RIDESHARING: SHOULD YOU?

Ridesharing – using your personal vehicle to transport others for compensation – has received significant media attention in recent months. A great deal of controversy and confusion surrounds companies like Uber, who help facilitate paid ridesharing.

People like the idea of ridesharing, but reliable information regarding the legality and insurance implications of that activity is hard to come by. We’re about to change that.

Is ridesharing legal?

Even though some cities and provinces are currently working to ban Uber, this isn’t the only problem facing individuals who choose to generate income by providing ridesharing services in their personal vehicle.

The greater problem is this: whether or not services like Uber are legal, your personal insurance policy and Class 5 license prohibit the use of your vehicle for hire – and your car lease most likely bans it as well.

Does my personal car insurance cover me while transporting Uber passengers?

Unlikely. To our knowledge, no personal insurer in Alberta currently covers private vehicles being used to transport passengers for compensation. This includes paid ridesharing, whether or not a service like Uber is involved.

Why? The Alberta government has imposed a standard auto insurance policy, which is the only auto policy insurers can sell for regular personal auto insurance in Alberta. This means that your basic personal auto insurance coverage and exclusions are the same regardless of which company sells you a personal auto insurance policy.

This exclusion can be found under General Conditions, 8(c) in the Alberta Standard Automobile Policy S.P.F. No. 1: “…the insurer shall not be liable under this Policy while the automobile is used…for carrying passengers for compensation or hire.”

My insurance company says they’re developing coverage for Uber drivers.

Given the popularity of services like Uber, it makes sense that insurers will develop new coverages in order to meet the needs of their clients. However, insurance is only one part of the equation. The other side of the issue, which few are talking about, is the fact that your coverage is void if you drive your vehicle illegally, no matter what kind of coverage you purchase.

Why does this matter? This is where your driver’s license comes into play. Most Albertans have a standard Class 5 operator’s license, which does not permit the driver to transport passengers for hire.

This means that operating your vehicle for hire, as a Class 5 license holder, is in contravention of your license’s restrictions – which may void your insurance and may be a ticketable offense if you’re pulled over.

The rideshare company I’m using has a $5,000,000 insurance policy. Does that make up for my own insurance policy’s exclusions? Not necessarily. One of the most visible ridesharing app providers currently claims that they provide $5,000,000 of contingent auto liability insurance for passengers, pedestrians and other third parties. This sounds impressive, but look carefully: they provide liability insurance to third parties. This means that the coverage they provide might cover injuries or property damage to others if you are involved in an incident, but it likely will not cover damage to your own vehicle.

This is similar to carrying Liability-only insurance on your own policy: it covers other people for injuries or damage you cause, but it doesn’t cover you for any damage to your own vehicle.

One more thing: if you’ve leased your vehicle, you have another serious problem. Lease contracts typically contain a clause defining permissible use of the vehicle, commonly stipulating, “you must not use or permit the use of the vehicle…for transportation of any persons.” They can do this because the leasing company owns the vehicle and has the right to determine how it can be used by the person who leases it.

As you know, violating the terms of your contract is cause for the vehicle to be seized. Depending on the terms of your contract, this could expose you to additional financial consequences, in addition to losing your mobility.

What’s the final word? For the moment, “wait and see.” At this point in time, one or more of the above concerns is likely to affect ordinary people who decide to use their vehicles for ridesharing purposes. As tempting as it may be to make a fast buck or two using services like Uber, you’re better off avoiding the possible legal, financial and personal safety concerns that arise out of ridesharing activity.

TENANT’S INSURANCE?

WHY DO I NEED TENANT’S INSURANCE?

If you’re renting a house, apartment, condo or maybe even just a room, you may want to consider getting tenants insurance coverage. Depending on your lifestyle and what you’ve accumulated, you may not think there is value in such coverage. And maybe you don’t own a lot of expensive stuff, but imagine having to replace your furniture, computer and clothes all in one shot?

