What To Expect When You Least Expect It


Here’s a scenario for you: You drive a 10 year-old car, planning to one day replace it. Whenever it breaks down, and it seems to break down a LOT these past few years, you question the logic in putting yet more money into a car that really isn’t worth much. But you love your car, and you haven’t had a payment on it in five years, and maybe the six thousand dollars that it has cost you in the last four years isn’t so bad.

Until one day, out of nowhere, some jerk runs a red light and broad sides you. Your car is wrecked, and now you have to make an insurance claim.

The good news is that the accident is NOT your fault, so your rates won’t be going up.

Here’s where things can get confusing. If the cost to repair your car exceeds the value of it, the insurance company will write the car off. So for only $3500 you can get your car back in tip-top shape, but the vehicle is only worth $2500. At this point, the insurance company is obliged, under the terms of the contract, to only give you $2500. Bummer…

This type of scenario plays out all over Ontario every day. But your situation is different, right? You have invested six grand into your car, just in the past four years! Isn’t your car worth MORE than $2500? Isn’t your car worth $6000?!?

The short answer is that it’s simply not worth more than $2500, regardless of how much you spent to keep it running. The value that the insurance company calculated for your car is based on a car that runs and passes a Safety Test. If you had not spent all that money, your car would have gone to that big parking garage in the sky years ago. Unless the money you spent was for custom rims, upgraded stereo and upholstery, and one of those cool chrome steering wheels, it has no bearing on the intrinsic value of your ride. Sorry.

On the bright side, now you can use the insurance claim proceeds as a down payment on that shiny new car you saw at the dealership. And moving forward, you will have a consistent and reliable car, with a consistent and reliable payment. Plus, your Broker can show you how the new technology and safety features available on today’s new cars can sometimes make for smaller insurance premiums than you think.

Bet you didn’t expect that.

Comments

Post a Comment

Popular posts from this blog

Image
Well, That Was Unexpected… In the wee hours of November 1, 2019, a huge storm ripped across Southern Ontario, causing over $50 million worth of damage in its wake. We’ve had big storms in this area before, but this storm was different. Typically, in the insurance industry, we have a few types of storms. We have the   regular ones, where you might see a few older roofs sustain damage, maybe some siding damage, perhaps a few basement floods. Those storms are easy enough to plan for. Heck, often insurance companies don’t have to raise everyone’s rates to recover from those losses. Then there are what we term “catastrophic weather events.” Those are the storms that cause significant damage in a concentrated geographic area, and the number of claims exceeds a threshold. For example, if an insurance company were to experience 500 claims from a single storm in the Region of Niagara, they might term that as a “catastrophic weather event.” Until recently, those were the storms
Read more

Co-Insurance: One of the Trickiest Concepts in Commercial Insurance

Image
If you own a business, you know how important insurance is. When you look at your business insurance Declarations Page, do you fully understand what each line item on it means? Don’t worry too much, few people actually do. But there are a few lines that you must understand, as your business depends on it. In this article, I want to focus on the “Coverage A – Building” and “Business Personal Property” lines, and more specifically the dreaded Co-Insurance requirement . To understand the concept of Co-Insurance, first we must look at the whole reason we purchase insurance. We purchase insurance to help us recover from the unexpected, and by unexpected, we’re talking about the absolute worst thing that could happen. What if a fire tore through your business location, leaving only the charred remains of your favorite pen? Or maybe it’s a flood of 12 feet of sewer water that turns your sales counter into a raft? I know, I know, those things would probably NEVER happen. That’s a com
Read more

Breezy Indeed...

Image
The 23 rd and 24 th of February in South Niagara will be a time that is looked back upon with something less than fondness. Heck, the whole of Ontario enjoyed some pretty windy weather those few days! People all over the province experienced damaging winds, fallen trees, and flying object damage. It is already being referenced as a significant weather catastrophe by the insurance industry. We have seen enormous numbers of claims, and millions of dollars in damage. So what happens after the roof blows off? The first thing that needs to be done is to report the claim to the insurance company. As an option, you can always report your loss to your broker and get any free advice on offer from them. When you report to the company directly, you’ll want to have your insurance policy number as well as your effective date, as the Claims Representative will need that information to set up the claim in their system. Once the claim is reported, the real work starts. You should next r
Read more