Over cautious or under protected? Where do Canadians stand when it comes to ensuring they are properly insured?
6 minute read
6 minute read
-- TD Insurance takes the nation's pulse with the State of Insurance Report --
TORONTO, June 19, 2013 /CNW/ - From deductibles to deferred premiums, do you understand the ins and outs of your insurance coverage? While a majority of Canadians (55%) review their insurance policies at least once a year, new research from TD Insurance has found that not everyone takes the time to ensure they are properly insured.
According to the State of Insurance Report, an annual report commissioned by TD Insurance to understand Canadians' habits, attitudes and knowledge about insurance, one-in-two Canadians (52%) wouldn't ask their insurance provider to clarify details they don't understand in their policy. They wouldn't clarify their policy because they think it is too complicated (31%), don't have time (31%), are embarrassed by their lack of knowledge (23%) or are simply uninterested (19%).
But Dave Minor, a vice president at TD Insurance, says it is important to understand what protection your insurance offers in case the unexpected occurs.
"If you come across terms or conditions you are unfamiliar with in your policy, there is no need to feel embarrassed or daunted to seek help," he says. "Speak with your insurance provider whose job it is to clarify any questions you have about your policy to ensure you thoroughly understand your coverage, rights and responsibilities as a policyholder."
Thirty-seven percent of Canadians admit they didn't bother to review, or even skim, the fine print on their insurance policies. As a result, 23% have been upset to learn that they weren't covered for something they thought was covered, and 15% have been pleasantly surprised to find they had more coverage than they thought.
"When you renew your insurance, or reach a milestone in life like buying a new car, a home or have recently completed renovations, spend some time reviewing your coverage," says Minor. "Your insurance needs may change from one year to the next and your coverage could have changed, too. Call your insurance provider if you have any questions about adjustments or if your coverage no longer reflects your lifestyle."
Minor provides three scenarios to educate Canadians on common home, auto and life insurance questions:
1. Hayley bought a $5,000 antique dining room table and chairs for her home a few years ago. Unfortunately, it was damaged when her toilet water supply valve burst last month. She made her claim and met the deductible, but isn't sure how much she will receive from her insurer to replace her dining room set.
Replacement value ensures the contents of your home are insured for the amount it would cost to replace them today. However, a standard home policy only covers actual cash value - what you would pay for a similar item at today's costs, less depreciation (a decrease in value due to wear and tear or age). If Hayley has actual cash value coverage, her insurer might pay $3,800 because that is the replacement cost minus depreciation and deductible. If she had purchased extended replacement value coverage, her insurer might pay $5,100 because that is the cost net of deductible to buy a similar dining room set today.
2. For his graduation gift, Duncan's parents gave him their 10-year-old station wagon to drive on weekends. The car is in average condition and is valued at $1,500. Duncan doesn't have strong cash flow right now, and is weighing his options for insuring it at a low cost.
Auto insurance premiums are calculated based on a number of factors, including your driving record, what type of car you have, and how often you drive. To save money on premiums, Duncan could increase his deductible, the dollar amount he would be responsible for when making a claim if he was deemed at fault. Since the car is old and will be driven relatively infrequently, Duncan could also consider dropping collision coverage. For example, if his deductible was $1,000, it may not be worth adding collision coverage to his policy since he would likely end up covering a majority of repair costs through his deductible. Instead, it may make sense for him to pay for any accident damage to his car out of his savings. Otherwise he could, over just a few years, end up paying more in premiums than his car is worth.
3. Sarah and Daniel have just made an offer on their first home and are planning to start a family in the next few years. They want to ensure their family home is protected in the event something unexpected happens, and are trying to decide if they should buy life insurance now or after they start their family.
Mortgage life insurance* pays the balance of your mortgage to the bank if a person listed on the mortgage passes away, so loved ones are not left with debt. This type of insurance can be purchased through your financial institution when you sign your mortgage papers and requires answers to just a few basic health questions. Premiums are then combined with your mortgage payments. Term life insurance provides coverage for a set number of years and the payout is delivered directly to the beneficiaries who can decide what to do with it. Both policies would give Sarah and Daniel a flexible, low-cost way to protect their family and their home.
One of the advantages that Sarah and Daniel have when thinking about life insurance now is that it can be more affordable since premiums are based on life expectancy. Sarah is 29 and Daniel is 33, so they could save on their monthly insurance premiums by locking in at a lower rate, if they purchased it today.
"At the end of the day, insurance should give you peace of mind," Minor says. "If you feel uncertain or have questions about the terms or conditions within your policy, ask your insurance provider for clarification before you sign on the dotted line."
About the TD Insurance State of Insurance Report
TD Insurance commissioned Environics Research Group to conduct an online custom survey of 2,583 Canadians aged 18 and older. Responses were collected from February 7 to 18, 2013.
About TD Insurance
TD Insurance offers a wide range of products to help protect clients from the 'accidents of life' including credit protection, auto, home, health, life, and travel insurance. With more than 3 million clients, TD Insurance authorized products and services are available through a network of more than 1,150 TD Canada Trust branches, the Internet and telephone. For more information, visit www.tdinsurance.com
SOURCE: TD Insurance