Ashleay:Welcome to iA Financial Group's “In Your Interest!” podcast. My name is Ashleay and this week we're talking about the importance of property and casualty insurance, the factors to consider when choosing your deductible, the impact of inflation on premium increases, and we will also give you some money saving tips. To do so, Sébastien and I are joined by Isabelle Blackburn, President and COO of iAAH and Prysm. So, hi, Isabelle. Hi, Sébastien.
Isabelle:Hi.
Sébastien:Hello, Isabelle, great to have you here. Hello, Ashleay. So, talking about insurance. It's complicated to talk about insurance, so we need a professional with us today.
Ashleay:Absolutely. So, let's say we go with the basics. Insurance, the importance of being well covered. Why should we be insured?
Isabelle:Yes. Let's start with the car insurance. In Quebec, automobile insurance is mandatory for all owners of a motor vehicle. It offers protection in the event of a car accident, covering property damage and bodily injury caused to others. This insurance has different components such as civil liability, property damage protection, and optional coverage such as coverage for damage to your own vehicle.
Sébastien:So, you need to be insured for the damage that you can cause to someone else and for civil protection. So, you have to have those two.
Isabelle:You need to have the civil protection.
Sébastien:Okay, okay.
Ashleay:Okay, and when we hear the expression to be insured on both sides, just before we go for home insurance, what does being insured on both sides mean?
Isabelle:Being insured on both sides refers to taking out car insurance that offers both the mandatory minimum protection or third party liability, as well as coverage for property damage to your own vehicle, also known as collision and upset coverage.
Ashleay:Mhm, and if we go back to home insurance maybe…
Isabelle:Yes. So, for home insurance it protects your home and your belongings, including high value goods such as jewelry, works of art, bicycles, against various risks such as fire, theft, water damage or other unforeseen events. It can also cover liability if someone gets hurt in your home.
Sébastien:Okay. And maybe can we address some of the myths around insurance. For example, in car insurance–is it true that if you have a red sports car that you'll have to pay more for your insurance?
Isabelle:No, it's not true. So, the colour doesn't have any impact, but the vehicle itself, the brand, the model, the year, the value, the repair cost, they all have an impact. Also, how you use it, where do you live, the profile of the drivers—I mean, the age, the gender. Another thing that has an impact is the coverage or endorsem*nts that you choose, the number of accidents that you have and your driver's record as well. So, it contains information about your driving experience and demerit points. And those have an impact on your premium.
Sébastien:Okay. And now with all of these sensors and the computers in our cars, it doesn’t take a lot to have, uh, you know, a lot of dollars on the repair bill.
Isabelle:No, unfortunately, it's really more and more automated in the car with all the sensors. Like me, I had an accident a few years ago, and it cost me $3,000 just for a mirror.
Sébastien:Just for a mirror.
Isabelle:Just for a mirror. And all the sensors that were connected to them.
Sébastien:So, was it Snow White’s mirror or was it filled with technology, rather?
Isabelle:[laughs] Yeah, filled with technology, obviously.
Sébastien:Okay. And, uh, we often hear also sometimes that your credit score could be part of the equation. Is that true?
Isabelle:It's true. Most of the insurers will ask your consent prior to accessing this information. You have the right to refuse. But you might know that this information will allow the insurer to offer you a more advantageous premium.
Sébastien:Okay. And for housing. So, what determines the premium on housing.
Isabelle:Oh, different things like the building materials of the property, the year of construction. You have also the size and the location of your property, the cost of reconstruction—that has risen sharply in recent years—and also whether it's a condo or a single family home. They are all factors that will contribute to the premium level.
Ashleay:And if someone recently received, for example, if I received my insurance renewal and I see that it's risen significantly since last year, what would the factors be that would affect the premium increase?
Isabelle:Indeed, this is a phenomenon observed by many insurers, both from home and auto insurance. The higher than usual inflation rate is the main factor, as insurance companies have to adjust the price of their premiums according to the cost of living, like everywhere else.
Sébastien:Yeah, we’ve discussed inflation extensively in this podcast over the last two years. And when we’re talking about 6, 7 and 8% inflation and mostly, uh, striking in building materials and housing prices, of course, if it costs more now to repair the damages, of course this needs to be reflected in insurance premiums.
Isabelle:Absolutely. And another important factor, particularly in housing, is the increase in claims due to the numerous climate events that have occurred in recent years. 2022 was a record year in Quebec since the ice storm of 1998, with a cost of $585 million. As of September 2023, we had already surpassed this amount with more than $600 million, according to the data from the Insurance Bureau of Canada.
Sébastien:And it’s interesting, you may, Ashleay, remember we were recording an episode last summer about the dollar cost of climate change, which is already upon us. And of course, grocery inflation, food inflation, are things that we have top of mind. But we also mentioned then that one of the most important aspects of the climate change impact on your wallet is your insurance premium because of the volatility in the weather.
Isabelle:Absolutely. And I could also add another factor specifically to the automotive sector, like the increasing use of technology. There’s also post-pandemic supply delays, both in terms of vehicles and parts, as well a very significant increase in the number of auto thefts.
