Home Insurance: Three Strikes and You Are Out

I had a great time at CPFC15 this past weekend, where a bunch of Personal Finance folk got together to discuss things and two of the speakers touched on points that resonated with me:

  • Rob Carrick from the Globe stated that the Insurance Industry needs to be put under higher scrutiny for some of their practices.
  • Ellen Roseman mentioned about the folks that have contacted her about having their home insurance cancelled (for many reasons)

With these two points in mind I will share with you an upsetting story that happened to my mother, with her home insurance.

Home Insurance

Home Insurance are you really covered ? For How Long ?

My parents have lived at the same address for more than 50 years, and they dutifully paid their home insurance premiums. There were a few small incidents in the house, but never any major claims until about 7 years ago. The water tank in the basement gave up the ghost in a spectacular way, and flooded the basement causing damage to the finished basement (dry wall, carpeting and clean up), so my parents made a claim due to this incident.

About a week after the “new” tank was put in, something went wrong with it, and it dumped its contents as well, so my Mother called the insurance company about that, and it was cleaned up as well.

The last straw (for the insurance companies) happened on my birthday about 2 years ago, when the oil tank in the basement leaked. Luckily the entire contents did not dump out but it was a significant spill which caused a very large claim to clean all of it up.

Thanks to this, the next year the Home Insurance on my mother’s house came up, she was told she was “uninsurable” due to these 3 incidents (uninsurable by any main stream insurance company, as we found out after calling a few). This is someone who had paid their insurance rates, and had been a model customer, but thanks to these 3 incidents (which in my opinion is really only 2 incidents, as the second water tank giving way was a function of the first tank failure, but we were told that is not the case in the insurance industry), she was going to have to use “off market” home insurers.

In this world you can insure anything, and you can find folks who will insure anything, however, they do not do it for cheap. For the next 4 more years (at least) my Mother must use these “alternate insurers” to insure her home.

I tell this as a cautionary tale, be aware that your Home Insurance can be cancelled for many reasons and the “Three Strikes” rule is one of the ways this can happen.

Image courtesy of fantasista at FreeDigitalPhotos.net


More Invasion of Privacy (for Reward Points)

Our friends at LSM Insurance pointed this one out already, but I figure I can “pile on” the subject, after I have already ranted about Car Insurance “Saving” Devices, I will allow myself another rant about how the words discretion and privacy are mostly dead in today’s society (and we are giving it away for alleged discounts and convenience).


This is my FitBit™

The topic (in question) is a new “Rewards” system that John Hancock Insurance (evidently a subsidiary of ManuLife) is offering a new rewards system for new Life Insurance policy holders ( A Vitality Rewards Program ), and with this new system you get a FitBit™. I have written about wanting a Financial FitBit™, but this Life Insurance idea is so ingenious (in a Dr. Evil kind of way) I am in awe.

The Financial Post has a wonderful article Ready to have a hissy Fit(bit) over health and reward points, but allow me to add in my 2 cents worth into this argument, the invasion of privacy that the company is perpetrating on their policy owners (with their permission) is a new level of “Data Incursions”.

The owners of the policies will get discounts, and bonuses for living a “healthy lifestyle” as monitored by their new FitBit™, which sounds wonderful (OK, it made flashing red lights go off in my head as soon as I read about it, but that is my paranoid view of life), but how is healthy being determined, and who legislates what is healthy behavior?

I use my fit bit to attempt to monitor my activity and to attempt to get back into shape (after along myself “go” a little), so here are a few things that I have figured out:

  • The heart monitoring on my FitBit™ Charge HR while useful is inaccurate (and I am fairly certain that FitBit™ says that somewhere in their marketing literature). I try to exercise on a stationary bike many times a week, and most times, while the heart monitor on the bike says my heart is pumping at 133 bpm, the FitBit™ says I am only at 85 bpm, but if I move it, suddenly it will jump to 105 bpm. My opinion is neither is that accurate, but it is interesting that the heart monitoring is a bit flakey.
  • The FitBit™ Charge HR will monitor your sleep, and it says my sleep patterns are lousy (my wife already told me this, so this is not news to me).
  • I walked down a country road a few weeks ago, and it counted my steps nicely, but because the road had a camber, and I kept moving from the hard to soft shoulders, it assumed I had gone up 24 flights of stairs?

These observations are not me complaining about the FitBit™, far from it. I think that it is an amazing data capture device, however, it is still early on with this technology, and I would assume later generations of the product will be even more accurate, and there lies the rub, this is incredibly important personal information about you. You will have a day by day view of your health, or at least parts of your health, but should you give that information away ?

Does John Hancock hand out FitBit™ Charge HRs? Don’t know, but from my point of view it really doesn’t matter, the data collected by them even from a simple FitBit™ is invasive, and will only continue to grow. When I got my FitBit™, I wondered whether (or when) FitBit™ would start selling the data they are collecting, evidently someone else thought of it first?

All of this to get a cheaper insurance rate? I think the price you are paying is too steep.

Oh and I did notice that the Apple Watch also Monitors  Heartbeats too? More helpful data collection about your every day living.

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Car Insurance Saving Devices

The Car Insurance industry has tripped across a brilliant piece of marketing, that will allow them to track the driving habits of all their customers. These devices hook into your car’s computer system (the diagnostic port, I believe), they most likely have a GPS capability and a cellular interface to send data back to your insurer. The device tracks your driving habits and you can see how well you are doing (on-line), and you get a discount for installing it on your car, which sounds wonderful.

