4 Unusual Events in Damage Insurance

Or the importance of protecting yourself from all types of risks!

Edward A. Murphy, best known for his oft-cited “Murphy’s law,” must have been a staunch supporter of all risks insurance: as he would say, “anything that can go wrong will go wrong”. Although no one wants to find themselves in this kind of scenario, it is important to make sure you have the right coverage to avoid the worst in the event of a claim. Still not convinced? Here are four strange (but true!) events that show the importance of having the right coverage for your situation. 

1. Motorcycle and Car Trips

Some car insurance policies nowadays still offer liability limits of $1,000,000, despite the fact that a limit of $2,000,000 is strongly recommended, particularly when travelling outside of Quebec. The difference in premium between $1,000,000 and $2,000,000 is negligible compared to the peace of mind this coverage provides. In the event of a motor vehicle accident, particularly one that occurs abroad, having adequate coverage is essential.

Here is one example: during a trip to the United States, a motorcycle accident occurs. The vehicle strikes an American pedestrian. As a result of the accident and the serious injuries sustained by the pedestrian, a $2,000,000 lawsuit is filed against the motorcyclist. In this type of situation, the cost of the lawsuit can quickly reach the liability limit. Imagine if the accident had involved multiple pedestrians! To ensure they had adequate coverage, the motorcyclist could have taken out Umbrella insurance, which increases your liability limit.

Do you also plan to travel abroad regularly for work or leisure? It is important to protect yourself to make sure your trip is enjoyable and hassle-free!

2. Out-of-Control Barbecue

One warm summer night, an insured has guests over for a swim and a barbecue. That evening, one of the guests lights a cigarette. Although he follows the host’s instructions to pay attention to where he throws his cigarette butts, an ember falls into the cedar mulch covering the insured’s lovely rock garden. Since the weather is hot and dry, the mulch catches fire without him noticing and the wind subsequently picks up.

Having stepped away to smoke his cigarette, the guest rejoins the rest of the group. A few minutes later, he realizes that the garage and the side of the house are on fire! Although nobody is injured, the incident causes nearly $50,000 worth of damage in a matter of minutes. In this example, the smoker has civil liability coverage. If the insured had chosen to sue the guest, the guest would have been covered, since civil liability insurance covers you anywhere in the world! Now imagine if the house had burned down completely and the fire had spread to neighbouring houses and led to multiple deaths…

Whether you have tenant or homeowner insurance, knowing you have civil liability coverage will give you peace of mind! Are you or one of your loved ones a smoker? Read this article to find out how to protect your home.

3. Ground Water and Sewer Endorsements

Water damage is the number one cause of home insurance claims, and with climate change, this trend is only going to get worse. Unfortunately, even if you have never experienced a sewer backup, or live on the second floor and think your home is immune to water seepage, you are never truly safe from this type of event. Even if you take every precaution, these incidents can still occur.

One insured experienced a major sewer backup: her entire basement had to be dried out and any wet materials removed. The basement, which had been updated several years earlier, had to be renovated again.

The woman in question had taken the necessary precautions: a main submersible sump pump and a second battery-powered emergency pump. However, when a power outage occurred, the sump pump battery also died. The basement flooded, resulting in a claim that nearly exceeded her coverage limit. What more could she have done to protect herself? For one thing, she could have checked the main pump regularly to ensure it was working and tested the battery-powered pump. For other types of water damage, a centrally monitored alarm system with automatic water shut-off may have been a good idea. This type of system detects leaks and automatically shuts off your water supply to prevent the situation from worsening.

When a broker draws on their expertise and advises you to purchase a certain amount of coverage for sewer backups and ground water damage, it is because these claims involve more than just belongings and furniture. Before automatically declining coverage that seems excessive, take a moment to consider the following factors:

  • The need to dry out your home and possessions quickly.
  • Removal of wet materials to prevent mould growth.
  • Reconstruction with equivalent materials if the basement is finished.

4. Vehicle replacement value

Here is another example: you have retaken control of your credit report and turned to second or third chance credit financing. You tell yourself the third time’s the charm. You have drawn up your budget and made sure you have enough to pay for your registration, your driver’s licence, your vehicle and even your insurance. However, when choosing your coverage, you decline “replacement value” insurance. You figure that you have collision coverage and that should be enough.

However, following a car accident, the vehicle is declared a total loss. After three years of use, the value of the vehicle at the time of the accident is well below the loan amount with interest. You therefore find yourself with a vehicle loan that is greater than the compensation you will receive. In addition to helping you avoid any nasty surprises, replacement value coverage also reimburses part of the premium in the event of a claim—a handy way to deal with mishaps on a tight budget!

To conclude, these four events show that the worst-case scenario can indeed happen … and not just to others! To make sure you are covered in all of these situations, you can rely on the expertise of one of our brokers here at Lareau, who can find an insurance solution that is tailored to your needs. Although we are never totally safe from losses, it is always easier to deal with them when we have the right information, coverage and support. Our brokers are here to assist you, before and after a claim. Give us a call.

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