We realize that in today’s economy and in light of the impact of COVID-19, we are always looking for savings, especially when it comes to insurance.

Budgets need to change if the money isn’t there.  We have some words of caution when reducing or removing coverage from your property and auto policies to save money.  These are a few examples, but not an exhaustive list.

Car Insurance

You are not happy with the cost of your car insurance.  You decide to remove Rental vehicle coverage, maybe even Accident Forgiveness. First, weigh the cost of each of that coverage per year versus the cost if you have an auto accident under your Comprehensive and Collision portion of your policy.  Can you afford a rental over a two-week or more period? Or, if you remove or decline Accident Forgiveness, will you be able to afford the increase in insurance when you have an at-fault accident for several years?

Depending on your insurance company, the cost for Rental Vehicle coverage can range from $35-$50 a year. Accident Forgiveness can range from $35-$75 a year per driver or vehicle.  Sometimes you can save by bundling these and other coverage together.  Think of it monthly – $4.16 a month for the rental vehicle coverage. $6.25 per month for Accident Forgiveness, again depending on your insurance company.

Removing Sewer Back-Up and Overland Water

Do you have the money stocked away to pay for the damage and renovation of your basement and home because of sewer backup or overland water?  Sewer backups can occur in other parts of the home such as bathrooms. They can leak into the hallway and other rooms and seep down into other areas of your home. The average payout on sewer backup and water damage claims in Canada is $43,000 if not even higher.  We hear many people say that they don’t need sewer back up because they are on septic. Think again.  Take a look at this guide for new homeowners and septic systems.  Under the Signs of Trouble:

Wastewater backing up into home:

  • Pipe leading to septic tank may be blocked.
  • Pipe beyond septic tank, or in distribution system may be blocked.
  • Leaching bed may be damaged or full.

Wastewater can back up into your home from your septic system.

Ask yourself if you can afford to self-insure for these types of losses.

The cost to rebuild your home

If you shop around for your house insurance and received a quote based on a rebuilding cost significantly lower than what you are currently insured for, that is a huge red flag!  Could you have been overinsured? Maybe.  The best course of action is to speak to your broker about the discrepancy and have your rebuilding cost re-evaluated.

If you have a fire loss to your home, do you have the money in your budget to pay for the coverage gap if you choose to move your insurance because of a significantly lower rebuilding cost? Check out this article on the California wildfires in 2018 and how homeowners tragically found out they were underinsured.

Liability limits

We live in a highly litigious society.  The reality is when it comes to being sued, $1 Million is not enough for your car and home insurance.  Even business insurance.  If you are faced with a lawsuit over $1 Million, would it be worth reducing your insurance? As brokers, we are being told by industry professionals that consumers need to increase their liability limits by a minimum of $2 Million.

We get it.  Many people literally live by the penny.  But it’s important to trust your broker who is your insurance advisor when they tell you it’s not a good idea to remove certain coverage.  Take the time to hear them out and have a discussion with your broker before making a decision.

The best course of action as a consumer is to contact your broker, review your policies to ensure everything is up to date and see if there are any possibilities of savings.