But here are a few other things to consider: 

• Your landlords insurance does not cover your personal belongings such as furniture, electronics, jewellery and sports equipment etc., in the event that they’re lost or damaged in a fire, theft or water damage
• If you cause damage to your landlords property (whether accidentally or not) you’re responsible to cover the cost to correct it. For example: you have a party in your apartment, too many people show up and your toilet overflows causing damage to the unit below. You could be held financially responsible for the costs to fix any damages arising out of that situation.
• Also, if you are on the lease you could be held legally responsible, even if a guest to your rental home causes the damage.
• Tenant insurance protects you from the cost of damage you may accidentally cause others. For example: you’re throwing another soiree in your rental and a guest trips on a floor mat, even though it was accidental your guest can potentially sue you for damages.
• The cost to replace damaged items can far exceed the cost of tenant insurance. Consider this: the average policy is as little as $15/month in Alberta yet the cost to replace the goods in an average one bedroom apartment is over $20,000!
• If you have auto insurance, you may qualify for multi-policy discounts which could make your tenants policy effectively free (ask your broker!)
• There are two basic areas that tenant insurance covers:
• liability (protects tenants if they or their guest(s) damage the landlords property)
• content coverage (refers to the replacement/repair of lost or damaged belongings)

If you’re considering tenants insurance, here are some features to discuss with your broker:

• liability coverage
• additional living expenses
• replacement cost
• theft/vandalism
• deductibles
• scheduled articles coverage (e.g.: jewellery)

As always – before signing on the dotted line, have your insurance broker review the entire policy. If there are any sections that you are unclear or cause confusion, you’re your broker to explain it again. It’s important to ask questions when you don’t understand (sometimes insurance professionals get caught up in the gobbledygook and forget that not everyone knows insurance!)

DRUNK DRIVING AND INSURANCE

DRUNK DRIVING AND INSURANCE: HOW DOES IT IMPACT THE CONVICTED AND THE VICTIMS

If you’ve ever been in a fender bender, you know just how stressful the entire situation can be, from filing police reports to dealing with the body shop. But imagine if you’re in an accident that involves a drunk driver?

We’ve been asked many times if it’s true that if you’re the victim of a drunk driving accident, that there is no insurance. We want to tackle this myth.

In Alberta, all auto policies follow the same language which is written by the provincial government. This insurance policy has three sections:

Section A:  3rd Party Liability

This protects you against property damage or bodily injury you do to others.

Section B: Accident Benefits

This provides limited income replacement and medical expenses for the driver, passengers in the insured vehicle or pedestrians that are involved in the crash, regardless of who was at fault.

Section C: Physical Damage

Most people carry collision and comprehensive insurance to protect for loss from physical damage. Collision protects against collision damage; comprehensive protects against numerous perils including fire, theft and hail.

How does drunk driving affect insurance?

Have your broker review your policy wording to make sure that your needs are properly covered in each section. If you look at Section A, there are no exclusions for drinking and driving, so if the drunk driver has valid insurance it will pay for property damage and injury to others up to policy limits.

For Section B, although it’s done on a no-fault basis, there is an exclusion for injuries to the drunk driver at fault in a collision. So the passengers in that vehicle and any pedestrians would still be covered under this section, but the drunk driver would not.

Section C dictates that there is no coverage where the insured operates a vehicle while under an intoxicating influence of drugs or alcohol, or permits someone else to operate the vehicle while intoxicated. This means that if a drunk driver crashes their vehicle, their insurance is not going to respond to pay for it. Those added costs are another way to punish the offending driver.

What does this all mean for the victims of a drunk driver’s collision?

The liability section isn’t voided by drinking and driving because if it were excluded there would be no financial recourse for the victims hit by the drunk driver. Therefore, if you are hit by a drunk driver, you can assume your damages will be covered assuming the drunk driver’s insurance was in force at the time of the loss. If you are a drunk driver, and you crash, your injuries and your vehicle will NOT be covered, in addition to the criminal and administrative penalties you will face.

INSURANCE TIPS FOR ENDURING THE ECONOMIC DOWNTURN

BOOM & GLOOM: INSURANCE TIPS FOR ENDURING THE ECONOMIC DOWNTURN

Alberta is an oil-driven economy – old news to businesses currently affected by the decline in oil prices. The ongoing slump in the economy is forcing companies to focus on preserving their viability, from organizations directly involved in exploration and production, to industries supporting resource development construction and manufacturing.

We’ve been here before: some companies will weather this downturn with manageable impacts to their organizations, while others will find their positions more difficult to maintain. The difference between these two outcomes may depend upon the extent to which companies take advantage of all existing and necessary opportunities to review their operations and maximize the efficiency of their operational spending.

