000 ($50,000 term life plus $25,000 AD&D).

In either case, if you were injured as the result of an accident, you would receive the AD&D benefit and the life benefit would remain intact. For example, if you had an AD&D policy in the amount of $25,000 and lost a leg in a car accident, you might receive 75% of the policy amount ($18,750). Your beneficiary would receive nothing.

Do you need both?

Often, group term life policies offer AD&D coverage at no additional cost. In this case, it’s a no-brainer, and you should accept the coverage.

If your employer offers AD&D as a stand-alone product or you are considering purchasing individual coverage, you should think about your lifestyle before deciding whether to purchase a policy. Are you an avid surfer? Do you ride an ATV every weekend during hunting season? If you answered yes, you may want to think about AD&D coverage. Even if you are not prone to adventure or rarely participate in activities that put you in unfamiliar situations, accidents happen and you may want to consider the additional safety net AD&D insurance can provide.

Regardless of your lifestyle, combining life insurance and AD&D coverage gives you a more comprehensive benefit and can help protect you and your beneficiaries should you die or suffer a grave injury as the result of an accident.

For more information

Life and AD&D can help protect the financial stability of your loved ones.

• Term life provides individual coverage for a specific number of years. The most common terms are 10, 20 and 30 years. If you die within the term of the policy, your beneficiary will receive the full death benefit.
• Whole life provides a guaranteed death benefit, covers you for your entire life and pays the face value up to the maximum age.
• Universal life enables you to build savings over time, but offers the flexibility to invest your savings and earn cash value on the policy.
• Accidental death and dismemberment pays benefits if you are killed or injured in an accident. It can be purchased on its own or as a stand-alone policy, or it may be combined with your life insurance.

If you would like more information about any of these types of coverages, how they are taxed or how to determine the amount of coverage you will need, contact us for assistance.

This content is for informational purposes only, should not be considered financial, medical or legal advice, and no representations or warranties are made regarding its accuracy, timeliness or currency. With all information, consult with appropriate brokers, advisors and attorneys to determine if implementing any recommendations would be in accordance with applicable laws and regulations or to obtain advice with respect to any particular issue or problem. Copyright © 2020 Applied Systems Inc. All rights reserved.

Regardless of the type of vehicle you drive or where you park, there’s always the chance of a break-in.

‘Smash and grab’ incidents are usually reported in sprees, within the same area and time frame. By smashing a window, the thieves can steal valuable possessions, even if the glass is tinted and the doors are locked. A smash-and-grab can take just a few seconds from start to finish.

You may be surprised to learn items stolen out of your vehicle, like laptops, phones, wallets and sports equipment, are not covered under your auto insurance.

If someone breaks into your car, your auto insurance will cover damage to your vehicle. However, it won’t cover stolen items unless they are an integral part of the vehicle, such as a built-in stereo system).

Aftermarket parts and accessories

Aftermarket parts, such as rims or a stereo system installed after purchase, need to be covered under a custom parts and equipment (CPE) endorsement to your auto policy.

CPE coverage is available through most auto insurers for an added cost. It covers custom paint jobs and grilles, navigation systems, car stereo upgrades and anything else the original manufacturer did not install.

Homeowners, condo or renters coverage for personal property

While basic auto insurance doesn’t cover stolen items, you may still be covered if you have homeowners, condo or renters insurance. Under these policies, everything you own is usually covered no matter where the items are at the time of the loss. This means whether your laptop is in your car, on an airplane, at a coffee shop or in your living room, damages and theft will be handled by your home insurance company.

Note that you may receive less coverage for stolen items if the theft happens while the vehicle is parked somewhere other than your own property. Talk to your insurance broker about the terms of your specific policy.

How to deter car-break-ins

It’s impossible to protect your car completely, but there are many things you can do to lower your risk. Here are a few safety tips to deter thieves:

• Don’t keep valuables in your car.
• Don’t leave objects in your car overnight. If you must, conceal them.
• Park in well-lit areas whenever possible.
• Keep your car locked with the windows rolled up.
• Never leave your car unattended if it’s running.
• Cover or detach your GPS or upgraded stereo system, if you have one.
• Install a car alarm on your vehicle.
• Park your car in a garage rather than in a driveway or on the street.

