Overlooking Insurance Premium Payments Can Be Costly!

When their annual family life insurance premium came due recently the Johnsons did not have the funds available.  Their credit cards were topped out from some unexpected house maintenance issues, a trip and, along with all of the other day to day expenses of running a household; there was just not enough money in the bank.  Their budget was on overload.   The life insurance premium statement and reminder notice was filed in their “to be paid” folder, untouched and unpaid for several weeks until they received the final “lapsed” notice.

Fortunately for the Johnsons there was no claim required under their now lapsed life insurance policy or this story would have had a much sadder ending.   There would have been no life insurance to look after their family responsibilities.    

Unfortunately, however, the Johnsons needed insurance and soon found out getting their life insurance back on track when it has lapsed is no easy matter.  New applications, new medicals (and a hope that their good health continued to even qualify) were required and now at much higher premiums reflecting their current ages.  Years of previous insurance payments now gone and a new policy required.   A costly and potentially financially catastrophic circumstance indeed.

Imagine similar circumstances if they had left the country on an extended vacation and their home, automobile, or any insurance policy expired while gone and they suffered a major loss such as a fire?  For the sake of a few extra precautions, the risk of financial loss could be catastrophic.

With most of our household budgets strained and on overload these days it can become difficult trying to prioritize which expenses come first.  Late with a credit card bill?  You’re charged more on the next one.  Late with your cable TV, cell phone or most other monthly expenses?  You might have an interruption of service or incur additional service charges.  Late with your home, automobile, life, business or any insurance premium?  You may find your policy lapsing and the financial consequences severe.

To avoid the chance of an accidental cancellation or expired policy always make sure your premiums are paid by their due date.  If you are unable to do so, it is always important that this be communicated to your broker or insurer to review any options available.

Sincerely,                    

                                                    The Insurance Advisors @ Guthrie Insurance Brokers Ltd

Toronto- (416) 487-5200  – 1-888-310-SAVE (7283)

www.GuthrieInsurance.com   -   info@GuthrieInsurance.com

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Proof of Competency – Every boater must now carry one!

Don’t get caught without one!  Every boater must now carry  proof of competency.

Almost 9 million boaters navigate Canada’s waterways each year.  To make boating safer for all, the Canadian Coast Guard launched a mandatory licensing program for pleasure craft powerboat operators in 1999.  Today all boat operators, regardless of age or engine horsepower, must carry proof of competency or risk a $250 fine.   Provincial Police, Conservation Officers and the RCMP are responsible for enforcement.

The Pleasure Craft Operator Card (PCO Card) is the easiest way to show proof of competency.  To get your card, you must attain a mark of at least 75 percent on a 36-question, multiple-choice Transport Canada accredited test.   Once you successfully complete the test and obtain a license, you have it for life. There is no re-testing or re-licensing required. Besides the PCO Card, proof of competency can include proof of having successfully completed a boating safety course in Canada prior toApril 1st 1999; or completion of a rental-boat safety checklist (for power-driven rental boats). The pleasure craft operator’s course focuses on educating mariners on the rules of the waterways and restricting children from operating certain vessels based on age and engine horsepower.

How this applies to operators of pleasure craft fitted with a motor and used for recreational purposes and power restrictions.

- Under 12 years of age, and not directly supervised*  Can operate a vessel with no more than 10 hp (7.5 KW)

- Between 12 years and under 16 years of age, and not directly supervised*  Can operate a vessel with no more than 40 hp (30 KW)

- Under 16 years of age Not allowed to operate a Personal Watercraft (PWC)

- 16 years of age and over No power restrictions

* The above age/horsepower limitation chart refers to “not directly supervised” when under the age of 16.   Directly supervised means accompanied by and directly supervised by someone 16 years of age or older.

If you don’t already have your pleasure craft operator’s card, a list of course providers is available from Transport Canada’s Office of Boating Safety- http://www.tc.gc.ca/marinesafety/debs/obs/paperwork/paperwork_operator.htm.  Be prepared for the boating season and enjoy your time on the water.

