Most insurance claims are subject to a deductible - the initial amount of every claim that you've agreed to pay. Deductibles help make insurance more affordable for everyone by eliminating minor "nuisance" claims.
If you have suffered a loss for which you are insured, inform your insurance agent or broker of the nature of your claim. If there has been a burglary or theft, the police must also be informed. You'll be required to supply information about the circumstances of the claim as well as reasonable evidence to justify the amount claimed. Your insurer will want to know exactly what was stolen, when you acquired it, and what you paid for it.
A claims adjuster may then be appointed - at no cost to you - to look after the details. You should take reasonable steps to protect against additional damage. If a pipe has burst, for example, shut off the water supply. Don't dispose of damaged goods without first getting your insurer's "okay". In some instances, your insurer may arrange assistance for temporary repairs, such as covering a damaged roof, or boarding over a broken picture window.
If you have replacement cost coverage, some insurers will assist you by providing the cash value of the used item immediately, topping up that amount later when you provide proof of replacement purchase within 180 days of the loss. There are exceptions, however, such as when you have been using an already damaged or obsolete item for some purpose other than its original one (e.g., a defunct refrigerator as a bookcase). When part of a pair or set of items is damaged, the loss will be calculated as a reasonable proportion of the whole set.
An up-to-date inventory of your possessions and a record of their value will be helpful to you, your insurer, police and others in the event of a burglary or fire. After a loss, it could be difficult for you to recall the details of things that are now damaged or missing. Some people like to make a drawer-by-drawer, room-by-room video recording of their possessions; some use a regular camera. An audio cassette recorder could be useful for making a spoken list of collections - books, tools, stamps, and so on. This would capture more detail than you could achieve with a camera. Written or typed descriptions are useful, too; be sure to include makes, models, serial numbers or other identifying marks. Keep purchase receipts for major items. Store your inventory records in a safety-deposit box or another secure location away from your home.
It is a crime to inflate a claim or to file a bogus one. Your local Crime Stoppers will be pleased to receive tips leading to the arrest and conviction of persons engaged in insurance fraud. Reporting is anonymous and rewards are based on the value of funds recovered or fraudulent claims denied. Insurance fraud hurts honest policyholders by driving up the cost of insurance for everyone.
Note: Illegally acquired property is not insurable and some policies exclude smuggled items which have not been declared to Canada Customs. Damage that results from your criminal activity would not be covered, nor would any intentional damage by you.
As well as technical jargon, insurance-industry practitioners often use some every-day words in a very precise way. We hope you find this glossary helpful; your comments and suggestions for future editions are cordially invited.
"All risks"
The term "all risks" describes insurance for losses due to a wide range of causes. Instead of listing each insured peril, such as fire, lightning, and so on, the policy covers all loss or damage to insured property that is the result of any "risk" that is not specifically excluded. "All risks" is a confusing insurance term and does, in fact, incorporate some listed exclusions which allow coverage to be tailored to individual needs and priced more fairly. Perhaps a better description would be "all common risks"!
A "risk" is a chance event that is unexpected and accidental as far as the policy holder is concerned. For example, if a dog's tail sweeps an ornament off a table and onto the floor where it breaks, that is due to a "risk"; the ornament would not otherwise have broken. The gradual wearing out of clothes, however, or the rotting of fruit, are quite natural and expected... and therefore are not insurable "risks".
Business premises, equipment at home
Loss or damage to buildings or structures is not normally insured if they are used for business or commercial farming. Business equipment is covered only while at your home, usually only up to $2,000 in all. There is no coverage for samples and merchandise 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 - that is designed for home-based businesses.
Direct loss
A "direct loss" arises when insured property or goods are damaged or lost. The term does not include other losses or expenses incurred as an indirect result of the damage, such as having to rent a video camera if your own is destroyed by fire shortly before you leave on a vacation trip.
Dwelling
Your "dwelling" coverage applies to your home and "attached structures" such as a garage or carport. Permanently installed outdoor equipment on the premises, such as a swimming pool and the equipment attached to it, is included. Building materials for use in construction, alteration or repair of the insured dwelling or related structures on the premises are covered, too, if they are on the site or adjacent to it. Theft and vandalism losses during construction are usually not covered.
You may apply up to 10% of the amount of insurance on your dwelling to insure building fixtures and fittings, such as mirrors or air conditioners that may have been removed temporarily for repair or seasonal storage.
You may apply up to 5% of your insurance to trees, plants and shrubs; but there's often a limit for any one item. Lawns aren't insured, and trees, shrubs and plants aren't covered for weather-related damage.
Other buildings and structures
Separate structures and buildings on the same premises as the primary dwelling are also covered for specified amounts, usually up to 10% of the main coverage. This could apply to detached garages, tool sheds, retaining walls, and even landscaping. If 10% seems too low, consider buying additional coverage.
Personal property
Your home owner's policy will cover the contents of your home and other personal property that you own, wear or use (including clothing, cameras, furniture, etc.) while on your premises. It may even cover uninsured personal property of others, excluding roomers or boarders who are not related to you. Your policy will normally cover personal property while it is temporarily away from your home anywhere in the world. Personal property not normally kept at home is not covered. Personal property in a warehouse is usually covered against theft without time limit; but other perils may not be covered, or may be covered only up to 30 days, so be sure to consult your agent or broker.
Relatively small dollar limits apply to negotiable securities, cash, garden tractors, watercraft and computer software; read this section of your policy carefully!
Coverage limits apply also if the following are stolen: bicycles; jewellery and gems; watches; furs; coin, stamp and card collections; and manuscripts. Many insurers no longer limit coverage of silverware. Check your policy.
Reasonably priced supplementary insurance is usually available. These "riders" or "floater" policies provide all-risk coverage for specific items - often fragile and/or valuable -- subject to certain exclusions. Coverage can be world-wide and there's usually no deductible.
Subrogation
Your insurer may try to recover some or all of its costs in settling your claim by suing others responsible for the loss. The effect is roughly the same as if you yourself were to sue the responsible party, except that you are compensated more quickly by your own insurer, often on a replacement-cost basis.
Vacancy
Insurance coverage on dwelling and contents ceases automatically when the premises have been vacant for more than 30 consecutive days without the insurer's prior approval. Coverage for certain perils such as vandalism lapse immediately. A "vacant" building, regardless of the presence of furnishings, is one that you've moved out of, not intending to return. Be sure to notify your insurer before you vacate your home.
"You" and "Your"
When the text of an insurance policy uses the words "you" or "your", it refers to insured person(s) named on the coverage summary page. The policy also includes, while living in the same household, a named insured person's legal - and, sometimes, common-law - husband or wife, the relatives of either, or any person under 21 in their care.
The nature of insurance requires consumers and claimants to supply some relevant personal information to insurance companies. Without such disclosure, insurers would find it difficult to assess premiums and pay claims fairly. If you have any questions or concerns about how the information will be used, it is important to discuss them with your insurer or agent/broker before applying for coverage or submitting a claim. You may wish to determine if your insurer follows a privacy code of conduct based on guidelines established by the Insurance Bureau of Canada and the Canadian Standards Association.
When you buy home insurance, you buy peace of mind. Insurance is a product like any other, and it works better when both sellers and buyers are knowledgeable. If you have questions that are not answered in this pamphlet, all you have to do is ask!
For more information:
Talk to your agent/broker.
Look under "Insurance, Home owners" in your local library for up-to-date, comprehensive books on insurance written expressly for consumers.
Talk to one of the experienced information officers at the Insurance Bureau of Canada.
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