When your vehicle is broken into, it can rattle you emotionally. Plus, you have the financial costs of repairing your vehicle and replacing your stolen valuables. Don’t risk making a bad situation worse by not having the appropriate coverage. Contact us insurance broker to make sure you are properly protected.

This content is for informational purposes only and not for the purpose of providing, financial, medical or legal advice. You should contact your attorney, doctor, broker or advisor to obtain advice with respect to any particular issue or problem. Copyright © 2023 Applied Systems Inc. All rights reserved.

You’re heartbroken and a little sore, but otherwise uninjured due to your seat belt and air bags. Your brand-new SUV, however, didn’t do as well. The insurance company determines that it’s a total loss.

Most new car owners hope this situation never happens, but when it does, having the right coverage in place is key. Determining what type of coverage is best isn’t always easy, however. Check out these six helpful tips to help you decide.

1. Know your insurance company’s rules about new-vehicle coverage. Do you have other vehicles insured with the same insurance company? If so, it’s possible that coverage extends to your new vehicle for a limited number of days. For example, an insurance company might allow coverage on a replacement vehicle up to 30 days after purchase. The type of coverage provided is typically what you have on the prior vehicle. Talk with your insurance professional prior to making the purchase to understand coverage rules and limitations.

2. Understand the basic types of new car insurance coverage. A basic amount of coverage is required by provincial law and finance companies. Understanding the types of coverage offered can help you determine which is best. Here are typical types of coverage to consider on a new vehicle purchase:

• Third party liability. This is defined per accident and designed to cover bodily injury and property damage caused to others when you’re responsible for the accident. For example, let’s say that you accidentally fail to stop at a red light and hit a vehicle. Liability insurance would cover the damage resulting from the incident. If you hit a city sign, this coverage would also cover those costs. This coverage, however, does not include damage to your vehicle, which is paid under collision insurance.
• Accident benefits. This set of benefits typically includes medical payments, disability income, funeral expenses and death benefits, as defined by the policy.
• Uninsured or underinsured motorist protection. This covers costs associated with an accident should the person at fault not have auto insurance, or not have enough.
• Collision. This coverage protects repairs to your vehicle after an accident.
• Comprehensive. This covers the cost if your car is stolen or damage occurs outside of a typical collision.

Most provinces only require the first two — third party liability and accident benefits — but with a new vehicle purchase, you will want to consider the other coverages so you have full protection.

3. Check provincial insurance laws. All provinces require some type of car insurance, but your province’s insurance and coverage requirements vary substantially and can be found online. Your insurance broker is your best resource, as he is well-versed in these requirements.

For instance, Ontario and Alberta require that vehicles carry ​$200,000 in liability coverage. This is the amount available for any one accident; however, if a claim that involves both bodily injury and property damage exceeds this limit, payment for property damage will be capped at $10,000. It’s very easy to have an “underinsured” situation if the person who hits you carries only provincial limits. They can cap out on property damage and leave you with too little to replace or repair your damaged vehicle, where there is no direct compensation, making uninsured/underinsured coverage a valuable option.

Provinces also differ in how they handle claims. Under Quebec’s pure no-fault system, drivers are not allowed to sue, while Ontario has a no-fault system that allows lawsuits under certain circumstances. Manitoba has a pure no-fault system while Saskatchewan offers both options to its drivers. The remaining provinces all have tort-based systems.

4. Understand the bank’s insurance requirements. Most finance companies require that vehicle owners carry collision and comprehensive coverages. The lender has a vested interest until the vehicle is paid in full, which is why they have special insurance requirements to protect their loan.

5. Select the right deductible. The deductible is the amount that you will pay to repair your vehicle.

Let’s says you damage your new car. You take it to the auto body shop and they estimate damages are $2,500. You have a $500 deductible, so you pay the first $500 and the insurance company picks up the rest of the tab.

A higher deductible decreases the premium, so it’s tempting to elect higher deductibles. Financing companies, however, have rules about deductibles and typically won’t allow you to raise deductibles much higher than $500.

6. Check into gap insurance. A new car typically depreciates as soon as you drive it off the lot. As a result, if you total your car, a situation may occur where you owe more on the vehicle than it’s worth. Let’s say that the replacement cost is $20,000, but you owe $23,000 on the vehicle. You’re on the line for that $3,000 difference after the claim is closed. Gap insurance will cover the difference so you aren’t left holding additional bills.