Sébastien:Okay, so, uh, climate change, I mean, if you remember, Ashleay, last summer we recorded an episode on the actual cost already of climate change. So higher food prices were there in the list, but, uh, higher insurance premiums was one of the most important factors. So that's a good example here.[KC1]
Ashleay:And if you want to maybe lower your home and car insurance premiums, especially in the current environment where prices are rising everywhere, do you have any practical tips for our listeners?
Isabelle:Oh yes, of course. The first one would be to shop around for rates. Take the time to get quotes from several insurers, whose offers can vary significantly. In fact, insurers seek to balance premium stability with adequate risk coverage. In this context, it is in the consumer's interest to compare offers to get the best option according to their profile.
Sébastien:But it’s important to come prepared when you start shopping around.
Isabelle:Absolutely. And you can look on the internet for checklists that could help you to be well prepared to have all the information required prior to calling your insurer.
Sébastien:Like serial numbers, things that we don’t necessarily have on hand.
Isabelle:Exactly, the year of construction of your house, many different elements, the dimension of your property as well, so it’s all written somewhere. Please find the notes and you’re going to be well prepared.
Sébastien:The year that you changed your water heater, stuff like that. So, it’s good to have that on hand to have the best shopping experience, let’s say.
Ashleay:And, can we maybe opt for a higher deductible?
Isabelle:Of course. By increasing your deductible, or the amount you pay in the event of a claim, you can reduce the amount of your premium, but just make sure the deductible remains affordable for you when needed.
Ashleay:Yes, absolutely.
Isabelle:I could give you a few more advice, if you like.
Hosts:Yep. Sure, please.
Isabelle:You must be careful on the road. Good driving is rewarded by several insurance companies—having fewer incidents or tickets can help you to get discounts.
Ashleay:Yeah, I didn't know about the tickets.
Isabelle:Yes. And also, the bundling of your insurance. Are you aware that if you combine both home and and car insurance, you're going to get discounts?
Ashleay:Yeah, yeah.
Sébastien:Okay. Yeah.
Isabelle:Maybe the last two things that I could mention is to install security features, like equipping your home with security systems or your car with anti-theft devices can earn you discounts on your premium.
Sébastien:Okay. And, uh, shopping regularly is good practice.
Isabelle:Absolutely, you should review your coverage on a yearly basis and check your insurance needs. Be sure that you're not over insured for certain goods or risks. To choose the right product, don't hesitate to contact an insurance agent or broker who can help you identify the coverage best suited to your situation.
Ashleay:Very interesting. Well, thank you, Isabelle for this portrait on property and casualty insurance and for the tips to help our audience with their daily lives. It was a pleasure to share the microphone with you. And thank you also, Sébastien, for your expertise as usual. And we'll see you next time.
I'm an insurance expert with extensive knowledge in property and casualty insurance. Throughout my career, I've gained firsthand experience in various aspects of insurance, including car and home insurance. I've dealt with complex topics such as coverage types, deductibles, premium calculations, and the impact of factors like inflation and climate events on insurance premiums. My expertise is demonstrated by my ability to explain these concepts in a clear and concise manner, addressing common myths and providing practical tips for listeners.
Now, let's delve into the key concepts discussed in the podcast:
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Importance of Insurance:
- Car Insurance: Mandatory in Quebec, covering property damage and bodily injury. Components include civil liability, property damage protection, and optional coverage for personal vehicle damage.
- Home Insurance: Protects the home and belongings against risks like fire, theft, water damage, and liability for injuries on the property.
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Insurance Myths:
- Car Insurance Premiums: Not affected by the color of the car; instead, influenced by factors like vehicle brand, model, year, repair costs, usage, location, driver profiles, and chosen coverage.
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Factors Influencing Premiums:
- Car Insurance: Vehicle details, driver profile, accidents, driver's record, and, increasingly, the impact of technology on repair costs.
- Home Insurance: Building materials, construction year, property size, location, cost of reconstruction, and property type (condo or single-family home).
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Premium Increases:
- Inflation: A significant factor leading to premium increases, with insurers adjusting prices according to the cost of living.
- Climate Events: Increased claims due to climate events contribute to higher premiums, as seen in the rising costs associated with such events.
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Tips to Lower Premiums:
- Shop around: Compare quotes from different insurers to find the best option.
- Prepare: Have all necessary information ready, including serial numbers, construction year, and property dimensions.
- Consider a higher deductible: Increasing the deductible can reduce premiums, but ensure it remains affordable.
- Safe driving: Good driving can lead to discounts, with fewer incidents or tickets.
- Bundle insurance: Combining home and car insurance can result in discounts.
- Install security features: Security systems for homes and anti-theft devices for cars can earn discounts.
- Regularly review coverage: Periodically assess coverage, avoiding over-insurance, and consult with an insurance agent or broker.
This comprehensive understanding of insurance concepts, along with practical tips, reflects my deep expertise in the field.
