- Auto Insurance Q & A
ü Q: Is auto insurance mandatory?
A: Anyone who owns an auto in Ontario is required by law to have third party Liability coverage, Property Damage liability, Accident Benefits, and Uninsured protection. However, there are optional coverages like Collision, Comprehensive, Car Rental, All Peril Coverage, and Non-Owners Coverage.
ü Q: What is the difference between Liability and Accident Benefits/Bodily Injury (AB/BI) coverage?
A: Liability is what will pay out if you have caused an accident and the other party or parties were injured and had medical expenses and doctor bills. The AB/BI is a no-fault medical coverage for you and can replace lost income, medical expenses, rehabilitation, and death benefits for spouse or dependents.
ü Q: Ontario only requires $200,000 in Liability so that should be plenty of protection, right?
A: Not necessarily. Having $200,000 will allow you by law to operate a motor vehicle but that does not mean you have enough coverage that you will not pay out any additional liability claims.
For example: You accidentally run a stop sign and hit a pedestrian who is badly injured. Having $200,000 on your policy may not be enough to pay out for medical expenses, loss of income, and rehabilitation services for that person you hit. The court will hold you responsible for any loss over your insurance coverage. If the pedestrian sues you for $1 million to cover his entire medical and rehab plus pain and suffering, you will have to come up with the remaining $800,000!
Included with your liability is coverage for any property that you damage in an at-fault accident. If you damage other vehicles or private property like buildings, fences, or other structures, you will also want at least two million dollars in coverage. You are required to have at least $200,000.
ü Q: So how much liability is recommended?
A: It is entirely your choice; however, $2 million is recommended. This would be especially important if you own property, business, and assets. It is also important if you have teenage drivers in your home since they pose more of a risk.
The more protection you have, the less likely you will have to sell your assets to pay for liability claims due to an accident that you or a family member have caused.
ü Q: How am I protected if someone hits my car and then takes off before I can get the driver’s information?
A: You would be covered for injury or damage under the Uninsured Motorists coverage. This pays out if it is a hit and run, or if for some reason someone is uninsured and hits you. This is also mandatory coverage and must have limits equal to your liability limit coverage.
- Auto Accident Benefits Q & A
ü Q: What are accident benefits, and don’t I have that on my liability insurance?
A: Accident Benefits will provide you valuable protection against injury or death from a motor vehicle accident regardless of who is at fault. It is not covered on liability, because that is only coverage for the other not-at-fault party.
ü Q: Am I required to have Accident Benefits?
A: Yes, all provinces and territories except Quebec and Newfoundland require Accident Benefits.
ü Q: What will Accident Benefits pay?
A: Accident Benefits will pay out for rehab expenses, medical bills, and other expenses that is not covered by your government health insurance plan.
It also will replace your lost income if you lose time and money from a job because you are out for your injuries, and childcare services if you cannot properly care for your children due to injury.
In some cases, it may also pay benefits to your partner and/or dependent children if you are killed in an auto accident.
ü Q: Does Accident Benefits pay out even if the accident is my fault?
A: Yes, it will pay out no matter who is at fault. It is called a “No-Fault Coverage” meaning you get this coverage no matter who is considered at fault.
- Optional Auto Policy Coverages
ü Collision: You can include this coverage if you want to be sure you can get the book value of your vehicle if it is totaled, or have it repaired in the case that you cause an accident and your vehicle is also damaged.
ü Comprehensive: This covers your vehicle for loss other than collision such as theft, fire, vandalism, glass, storm, or animal.
ü All Perils: An all-perils policy will cover you for more types of losses unless it is specifically excluded. You can upgrade your policy to this type of coverage if you only have the regular named peril coverage on your collision and comprehensive. However, it is a higher premium.
ü Car Rental Coverage: This will provide you with a temporary replacement vehicle while your car is in the shop for collision or comprehensive repairs, or if you totaled your car, it will replace it while you search for a new vehicle. It will only cover up to your limits, so be sure to understand what the limits are before using this coverage.
ü Non-Owned Auto Coverage: This is a liability policy that you can purchase to cover only yourself if you do not own a vehicle or you do not have regular access to another household member’s vehicle. This will give you protection if you should ever rent a vehicle or borrow someone’s vehicle and you caused an accident. It will not pay out for your own damage, but it will protect you for the liability on the other person if the accident was your fault.
- Home and Condo Insurance Q&A
ü Q: My mortgage is paid off, why do I need home insurance?
