In the past 5 years, have you ever been cancelled, declined, or refused coverage?"
Clients that have been cancelled for non payment may find themselves PAYING A LOT MORE for coverage at renewal.
Here's a few reasons to make insurance payments a priority.
Avoid getting picked last for kickball.
Fortunately Auto Insurance is regulated by the province, and if you pay the missing amount before your cancellation date there's a requirement to reinstate your coverage.
Once renewal rolls around though, that's when you'll see the additional costs.
Property on the other hand has NO REGULATION which means insurance companies don't HAVE to do anything... and the market is trending towards insurers NOT REINSTATING HOME POLICIES that have been cancelled for non-payment.
This leads to shopping for coverage elsewhere right away, and your options are often less attractive.
When it Rains, it Pours.
If you're able to get your insurer to reinstate your HOME policy, there's a good chance they may not offer monthly payment anymore.
PAYMENT IN FULL?!
If you decide to go elsewhere "since this is ridiculous" you're likely to have an even higher premium elsewhere since you've been removed from the WANTED list.
Understand What You Signed Up For.
An insurance policy is a 12 month agreement.
Tons of people end up getting cancelled for non-payment simply because they didn't know it was a big deal, or they didn't think it affected them.
I knew a guy who put a 'stop pay' on his payments after he sold his car since he didn't need it anymore.
I'm not kidding.
Rather than calling and cancelling it like most people, he just pushed his future self off an insurance rating cliff.
I guess my takeaway here is:
If you’re living paycheck to paycheck and you sometimes have to ask: "WHICH BILL IS GETTING PAID THIS MONTH?"
You can save FUTURE YOU some money by putting your insurance bill near the top of the pile.
Big day tomorrow as Canada formally legalizes Cannabis!
While you're out celebrating the big change, or hiding from second hand smoke...I'm over here considering the impact on insurance coverage.
*Insurance Nerd Status CONFIRMED if it was ever in question.
Let's bring everyone up to speed on the how this is going to work.
On Wednesday Oct 17th 2018
Canadians over the age of 19 will be allowed to:
*You can possess up to 30 grams, and grow up to 4 plants per household.
Local Municipalities like the City of Halifax, or the Town of (insert any town) get the honor of creating and enforcing bylaws to dictate WHERE you can use it or grow it.
*Shout out to Halifax on their VERY popular choices so far on the new bylaws.
Indoor grow ops and smoke filled bus stops are the future.
Now that people can legally possess this stuff, insurance companies need to revisit how they plan to handle claims related to it.
Here's 4 insurance changes to consider about Cannabis
1. Weed just became INSURED CONTENT.
Prior to legalization Mary Jane was always excluded from Property Insurance coverage.
The specific exclusion is often worded something like:
“ILLEGALLY ACQUIRED, KEPT, OR STORED CONTENT”.
Since tomorrow is the big day and it's NOT illegal anymore, insurer's have to switch things up.
Most property policies will see Cannabis moved to the SPECIAL LIMITS section to put a maximum payout on Cannabis at say $500 or $1000.
There is at least ONE insurer who is not limiting Cannabis at all for MEDICINAL users.
Everyone's situation is different, but if you're sitting on a year's supply of the stuff you may want to make sure you're not limited to $250 in coverage.
Another reason why an independent broker is your best option for insurance.
2. Most insurers will be EXCLUDING CANNABIS from Trees, Shrubs, and Plants related coverage.
This isn't exactly a change, but it's worth noting that if you are spending some time and effort growing outdoor plants, it's unlikely that any insurer is extending coverage to those plants.
Worried about Bambi and his crew with the munchies eating your plants?
Maybe put up a fence.
3. Impaired Driving w/Cannabis will be A LOT like Drinking and Driving.
Insurers are rolling these convictions into the same pile as drinking and driving.
If you think Auto Insurance is expensive NOW you won't want to see how one of these on your record jacks up your rate.
In addition to the fine and probable license suspension...whoever is unlucky enough to get the first of these tickets is probably going to make the news.
The money being spent on "don't drive high" ad campaigns is serious, and I think we can all expect a real focus on it from Police.
4. Building/Content damages CAUSED by GROWING.
This one is interesting.
A COMMON EXCLUSION in most homeowner policies talks about damages caused from using the home to grow marijuana. It often looks something like this:
The old exclusion talks about marijuana directly, and also points to the CONTROLLED DRUGS and SUBSTANCES ACT which USED to have Cannabis listed.
But as of tomorrow, Cannabis will be OUT of the CONTROLLED DRUGS and SUBSTANCES ACT and getting into it's own CANNABIS ACT.
Most insurers have made changes to the language in policy to better explain what they're trying to exclude.
