I know that the first thing you do when you receive your policy is to sit down and read it. NOT!!
So, I thought I would give you an overview of what that insurance contract includes. In other words, use the KISS principle to explain it.
Insurance is a contract between you and your insurer and believe it or not, there is no such thing as true “All Risk”. Insurance is not, and was never designed, to cover everything! Generally, all insurance contracts include the following sections with conditions, exclusions and limitations:
- Declaration’s page – describes, who is insured, when, amounts of insurance and premium
- Insuring agreements– what are you covered for
- Exclusions – what’s not covered
- Conditions – Certain requirements or conditions that are required for coverage to be valid
- Definitions – Words that have clearly defined meaning for your contract
- Warranties – Things that you must do or you may not have coverage
- Limits and deductibles – How much insurance you have and what is your share.
- Endorsements – changes to the above
- Signature clause – Signature of the official signing to the agreement
You have rights in that contract.
You also have responsibilities as required by law under the Insurance Act of Alberta. These are called Statutory Conditions and must be included in every property or casualty policy issued in the province of Alberta. There are additional Statutory Conditions for Auto Insurance, many but not all of them, are similar. We will talk about the Auto Insurance Stat Conditions in a future blog.
- MISREPRESENTATION – Don’t lie or tell a part-truth to an insurance company. If you do, they can void your policy or rightfully refuse to pay a claim.
- PROPERTY OF OTHERS – You can’t insure something you don’t own, have a financial interest in or have assumed responsibility of.
- CHANGE OF INTEREST – Insured losses occurring after an assignment due to bankruptcy, insolvency or change of title by succession, operation of law or death are covered.
- MATERIAL CHANGE – If any conditions of your situation or property changes, you need to tell your insurer. If you aren’t sure, ask.
- TERMINATION – A contract can only be cancelled by you on request at any time or by an insurance company giving written notice. Certain penalties may apply if you cancel.
- REQUIREMENTS AFTER A LOSS – No don’t just walk away. You must:
Right away tell your insurer when and how it happened
Provide a proof of loss (your insurer will give you a form to complete)
Prove the amount of your loss.
Co-operate with the insurer and provide them the records they request.
- WHO MAY GIVE NOTICE AND PROOF OF LOSS – If you can’t provide or don’t provide the Proof of Loss, it can be given by your agent (under certain conditions) or any one to whom some or all of the insurance money is payable.
- SALVAGE – You must protect your property from further loss or damage after the occurrence and the insurer will help you pay for it.
- ENTRY, CONTROL & ABANDONMENT – The insurer has right of access to your property but they can’t take control or possession without your consent and you can’t just walk away from it.
- IN CASE OF DISAGREEMENT – This one is important! You have the right to a dispute resolution process prescribed by the government if you don’t agree with the amount the insurer will pay to repair or replace your property. Here’s some more info for you – Insurance Complaints
- WHEN LOSS PAYABLE – The insurer has 60 days to pay you after you file your Proof of Loss.
- REPAIR OR REPLACEMENT – Unless you have entered the “Dispute Resolution Process” outlined in item 10, the insurer instead of paying you, may repair, replace or rebuild and must start within 45 days of you filing your Proof of Loss.
- NOTICE – Written notice can be delivered or sent to the Head Office of the insurer in the province. The insurer must reach out to you at the address shown on your contract.
Now comes the fun part. You can’t take this to the bank or the courts. This is the condensed version of the Statutory Conditions to help make it just a bit easier. If you want to know more, then read your contract, talk to your insurance provider or better still call me!
I’m always happy to help you decipher the legal jargon in your contract. Reach out to firstname.lastname@example.org or 587-597-5478.
That’s a comment I hear regularly from the consumer when they finally get a quote for their commercial auto premium. So, they start shopping around as they should and it doesn’t seem to make sense.
Some agents and brokers won’t quote over the phone, some quote high, some quote low. You take the lowest quote and then when the policy comes in it’s higher than quoted. It’s all very confusing.
Perhaps the following information will help.
The Government of Alberta mandates certain insurance requirements for all Commercial Vehicles
Transportation Alberta Insurance Requirements so if the Government mandates that everyone carry insurance and the insurance in our province is a private industry how does that work?