A: Your home insurance does not pay for the mortgage; it replaces or repairs your house in the event of a covered loss such as fire, storm, tornado, falling objects, etc. So it does not matter if you have a loan or not, you want to be sure you have a home policy that covers 100% of the cost to build your house.
ü Q: Will my house be covered for everything that could happen?
A: It depends on what type of home policy you have. Do you have all risk or broad form? You will want to go over the differences and compare the prices between the two options.
Broad Form covers only the “named perils”: Damage from fire, lightning, windstorm, hail, explosion, aircraft, smoke, vehicles, vandalism, riot or civil commotion, sinkhole collapse, sprinkler leakage, accidental water damage, volcanos, falling objects, ice, sleet, and snow weight. It does not cover for vast flooding.
All Risk Form is more inclusive and will cover most anything unless it is specifically named as an exclusion.
ü Q: I’m going to buy a condo. Since I will be paying the condo association fees do I need condominium owner insurance?
A: YES! The condo fees go towards building maintenance and grounds keeping but you are still responsible from the wall studs inward. So if you have a fire, you need insurance to replace all your belongings and your walls, floors, cabinets, and anything else that was lost in the fire.
COMMERCIAL LINES: PROPERTY, LIABILITY, AND CRIME
Inder will provide commercial insurance for business owners including those in manufacturing, wholesale, retail, contract business, electricial contracts, roofing, janitorial services, and apartment building owners.
- ü Q: I have a building on my personal property that I designate for my business, do I need commercial property insurance?
A: Yes! Your personal homeowner’s insurance is not going to cover a building used for business or business property.
If you own or lease any type of building or you carry any type of inventory, you will need commercial property insurance to insure you can receive money to rebuild your business building or your inventory from a covered loss.
ü Q: What does commercial liability cover?
A: It will cover you if you are sued due to injury on your property, make a recommendation that a customer does not like, provide an opinion that is not well-received, or offer a service where someone is displeased.
It will cover medical expenses, defense and attorney fees, court costs, and damages if you are found legally responsible in a lawsuit.
ü Q: Does commercial crime insurance cover employee dishonesty as well as robbery and burglary?
A: Yes. Commercial crime insurance will replace your inventory or damage from a break-in as well as theft and loss from internal sources like employees. If an employee steals money or inventory, your crime insurance will cover it.
LIFE INSURANCE: GENERAL DESCRIPTION AND TYPES OF LIFE INSURANCE
Life insurance is very important if you have a spouse, dependents, or family that is responsible for your final expenses. Your life insurance is income protection for those you leave behind. Consider how difficult it would be for your partner if you die and the total household income drops to whatever they earn. They will be forced to make very difficult decisions and may lose assets in order to make up the difference.
- Life Insurance Q & A
ü Q: Why should I buy Life Insurance? Why is this important?
A: Life insurance is important because if you have any bills, mortgage, debt, or loans, your next of kin will be responsible for paying these.
Your life insurance can cover these expenses up to the face value of the policy you buy.
If you earn any income that contributes to a family budget, you will need life insurance to replace that for your family.
This is especially important if you have children. If your spouse stays at home to care for your children and you die, they will have a very difficult life if you do not have life insurance.
ü Q: How much life insurance do I need?
A: This answer is variable based on your current financial standing and your anticipated future income needs.
If you still have children at home, you have to figure in their school costs including college, and if your income was the only income for the home, you will need to make sure that your life insurance policy will be able to provide that for your children and spouse.
Inder can help you calculate those needs. There are also online calculators if you wanted to get a general idea.
ü Q: If life insurance is part of a benefits package with a company, is there any reason to buy individual coverage, too?
A: Absolutely. The older you are, the more life insurance will cost you. If you go to work for a company when you are 25 and you faithfully work for them for 20 years but then they go bankrupt and close, you are now 45 and have no life insurance.
Purchase an individual policy as early as you can and for as long as you can. You cannot guarantee that you will work for the same employer until you die.
- What are the differences between Whole, Term, and Universal Life Insurance?
ü Whole life will cover you for your “whole life”, as long as you continue to pay the expected premiums in a timely manner. It also builds equity or cash value during your life, albeit at a low interest rate.
It is best to get whole life from the time of birth or as young as possible. Whole life also makes sense to buy very late in life. Or, if you prefer an investment that has slow growth, but stable growth, whole or universal life is for you.
