Frequently Asked Questions About Insurance

Auto Insurance

Home Insurance


Auto Insurance

Q: Can my neighbour borrow my car?
A: As long as a person to whom you lend your car has a valid Ontario driver’s licence you can lend your car to anyone. There is no problem if this is a once or twice a year event. However, if the usage is more regular, such as once or twice a week that person should be added as a driver to your policy. But if you lend your car to a person and that person gets into an accident with your car, that accident will be on your insurance record and, if the person you lent your car to is considered at fault or responsible for the accident, the accident can seriously affect your insurance premiums. Essentially, even if you were not driving your car, your insurance policy will take the brunt of it in these cases. Be very cautious about whom you lend your car to!

Why do I have to give licence details of other persons in my household if they don’t drive my car?

On every car insurance application there is a question asking ‘Are there any other persons in the household or business licensed to drive?’ In order to properly cover you, the insurance company must know who possibly could be driving your car at any given time. While you may have no intention of lending your car, situations do happen. Perhaps a roommate has to borrow your car in an emergency, or may unexpectedly become the designated driver after a night out on the town. It is important for the insurance company to know who could possibly be driving the car so your policy can accurately reflect your coverage needs.



Q: I have automatic withdrawal for my premium, but I didn’t have enough money in my bank account when the premium came due. What will happen now?
A: It all depends on the insurance company and whether or not this is your first, second even a third non-sufficient funds situation in a given policy term. Usually, a first or second non-sufficient fund occurrence results in the insurance company simply re-attempting a day or so later and the worst that happens is a non-sufficient fund charge. If that retry is not successful, then the insurance company may issue a registered cancellation letter to the client in which they have 30 days to bring the account up to date to reinstate the policy. On a third non-sufficient fund occurrence the insurance company issues a cancellation notice with no reinstatement option. The best course of action is to call your insurance broker and determine the exact plan of your insurance company.


Q: Should I keep the vehicle in my name instead of my child’s name? Will this be cheaper?
A:
There is no advantage to doing this. The main factors in determining insurance premiums are who is driving the vehicle (and how much experience they have, traffic convictions, and accidents), where they are driving the vehicle, for what purpose they are driving, and what discounts the driver is eligible to receive.


Home Insurance

Q: Why is the real estate value not the same as your rebuilding cost?
A: Because there are several ways to assess a home’s value you may have several different dollar figures according to whom is doing the assessing and the difference can be as much as tens of thousands of dollars! The banks and mortgage companies look at market value — what a house of similar style, size and age would be worth at that time, while, taxes are determined using the market value of homes in the neighbourhood and insurance companies look at the rebuilding cost of a home. For example, should the worst case happen and a home is completely destroyed in a fire the insurance company, through an insurance policy, promises to rebuild the home in the same fashion. The rebuilding cost of a home includes such features as debris removal, taking away all the wreckage of a home, undergoing any environmental tests as required, and getting the home rebuilt or repaired as quickly as possible. There are many factors in determining the rebuilding cost including type of building, design, site accessibility and local bylaws. Because insurance companies do not rebuild many homes (total home loss is not common) an insurance company pays market price for construction labour and materials, unlike a new home builder who has many volume discounts.

To see the difference between market value and rebuilding cost imagine two identical homes, one in downtown Toronto and one in Fergus. Both homes have the same square footage and same building materials. While the rebuilding costs between these two homes might be slightly different due to local bylaws or how close neighbouring buildings are, the market value of the homes could be different by hundreds of thousands of dollars. Depending on the housing market, it could be that the market value of the home in Fergus is less than the rebuilding cost and the market value of the home in Toronto is far higher than the rebuilding cost.