It’s called the Facility Association. Every licensed agent and broker must be prepared to offer the mandatory coverage for licensed vehicles. If the insurance company they work for or the companies that their brokerage firm represents won’t provide coverage, your auto insurance will end up in the Facility Association.
The Facility Association is the vehicle by which the insurance industry meets the government requirement for all licenced vehicles to be insured. Download the Facility Association Brochure for more information.
Premiums are up considerably in commercial insurance and in some cases double. Rates vary depending on the use and radius of operation and driver history. Each private insurer has their own set of underwriting rules and guidelines that identify the types of business they wish to write.
For those entrepreneurs starting their own business it’s even more difficult. There are several things that you can do to make sure that you can obtain coverage in the regular market and can avoid being placed in the Facility Association.
- Don’t have accidents. Drive safely – it’s that simple.
- Convictions don’t help. There are various classes of convictions and they will impact your premium; serious traffic violations more than others.
- Keep records of your previous insurance history as a commercial driver. If you are driving for someone else, having verifiable driving information can have a positive effect on your premium.
For the established business a good claims history in addition to those items above….
- Vette your drivers before hiring them. Ask for Motor Vehicle Abstracts and driving history. It costs more to have experienced drivers but the insurance premiums are considerably less!
- Maintain a strong vehicle maintenance program.
- Utilize technology like GPS tracking, Alarm Systems…(etc.)
Then there is the transportation industry. That’s a whole new ball game. In current market conditions, in many cases, it’s not so much a question of best price. It’s a question of finding coverage with reasonable deductibles and premiums that won’t break the bank. Find an insurance provider that specializes in transportation risks. They can provide you with more than just an insurance policy. They usually have access to more insurers, excellent fleet management programs and technology to help you manage your fleet. It’s quite possible that the mandatory coverages could be purchased through the Facility Association and an alternate market could provide the physical damage and cargo.
As of writing this column, the deductibles on physical damage with the Facility are a percentage of the list price new of the vehicle. That means if you have a 2011 Ford E250 with an LPN of $54,000, your deductible will be $6,500 per accident.
Your broker should know who best may be able to assist. Whatever you do, make sure that the provider who choose knows your business as well as the insurance business.
If you have any comments or request for more information on any matter insurance – get in touch with commercial insurance expert – email@example.com
This is a quote from the movie Network a 1976 film about a TV Network and exploitation. And that’s exactly how I and many insurance industry professionals and consumers are feeling right now. And it’s not about a TV Network. It’s about auto insurance in the Province of Alberta and how the NDP Government are causing hardship to many Alberta Consumers!
For those of you who don’t remember the film check out this link! https://en.wikiquote.org/wiki/Network_(film)
In November of 2018 I wrote a letter to multiple political representatives on both sides of our current government. Here’s an excerpt of my letter:
On December 4, 2017, the NDP Government thought it wise to impose a 5% cap on increases for auto insurance across the province. That’s akin to telling all grocery stores that they can’t increase their cost of meat or milk at the retail level when they don’t control their wholesale costs. So, what does the grocer do? He has to make up for his losses somewhere. He has several choices.
1. Stop selling meat or milk at all.
2. Increase the cost of his other products to make up for the shortfall.
3. Reduce the quality of the product he sells.
4. Close all his stores in the Province.;
I can tell you now that this is precisely what you are forcing the private insurance companies in Alberta to do. And guess who is now being affected in a very major way. CONSUMERS – the very people you were intending to help. Yes, and your consumers are your VOTERS!
I am also a consumer and a voter. I am also an insurance broker in Alberta and have been for 42 years. I’ve seen hard and soft markets and this is the worst situation that I have ever experienced in Alberta!!
Here’s a notice from just one of the insurers that my brokerage deals with:
“The unfortunate reality is that when regulators intervene to artificially control market conditions – either because they don’t accept insurers’ data and loss trends, or because they’re politically motivated to keep premiums low – then companies are forced to seek alternative ways of stemming losses, deflecting business and preserving capital.
I know that some of these measures are tough for customers to understand and it’s unfortunate that the industry finds itself in this position. However, these situations only reinforce your role and I truly think customers will see the fantastic value that you provide with your guidance and counsel. On our end, we continue to actively work with regulators and provincial governments to rectify this situation and bring valuable reform to the financial performance and stability of the industry overall.”