If I put on my aluminum foil hat (i.e. take a paranoid point of view), I find it interesting to hear rights and freedoms lovers (as should we all) complaining about how much information the government collects from them, when folks sign up for these kind of invasive programs without batting an eye.

Allegedly the insurance companies in Canada that have these devices claim that they will not use this data to punish drivers, and that may be the case now, but it won’t remain that way.

Car Tracking Device

A version of one of the devices (from the CBC)

If I was collecting specific data about driving habits, I would start doing some analysis on the number of times drivers:

  • Slam on the brakes (yes, that data is there already, your car already tracks pressure on brake pedal)
  • Breaks speed limits and where (do you do 120 KM/hr on highways or worse 80 km/hr in school zones), if the device has a GPS in it, how hard is it to figure this out?
  • Went to bars and drove afterwards (no that doesn’t prove guilt, but it doesn’t paint a pretty picture either).
  • How well you maintain your car.

Don’t think this can happen? Haven’t you noticed all of this great “directed advertising” Google has been giving you? Data collection about you goes on pretty much all day long, and the folks collecting the data aren’t supposed to use it for nefarious reasons, but what is stopping them?

Yes, I sound like a paranoid privacy lunatic, but in this situation, I don’t believe that these “money-saving devices” are only for “monitoring purposes”. I will pass on them until I am forced to install one (and yes I believe that in the future that might be the case).  I do, however, think it is a brilliant idea for the insurance companies to have a better understanding of their customers’ driving habits.

Is this just me being paranoid?


Financially, it is never enough

Last week I was talking to an Insurance Agent about possibly changing my term insurance carrier, to see if I could get a lower rate, and (as usual) the conversation was not just about Term Insurance for guys over 50 (that was the topic I wanted to talk about), unfortunately the topic of retirement planning and insurance coverage to protect my family came up (no, I didn’t bring it up, you can guess who might be the protagonist in that part of the conversation).

Financial Despair

At the Signpost Up Ahead, you see you are entering… The Financial Despair Zone

I pointed out that I have a pension plan (a very good and generous plan) so my family was going to be OK, in terms of retirement planning, or were they? The agent I was speaking with pointed out that the Life Insurance that went with my pension wasn’t really that much and if I died, my wife would only get a fraction of the money in my pension.

This statement is entirely correct, but it still annoyed me because after I hung up the phone I realized when you are talking to anyone selling financial services, you never are safe in terms of retirement or insurance coverage (yes, I will plead guilty on this, but I am not selling anything).

Let me give you a few scenarios I have been a part of over the past couple of years when talking to various financial service folks about various topics:

  • If I talk about Life Insurance, and bring up that I prefer Term Insurance, inevitably the agent I speak with espouses the importance of “Whole Life” insurance as it will protect me in my “Golden Years”.
  • Credit Card companies used to call me incessantly asking if I wanted to increase my Credit Limit, because you never know when something might go wrong and I needed some extra help.
  • If I am negotiating a new Mortgage Term, the topic of Mortgage Insurance will inevitably come up, because it is important to protect my family in case something terrible happens.
  • When I call to talk about disability insurance, suddenly the topic of Catastrophic Illness insurance comes up.
  • And on, and on, and on….

My family is never really safe is it? I can never rest easy that I have enough insurance coverage, financial leverage or low enough debt load, is it? I realize that all of the cases I mention are sales folk simply trying to either up sell new services to me, or to make sure they have a bigger commission, but this does explain why I have such trepidation when I have to meet with anyone about my financial situation. I know I will be barraged with worst case scenarios, and how badly prepared I am for my retirement.



Disability Insurance vs. Critical Illness Insurance

I really didn’t understand the difference between these two different types of insurance policies, but luckily I have smart friends who answer my dumb question like, “What is the difference between Critical Illness Insurance and Disability Insurance?”.

Chantal Marr answered my query (she is part of LSM insurance one of my advertisers, and she is also my insurance consultant for this blog as well), and I think I now understand the big difference between these two policies.

Critical Illness Insurance

Critical Illness Big Winner! (really?)

Chantal’s answer is concise and easily understood:

Disability Insurance pays out a monthly benefit that is tied to your ability to earn an income.  Critical Illness pays out a lump sum benefit but is is not tied to your ability to earn an income.  Disability Insurance underwrites your occupation and Critical Illness does not.

Chantal has also written a more detailed description and discussion of these insurance vehicles with: Critical Illness insurance vs. Disability Insurance Why You Need Both.

I do not agree that you need both insurances, I think Critical Illness insurance strikes me as a bit ghoulish, in that you get a big pay out for getting a critical illness. Do you need a large lump sum payment if you are diagnosed with a critical illness? I am not sure, I would have thought that if you have a good health insurance plan, and you have some kind of disability insurance, that would be nearly enough, but I am sure Insurance folks would argue you need the critical illness to be completely covered (again, I don’t agree with that).

As for the Disability Insurance, read over your policy carefully if you are purchasing one to ensure you understand how “Disabled” is defined, and how you qualify (or don’t qualify) for funds (but you should do that with all Insurance policies). Understanding what Disabled means, is the key to the policy, as what you think of as disabled and what your insurer thinks of as disabled may not be the same thing.

The other part of any Disability Insurance Policy is figure out who is insuring you. I have written previously about Self Insured Disability Insurance that decimated many families during the Nortel fiasco. Make sure that whoever is insuring you, is financially sound.

Image courtesy of Ambro/ FreeDigitalPhotos.net


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