Sincerely -   The Insurance Advisors @ Guthrie Insurance Brokers Ltd

Toronto – (416) -487-5200  – Richmond Hill – (905) 313-8481

www.guthrieinsurance.com -  info@guthrieinsurance.com

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Boat Insurance – Valuations – Basis of Claim Settlements

Won’t be much longer now until “she’s back in the water” and another boating season starts.  You are already thinking about what needs to be done, either by yourself or your marina, to get your boat all ready for a season of “clear sailing”.   Now might be a good time to dust off  your insurance policy and carefully go over it.  If the unfortunate does happen, you don’t want any last minute surprises!

One area of watercraft insurance that may seem obvious yet often gets overlooked is the valuation or basis of claim payment clauses – how MUCH am I insured for?  This would seem to be obvious, but not always.

The “How Much?” usually boils down to the difference between “replacement cost” and “actual cash value” (ACV).   Without analyzing the specific definitions of several insurers, replacement cost is generally the cost to replace or repair new without deductions for depreciation, subject to the limit of insurance.  ACV or “market value” generally means the cost to replace or repair, less depreciation for age, condition, resale value, obsolescence and normal life expectancy, and again always subject to the limit of insurance as the maximum.   As an ACV example, if a boat has a life-expectancy of 20 years and was purchased new for $80,000 the simple value after 10 years might be $40,000.

Consider these situations involving a total loss to illustrate -

Your boat was purchased 11 years ago for $40,000 and you have kept the insurance  limit at this to reflect this “replacement cost” (at the time you purchased it).   Sounds OK so far, right?  After a hurricane tears through cottage country your boat is destroyed. The insurer only offers you ACV of $20,000 based on what your actual policy states.   In checking your policy, you realize that the “replacement cost” provision drops off once the boat exceeds 10 years of age.  Ouch!  Tip.  If you know your policy has this provision, consider reducing the limit, with a resulting reduction in premium.

In a similar situation regarding the total loss and replacement of a 3-year-old boat insured for $80,000 one insurer has offered to settle @ $80,000, another insurer has offered to settle at $92,000 and another insurer at $115,000.   In the two latter cases, the settlement amount was over the limit of insurance!   Some policies contain clauses allowing a generous inflation or replacement benefit subject to certain qualifications e.g.  if the boat is replaced with a similar new boat,  if it is newer and purchased new, and insured with same insurer from the start.

How about this?  Imagine your prized metal-flake finish $80,000 bass-boat is destroyed.  There are special clauses that exist which limit the amount payable for certain types of boats such as metal-flake or inflatables, strictly to actual cash value, and not replacement cost.   That 8-year-old $80,000 bass boat might now only be worth $50,000!

If you decide not to replace a boat after it has been destroyed, opting instead for a cash settlement, loss payment provisions also typically dictate that settlement will be made on an ACV basis.  Special valuation clauses also generally apply to sails, covers, trailers, tenders & auxiliary outboard boats – usually ACV.

The replacement cost provisions can vary considerably from one insurer to another – no age limit, 10 years, 15 years, always best to check your policy.

Like any other product or service, boat insurance exists to pay claims fair and square, subject always to the conditions and exclusions of the policy.  Issues generally only arise when expectations are not met often due to a lack of communication or taking the time to read through policies.   If the boat has any value of significance, it is important that you take the time to read your policy and discuss your needs and requirements with your broker.

PS.  Reminder to check for your winter lay-up warranty.   Putting your boat in the water before March 31st, April 1st, April 15th, or whatever the date in your policy is, could result in doing so without insurance.

Sincerely -  The Insurance Advisors @ Guthrie Insurance Brokers Ltd

Toronto – (416) -487-5200  – Richmond Hill – (905) 313-8481

www.guthrieinsurance.com -  info@guthrieinsurance.com

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