Fortunately, a number of insurance-specific measures are available to manage cost:

• Review your revenues with your insurance broker: request that your broker amend revenue projections immediately rather than waiting for your renewal cycle to come around.
• Review your operations with your broker to find opportunities to tighten your coverage and premium structure: suspending operations for which specific coverage was required may enable you to reduce associated premiums during the downturn. Reducing the scope of your operations, including suspending services or avoiding international operations, may reduce the degree of risk your business presents to the insurer – opening up options to reduce your current premiums, or to approach new insurers who may be a better fit for your revised strategy.
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• Review your active contracts: you may be able to trim your premium expenditure by accounting for reductions in the scope of existing contracts, or the cancellation of contracts for which specific coverage was previously purchased.
• Update your equipment list and property schedule: remove items that have been disposed of or which you would not replace in the event of a loss. Ensure that your property is properly assessed to reflect its current value or replacement cost.
• Determine what equipment you’re using and to what extent it is in service: if you’ve parked, stacked or laid up a significant amount of your insured equipment, your broker may be able to leverage this reduced utilization to achieve favourable rates more closely matched to your current exposure.
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• Ensure your broker is aware of all security measures which reduce the insurer’s exposure and could achieve reduced rates: security systems, patrols, fire protection, fencing, CCTV and GPS systems are examples of measures which may work to your advantage.
• Review your schedule of drivers: you can help ensure accurate rating by removing drivers who no longer operate your equipment and by managing drivers whose past performance may adversely affect your premium.
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• Review your deductibles: always keep deductibles within your risk tolerance while ensuring that you consider and take advantage of the premium reductions that can be achieved by selecting higher deductible amounts.
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• Secure an appraisal of your property: if an appraisal hasn’t been recently conducted, your values could be out of date. Over-insured property may be costing you unjustified premiums, while under-insured property may cost you even more in the event of a loss – affecting your cash flow due to unbudgeted expenses and shortfalls in coverage. Ensure that your policy limits are precisely matched to your current and anticipated future needs.
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• Explore premium financing options: your broker may be able to offer financing options which reduce the immediate budget impact of your insurance portfolio, while keeping the cost of financing within a range acceptable to you.
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Other creative business strategies may exist to enhance your survivability by managing costs:

• Revisit your supplier contracts: ensure you’re getting the best possible value for your dollar. Utility and telecommunications companies offer fixed-rate deals that can help you control and plan for future expenses; they also have few variable costs, so it’s in their best interest to retain as many customers as possible. If your current provider is unwilling to bend, look for innovative solutions from competing providers.
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• Review your employee benefits plan and compensation structure: this is an opportunity for private and public companies to engage stakeholders in developing solutions and ways to share the load.
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• Proactively manage your human capital costs: minimize your future rehiring and retraining expenses by retaining employment of as many personnel as possible. Consider initiating involuntary, rotating unpaid leave programs, or using earned vacation time in lieu of unpaid leave.
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Remember that a harsh economic climate presents unique challenges – not just to you, but also to your competitors. While a downturn requires you to adjust your outlook and refocus your operations, it’s also an opportunity to tighten up your budget and maximize efficiencies to outlast your competition and be lean and ready for the next boom.

INSURANCE APPRAISALS VS CITY ASSESSMENTS

INSURANCE APPRAISALS VS CITY ASSESSMENTS: WHAT IS THE DIFFERENCE?

For many property owners and real estate investors, deciding on the correct amount of insurance to place on their real estate assets can be a difficult task. The total value of the insurance policy needs to be able to cover the full cost of a rebuild in the event of a loss of course, but as an astute investor, one needs to ensure that the premiums paid aren’t based on an over inflated valuation of their property.

Many owners rely on the assessed values provided by their city or town for their insurance values and this can lead directly to the aforementioned over inflation. Assessment valuations are derived from the calculation of: land value + building construction cost + market speculation – depreciation factors, so from this equation, we can see that three out of the four factors have nothing to do with actual reconstruction costs. When assessments, and similarly market value appraisals are relied upon for insurance values, it becomes easy to see how this can lead to an over insurance situation.