Here’s the response from Joe Ceci, our Minister of Finance who continues to ignore and delay in hopes of possibly being re-elected?
“Dear Ms. Cournoyer:
The Honourable Rachel Notley, Premier of Alberta, has forwarded a copy of your November 1, 2018, email regarding automobile insurance in Alberta. Premier Notley has asked me to respond on behalf of our government. As President of Treasury Board, Minister of Finance, responsible for the Insurance Act, I am pleased to respond.
Through the five per cent rate increase limitation, our government’s goal is to strike a balance between Albertans’ need for fair and affordable automobile insurance and the insurance industry’s need for a viable and sustainable market. My department is working very closely with the Insurance Bureau of Canada, the Insurance Brokers Association of Alberta, and insurance company representatives to find the right balance for both consumers and the industry. While we recently extended the cap, we did so for only nine months to give us time to find longer term solutions to the issues industry is facing. To this end, we are conducting a claims and costs study to provide government with information about cost pressures industry is experiencing.
Our government is aware that some insurance brokers, such as yourself, are facing challenges resulting from insurers attempting to reduce their exposure in Alberta by taking various actions, such as cancelling broker contracts, restricting access to premium payment plans, and limiting access to coverage. The Office of the Superintendent of Insurance is monitoring the situation closely to ensure that automobile insurance remains available for Albertans, and that insurance companies remain compliant with the Act. If you have information that an insurance company has violated the Act or its regulations, please contact the Superintendent toll-free by telephone, at 310-0000 (wait for the tone, then dial at 780-643 2237), or by email at firstname.lastname@example.org.
In Alberta, we continue to benefit from a competitive market, and property insurance remains readily available. In order for Albertans to find the best rate and product, I encourage consumers to shop the open market to ensure their needs are met. Insurance brokers, such as yourself, are well equipped to find consumers appropriate coverage at the best price. I also acknowledge that insurance can be confusing and difficult to understand for some Albertans, including seniors. I commend you for your professional dedication in helping Albertans find and understand the coverage that best meets their needs.
Thank you for taking the time to write.
President of Treasury Board,
Minister of Finance”
Just this morning I have dealt with three individuals who have impeccable driving records, no claims and are simply trying to make a living to support their families. All of the following situations are a direct result of our Provincial Government interfering in private industry! I might add that I don’t do a lot of personal insurance. I’m a commercial insurance broker so 90% of by clients are business owners.
1. Insured, who is a senior citizen, has been on a monthly payment plan for years and 30 days prior to renewal is told he won’t have a payment plan this year. He must pay over $1,000 upfront or as of April 30 will have no insurance. This widower is on a very fixed income. So, does he park his car, not buy groceries, not buy house insurance?
2. Long time client of insurer is told they must complete a new application on renewal which the client is doing. By completing a new application, this now gives the insurer the right to not offer physical damage coverage and possibly take away their monthly payment plan. How will this family of 4, living pay cheque to pay cheque come up with $5,000 to pay their auto insurance premium within a very short period of time?
3. Broker in Alberta has had their contract to write insurance with one of their companies cancelled. Insured starts shopping for insurance. Two brokers already have had to turn him away as the companies they deal with will not provide physical damage coverage nor a payment plan. All they can offer is coverage through The Facility Association at an extremely high premium. The client’s insurance expires on April 4! He’s still shopping!
Again quoting the Honorable Joe Ceci:
“The Office of the Superintendent of Insurance is monitoring the situation closely to ensure that automobile insurance remains available for Albertans, and that insurance companies remain compliant with the Act.”
All I can say to him and his government is that it’s not working! The insurance companies are in fact following the letter of the law! The laws the Government of Alberta has put in place!
And it’s the consumers in Alberta who are suffering once again.
Yes, I’m mad as hell and for my part I will keep fighting for my clients!
So, what can you do?
I call on all insurance professionals in Alberta to send an example of hardship caused to Alberta consumers!
I call on all consumers who have been affected or if you know someone who has been call or email.
Superintendent of Insurance – toll-free by telephone, at 310-0000 (wait for the tone, then dial at 780-643 2237), or by email at email@example.com.
Heather Cournoyer, CCIB CIP – contact: firstname.lastname@example.org