There are three types of permanent life insurance policies:
- Term to Age 100 (T100) will cover a person’s life span up to age 100 for a fixed benefit value and will not have cash value during the term.
- Classic Whole Life will build some cash value based on interest rates. This will have higher premiums than T100.
- Universal Life gives more flexibility on the savings component by allowing the policyholder to shift money from the insurance to the cash value based on interest returns.
If the interest rates go up, you can exchange more of the insurance to the cash value. If interest rates are low, you can use your cash value to pay your premiums.
ü Term Life: Once you get into your twenties, it makes more sense to get term insurance for the most part, but again, circumstances vary. Term Insurance covers you for face value if you should die during the term you select: 10, 20 or 30 years.
For example, if you are 25 and you buy $100,000 for 30 years, you will be covered for that amount up to the age of 55. After the term ends, so does your coverage. This is why it makes sense to buy a couple through out your twenties and thirties. If you buy a 30-year policy when you are 40, it covers you until you are 70.
ü Q: What is Mortgage Insurance and what is the difference between that and traditional life insurance?
A: Your mortgage company may entice you to buy mortgage insurance claiming it will pay for your mortgage if you die.
What you need to know is that mortgage insurance premiums will stay the same for the entire 30-year mortgage no matter the total mortgage balance. Once the mortgage is paid, you are done paying for mortgage insurance and you receive nothing.
If you die during the time you are paying on your mortgage, the money you have been paying goes directly to your bank for the house; your beneficiaries and family do not get a penny.
On the other hand, if you have a life insurance policy that is at least the value of the mortgage, your family may use that life insurance to pay for the mortgage and anything else that needs paid. Any leftover amount can be spent however your beneficiaries choose.
For example, if you pay $40 a month for a $250,000 life insurance policy, and your house mortgage is $200,000, you know that no matter what, your home is safe for your family to remain in it if you die. You also know that your family will have at least $50,000 to apply towards your final expenses and any other bills that you are responsible to pay.
If you do not die until the mortgage balance is only $50,000, your beneficiaries can pay off the mortgage and then have $200,000 to use for final expenses and to use the rest how they want.
Conversely, if you pay $40 for a $200,000 mortgage life insurance amount, in 10 years when you only owe about $150,000, you are still paying $40 but now it will only cover $150,000. And so on until the mortgage is paid and you get nothing for the 30 years of $40 monthly payments.
- Disability Insurance Q & A
ü Q: The government provides disability insurance, do I need more?
A: The government does provide some benefits if you become disabled, but it may not be enough to keep your previous standard of living.
The government will only provide you a fixed amount depending on your age and if you have children, and how many. Your family’s benefits could be as low as $218 or as high as $1153, but for most, it will not be enough to live on.
Inder can provide you with different options for disability insurance that can provide various levels of compensation in the event you should become disabled and cannot work.
You will want to discuss comparisons and options with Inder so that she may provide you with the knowledge to make an informed decision.
CRITICAL ILLNESS INSURANCE
- Critical Illness Q & A
ü Q: I have Disability Insurance, why do I need Critical Illness Insurance also?
A: YES! This is a very important coverage because if you suddenly become ill, but not disabled, and you miss a lot of work, disability will not help you.
Critical Illness Insurance will help bridge that gap so that you and your family have a way to pay the mortgage and utilities and groceries while you are recovering.
HEALTH AND DENTAL BENEFITS FOR INDIVIDUALS OR A GROUP
- Health and Dental Benefits Q & A
ü Q: My employer does not offer group health or dental insurance. How can I cover my family and myself?
A: Inder Madan offers service for quoting individual health and dental benefit insurance. She works with the top companies to provide you with several package plans for you to choose a customized policy plan.
ü Q: I am a small business owner and I have 30 employees. Can you also provide quotes for group insurance?
A: Yes! Inder Madan can insure a company with as few as 3 employees or as many as 30 employees. Come in or call and have Inder provide you with several package options that include health and dental insurance.
REGISTERED EDUCATION SAVINGS PLANS
- RESP Q & A
ü Q: What is the best way to help my child pay for college?
A: Planning ahead with an RESP is a great way to have the money you need to help your child attend college and get their degree.
We all want our children to do well in life, setting them up with an RESP when they are born is a great way to ensure the best possible start.
It is much easier to afford when you have been saving for ten or fifteen years rather than trying to come up with all the money after they enroll.