Moving forward with greater safety

Purchasing a new car is exciting, and car insurance is an important consideration before driving the car off the lot. Carefully considering what types of insurance are required and the right protection levels for you and your new car is worthwhile and provides greater peace of mind should an accident take place in the future.

We are more than happy to explain the coverage options that are most suitable for you.

This content is for informational purposes only and not for the purpose of providing, financial, medical or legal advice. You should contact your attorney, doctor, broker or advisor to obtain advice with respect to any particular issue or problem. Copyright © 2019 Applied Systems Inc. All rights reserved.

The insurance industry is evolving and slowly adopting clearer language. Since we’re not there quite yet, here are a few definitions that should help you gain a better understanding of what coverage you have and what the limits are.

1. Actual cash value (ACV)

Also known as fair market value, ACV is the price an informed buyer would be willing to pay today for one of your covered personal belongings. ACV is usually lower than the original purchase price, due to depreciation.

2. Appraisal

An appraisal, whether for your dwelling or for certain valuables like paintings, jewelry or furs, is a professional assessment of the value of that property. An appraisal should be done by a recognized and certified expert. Many homes need to be appraised before being eligible for coverage.

3. Depreciation

Depreciation is used in accounting and insurance a great deal. It’s the estimated loss in value of your property. Think of that computer or large TV you purchased three years ago and what it’s worth today (most likely less than what you paid, due to age, wear and tear, and so on). Insurers use this during a claim to establish the amount that will be paid out if the property is insured at its actual cash value.

4. Endorsements

An endorsement, also known as a rider, is a clause or contract that is added to your master policy to extend (or limit) your coverage. Home insurance already bundles dwelling, other structures, loss of use and liability coverage, but you may want to look into extending that with flood or sewer backup coverage.

5. Exclusions

Several situations, items or conditions may be excluded from a policy. As a rule, insurers won’t cover anything that falls outside of the purpose of insurance, which is to provide coverage for certain unpredictable events in exchange for a set premium. Wear and tear is not covered, but coverage is also limited for floods, sewer backups, pollution, earthquakes and a lot more. In some instances, you can get an endorsement to cover these perils.

6. Liability

Liability is at the very core of insurance. The liability portion of your homeowners policy covers you against lawsuits for any injuries or property damage that you or your family cause to other people. It also covers any related legal or medical expenses. You can also purchase umbrella insurance to extend your liability coverage.

7. Limit

The limit of coverage is the maximum amount an insurer will pay out for a covered event. Most homeowners policies set the limits for other structures and personal property as a percentage of your dwelling coverage. Your personal property might be limited to certain categories of goods, such as valuables and collectibles, sports items and computers. It’s important to read your policy to make sure that the amount of coverage in each instance is adequate.

8. Living expenses (additional)

This coverage is also called loss of use. Both names accurately describe its meaning: coverage that kicks in when you cannot remain in your home while repairs are underway. The provider covers a per diem for expenses that go above and beyond your normal ones (hence the word “additional”). Don’t expect it to cover your stay at the Ritz Carlton, though. Expenses must be reasonable and in line with your current standard of living.

9. Peril

Perils, also called risks, are specific events covered by your insurance policy. Examples of perils include fires, theft, windstorms and flooding. Some home insurance policies will only cover listed perils, while other formulas cover all perils except those specifically excluded. Pay attention to what perils are insured on your home insurance policy and speak with your insurance broker if you need additional coverage.

10. Replacement value

Replacement cost (or value) is what it will cost for the insurer to purchase a new item of comparable quality if something you owned has been stolen or damaged beyond repair. Your personal property will often be covered for its replacement value rather than its ACV.

Once you master insurance vocabulary, you can truly begin to understand how insurance works. These 10 terms are only the beginning, but they should help you make more informed choices when selecting coverage. Do not hesitate to call us if you have any questions about your policy or want to reevaluate your coverage.

This content is for informational purposes only and not for the purpose of providing, financial, medical or legal advice. You should contact your attorney, doctor, broker or advisor to obtain advice with respect to any particular issue or problem. Copyright © 2020 Applied Systems Inc. All rights reserved.