An insurance appraisal on the other hand, is the best way to ensure that the level of insurance is accurate and that you’re not paying too much in premiums. Let me explain further. An insurance appraisal is based on the following calculations: Reconstruction cost of the building + reconstruction cost of site improvements (landscaping) + the cost of demolition and debris removal. These are the three main components of a professional insurance appraisal and the three that are required to ensure that you have a complete report of the cost to reconstruct your property.

Breaking down these three components further, the reconstruction cost of the building takes into consideration construction material costs, labour costs, building/ fire codes, bylaws, architectural fees, developer overhead and profit, plus soft costs such as permits/ inspection etc. Secondly, the site improvements take into consideration roadways, fences, sidewalks, exterior lighting etc, plus soft landscaping items such as grass, trees and shrubs. Lastly, the cost for demolition and debris removal is a very important inclusion in the valuation, as this is often the very first amount to be taken out of a policy when there is a claim.

More than ever amidst today’s rising insurance costs, it becomes necessary to make sure you have an accurate valuation on your property, as today’s inaccuracies are only compounded over future years. An example of this is from a project I worked on last year. An investor had bought a six-plex apartment building five years ago and had been incorrectly insuring the property for the sum of the market values of all the units. This added up to $1.75 million, so that’s what he insured for. It came as quite a surprise then when he received the insurance appraisal which valued the property at $1.25 million to reconstruct it completely. Unnecessarily, he had been paying an additional $500,000 in premium per annum over a period of five years, which certainly impacted this investor’s return on investment.

The relatively small cost of an insurance appraisal was a fraction of what this investor was paying out in excess premiums, therefore very worthwhile to have performed. With an annual valuation update service also available, a property owner can be confident that their year to year insurance costs are never exceeding what they should be.

PROFESSIONAL LIABILITY INSURANCE

WHAT IS PROFESSIONAL LIABILITY INSURANCE AND DO I REALLY NEED IT?

If you offer specialized services like consulting, teaching or professional advice to clients, you are automatically held to a higher level of duty and accountability. Your business may be held responsible if a client alleges that an error, omission or negligent act due to your faulty performance OR failure to provide the level of advice or service that was expected resulted in their financial loss. Errors & Omissions Liability aka Professional Liability responds to situations not covered by a Commercial General Liability policy which addresses events related to property damage and bodily injury.

Errors & Omissions Liability protects the business professional by shielding their assets and paying for defense and potentially onerous legal costs if a client makes a claim. It protects the professional’s clients by ensuring there will be adequate funds to pay for damages incurred if the professional’s services are deemed to be faulty.

We often associate the word “professional” with physicians, lawyers, accountants, engineers or other people who require extensive education and training to perform their duties, but you do not need to be a doctor or lawyer to have a professional liability exposure. Virtually any business that performs a service or provides professional advice to a client in exchange for financial compensation can be sued on the basis that it failed to meet its professional obligations.

In some provincial jurisdictions (like Ontario, Quebec, Saskatchewan), Errors & Omissions Liability is mandatory for professionals like Financial Consultants and Estate Planners. Many professional associations (like the Real Estate Council of Ontario or the Human Resources Institute of Alberta), have mandated the requirement to carry Errors & Omissions Liability in order to practice within their fields. We recommend checking your provincial legislation or with your professional association/group about whether or not you are required to carry Errors & Omissions insurance.

Other types of business professionals who might need Errors & Omissions Liability are IT/Computer Consultants, Software Developers, Architects & Engineers, Medical Professionals, Interior Designers, Management Consultants, Counsellors & Mediation Specialists, Web Hosting Companies, Oil & Gas Consultants, Advertising Agencies, Wedding Planners, Travel Agents, etc.

Key Features of an Errors & Omissions Policy:

Claims-Made:  A claims-made policy protects an Insured against claims or incidents that are reported while the policy is in force; virtually all Errors & Omissions policies today are provided on a claims-made form. In order to establish coverage, three conditions must be met:

• A policy must be in place at the time a claim is made.
• Many policies specify a retroactive date in the declarations which should be the inception date of your first claims-made Errors & Omissions policy; a retroactive date must remain the same each time your policy is renewed. A retroactive date or a prior acts date must be present on the policy and it must be dated at least as far back as the services giving rise to said claim were provided.
• And prompt notification of claim to the Insurer.