The cost of college is increasing every year along with inflation. In ten years, the estimated cost of a basic bachelors degree will be well over $100,000.
ü Q: How do I start an RESP?
A: To open an RESP you need to apply for a Social Insurance Number (SIN) and then work with Inder to find out what is the best RESP to get.
Inder Madan has the knowledge and experience to help you find exactly what you need for your insurance needs. Fill out the form on the “Contact Us” page and Inder will contact you right away.
BUSINESS INTERRUPTION COVERAGE EXPLANATION PAGE
Commercial and Business Income Insurance (Business Interruption Coverage)
A nightmare that all business owners hope never happens: You get a call in the middle of the night from a fire chief that advises you a fire has broken out in your office building and there was severe smoke and water damage. You rush down there only to find that there are no salvageable contents, and the building you own has extensive damage.
You call your insurance company in the morning and you discover that your contents and building are covered, but you had no “Business Interruption” coverage, typically called Business Income Coverage.
This means that you will get your building fixed and your stock and contents replaced, but in the meantime while you are waiting for rebuilding, you have no business income.
Business Income Coverage may be the survival lifeline that means the difference between having to close down and remaining open.
Do not make the mistake of missing out on this important coverage!
Inder Madan will take the time to explain all your options and how they affect you so you can be sure you know exactly what you are and are not covered for.
Business Income Coverage is as important to the business as Building, Stock and Equipment insurance. A continuation of income while there is loss of sales is critical for survival of the business.
Q: Why is business income insurance important?
A: You run a business to make money and earn an income. If you incur a covered loss like fire or storm damage, you may see your profit margin decrease or you may even lose money until you are completely back on track. If you continue to lose money, your business will not survive for long.
Business Income Coverage will replace lost income, pay bills (taxes, payroll, utilities), and will even pay relocation costs if you have a temporary office in another location.
Q: How do you define business income?
A: Business Income is defined as Gross Profit minus Costs (which include raw material, manufacturing expenses, labor, marketing, and other variable expenses).
Q: What will business income insurance pay?
- Replace net income that is lost due reduction in revenue.
- Additional expensed incurred in minimizing the loss of income.
- Continuing expenses like taxes, payroll, mortgage, and advertising.
- Relocation expenses
- And more! Inder will provide detailed information to what is covered for your individual type of business.
Q: How will business income coverage help?
A: You will be compensated for the loss of net profit and for the expenses that will continue while business is partially or completely curtailed.
The intent of Business Income Coverage is to bring you back in the same financial position as you were prior to the loss.
The insurer will pay extra expenses incurred to reduce loss of income. Such extra expenditure may include: Paying overtime to employees, outsourcing, renting machines, or moving temporarily to another location to continue business and lower income loss.
Q: How long will business income coverage pay out?
A: Most companies will pay for up to twelve months; however, you may negotiate if your need for coverage extends for longer than twelve months.
Q: Will my payroll be covered for my employees?
A: You have an option to insure ordinary payroll. Ordinary payroll is generally defined as all employees other than executives, officers, employees under contract, and department managers.
It will include payroll, benefits, union dues, and other expenses you typically pay.
Ordinary Payroll can be insured for 90 days or 120 days. You must verify your business contract with employees.
Be sure you have at least two weeks worth of wages covered in case you must lay off employees.
Q: What is gross earning insurance?
A: Gross Earning Insurance will compensate for the reduction in gross profits due to a covered loss. Typically, for non-manufacturing businesses, it is calculated as Total Sales minus Cost of Goods Sold. For a manufacturing company, it would be Sales Value of Production minus cost of raw materials. Insurer will stop making payment as soon as you physically restore your business.
Q: What is profit business income insurance?
A: Profit Business Income will pay for loss of income, standing charges, and expenses that will continue until you have reached the same financial position as before the loss. This typically lasts up to twelve months.
Q: Should i get gross income form or profit form of business interruption?
A: The type of form will depend on the type of business you have.
The Gross Income Form may be a good choice for you if you are sure your customers will return to you as soon as you are back in business.
If there is a possibility that you will not get all of your customers back once you are back in business, it may be in your best interest to consider Profit form. This would include if you lose customers to your competition. This also includes if you think it may take a longer period of time to build back your customer base and return to the same financial position prior to the loss.
For more information about this, business owner’s policies, or financial advice, please contact Inder today by calling at (905) 568-1676 or send the completed quotation form.