Here's an example of a new one:
On all policies, excluding watercraft, loss or damage to buildings or structures or personal property contained in them is excluded when used in whole or in part for the cultivation, harvesting, processing, manufacture, distribution, or sale of cannabis or any product derived from or containing cannabis, except as allowed by law.
Changes like these lead me to believe that the trend will be for insurer's to be OKAY with the risk that people are growing 4 plants inside their home.
That being said, this is only one company. There are all kinds of property insurers out there including a number of direct markets who don't always follow industry standard.
It's very possible some companies will not have any changes ready for tomorrow or they may have no interest in covering loses due to growing plants indoors.
So if you're planning to grow a few plants indoors, you may want to check with your broker to make sure any damages caused by it would in fact have coverage.
Based on how I'm reading some of these these wordings, opting to grow a few more than what's ALLOWED BY LAW could be enough to deny a claim in some situations.
I have NO DOUBT this will be a contentious issue for years to come for insurers and clients who push the envelope on growing one too many plants.
There is a real risk in growing plants indoors if you don't take the proper precautions. A lot of heat comes off these high-powered lights. There are often extension cords and exhaust fans, with containers of water sometimes in tight spaces.
Whether you use it medicinally, or just for recreation make sure you're covering your bases and being responsible. If you're going to take a crack at it, do your homework and treat the process with some respect.
2018 is quite a time to be alive.
This seems to be coming up a lot lately, and probably with good reason.
" $450,000 to replace my house?!? I bought it for less than that this year!"
PLUS INSURERS are only covering the STRUCTURES...not the LAND.
PEOPLE OFTEN THINK THE VALUE OF THEIR INSURANCE SHOULD BE BASED ON THE SELLING PRICE OF THEIR HOUSE.
This is incorrect.
Insurers are interested in the REPLACEMENT COST, not the MARKET VALUE.
Not what someone is willing to purchase your home AND LAND for, but what it was would cost to rebuild it TODAY with BRAND NEW MATERIALS.
Today's Home insurance is not based on an Actual Cash Value....most of it is based on REPLACEMENT COST.
This means all your OLD STUFF is going to be replaced with BRAND NEW STUFF.
(less your deductible and a long ride on an emotional rollercoaster)
Someone buying an 18 year old house for $250,000 is agreeing to buy 18 year old siding, an 18 year old furnace, 18 year old decking....18 year windows....etc. The replacement cost of this same home may actually be closer to $350,000.
The market value when buying a home is heavily weighted on WHERE the home is located. The same structure in different communities may demand very different prices.
REPLACEMENT VALUE IS NOT THE SAME AS PURCHASE PRICE.
The increased costs of material hit home for me this past weekend.
I needed to buy some lumber to replace some railing on my deck and 6 lengths of 2x6 came in over a $100.00!
I can't imagine the costs of RE-FRAMING MY WHOLE HOUSE.
Insurer's also have the burden of carrying a lot of costs over and above just materials.
They require replacement to be done RIGHT AWAY as they also pay the costs of LIVING EXPENSES for those people out of a home... PLUS they need qualified builders, warrantied work...plus plus plus.
Insurers need agreements from contractors to rebuild homes when and wherever needed year round.
This is built into the pricing and simply doesn't make it a fair comparison to someone who believes they could rebuild their own home for a lesser Replacement Cost.
WHAT'S THE CORRECT VALUE THEN?
Now that we've established the SELLING price of your house is not the same as the REPLACEMENT cost, you may be wondering...whats the right number?
Brokers and Insurers use a number of industry standard programs to calculate replacement values.
Considerations are given to Square Footage, the number of bathrooms, heating type, exterior and interior finishes and more. The more specific you get the more accurate the number can get... but it does vary program to program.
The RIGHT number is a bit subjective without having an inspector go through it with a measuring tape.
DON'T FORGET ABOUT INFLATION.
There's a good chance that your replacement cost CALCULATION was done when you moved into your house.
Every year at renewal, your insurer moves the value of the building up a few points.
Some add 4% a year, some add as much as 6% a year to cover "inflation".
It's a reasonable action, since costs DO go up each year....but this can get out of control pretty quickly if you're not paying attention.
If you've been with the same insurer in the same location for the last 5 years
HAVE YOUR BROKER RUN A NEW VALUATION.
That number drives a lot of your insurance premium and you should have updated every few years.
Replacement Cost at 5% inflation without adjustment
Year 1 - $350,000
Year 3 - $385,875
Year 5 - $425,427
Looking at the above, you could be adding a lot of cost to your insurance without realizing it.
Talk with your broker and make sure you feel good about what you're paying for.