Limits and Deductibles: 

• Most Errors & Omissions policies have an Each Claim/Each Occurrence Limit which is the maximum an Insurer will pay for damages arising from a single loss.
• The policy may also contain an Aggregate Limit which is the most an Insurer will pay for all damages arising from all the claims/losses combined in a policy year.
• Defense costs may be subject to the limits stated for Each Claim/Each Occurrence and the Aggregate.
• Some Errors & Omissions policies may have a Deductible which is the amount you must pay out of pocket for each claim or loss before your insurance will apply.

Defense: One of the key features within an Errors & Omissions policy is legal defense in the event of a claim. The legal costs associated with defense of a claim (whether justified or not) can be substantial; if defense were not covered by your policy, you would be stuck paying defense expenses out of your own pocket. Depending on the specific policy terms (whether defense is inclusive of limits stated or outside the limits stated) it may or may not erode the limits on your coverage.

A standard policy form or wording does not exist within the Errors & Omissions world; there is tremendous variation from one wording to the next. If you are a “traditional professional” like a physician or a lawyer, you may obtain an Errors & Omissions policy specific to your profession. For everyone else (like a management consultant, real estate broker or even a photographer), there is a miscellaneous professional liability wording.  There is no “one size fits all” Errors & Omissions policy!

The above stated information is not exhaustive or complete; there are many additional features and variations to each Errors & Omissions wording and policy, including definitions and exclusions which must be reviewed carefully. Speak to your broker and confirm that you’re insured on a proper policy form as related to your profession, exposures and risks.

AUTO CLAIMS

SURVIVAL GUIDE TO AUTO CLAIMS

SURVIVAL GUIDE TO AUTO CLAIMS

It was 4:56pm. You had a very long day. You found yourself stuck on Deerfoot Trail by the Calf Robe Bridge like hundreds of other drivers. The traffic was just not going anywhere. You started to think about what was left for you to do today: let your dogs out and go to the grocery store to pick up some milk. You just wanted to get out of there. You just wanted to go home. At that moment, the traffic finally started to move along. What an unexplainable sense of relief. You got a bit excited. You released your brake and stepped on the accelerator. Unfortunately, you misjudged how far the traffic was going and how slippery the road really was. The next thing you knew… you hit the car in front of you.

What were you going to do? Should you call 911? Or, should you keep your mouth shut at the scene to avoid putting yourself in a prejudicial position?

HERE ARE A FEW TIPS FOR YOU:

Calm down! Take a deep breathe.

You need a clearer mind than ever! Don’t let your adrenaline get the best of you and put yourself in harm ways!

Assess the situation cautiously.

Watch your surroundings and make sure you are not putting yourself any further damages before stepping out the vehicle! If the road condition is not safe for you to step out, stay in the vehicle if it is not going to put yourself in any further danger. While you do not have to stay where you are and call 911 on every single collision, if the collision involved serious injuries or extensive damage to your vehicle, then you will need to call 911.

Take pictures

Well, it is 2015. You have a smart phone, right? Grab your phone and start to take pictures – not selfies, but capture the scene: The third party’s license plate (in case they hit and run), where the third party’s vehicle is located relative to the traffic lines and other fixtures from a few feet away from different angles, the third party’s vehicle damage from different angles, where your vehicle is located relative to the traffic lines and other fixtures from a few feet away from different angles, your vehicle damage from different angles, and, any other important traffic devices.

Gather information

You don’t know what is important when you need them. Look around you to see if there may be any witnesses who were present at the scene. Ask for their name and contact information. It will be even better to get their business cards.  Exchange contact and insurance information with the third party’s driver. You shall not need to apologize or be confrontational. All you are doing is to collect the information for your insurer to handle the claim further. You will need the third party’s name, telephone number, address, vehicle information (year, make, model and serial number) and insurance information (insurance company’s name, policy number and expiry date). Once again, our modern technology can potentially save the day. Snap pictures of the third party’s driver license, vehicle registration, pink card and business card. All the information discussed are available there.

So, what’s next?

If everyone can drive away fine with no injuries and there is no need to call 911 at the spot, you can go after gathering all the information discussed above. So, what’s next? You will want to go to nearest police station to file a police report. If you experience some stiffness and want to be cautious, you can go to the closest medical centre to have a quick check.

Report the claim

Call your broker or directly to your insurance company. If it is after business hours, most companies have some after-hour or 24 hours claim line. Provide them with all the information that you have about the incident. A claim handler will contact you for a detailed in the following business day.