Grande Prairie Branch Manger
HUB International Phoenix Insurance Brokers
Mark- What is home insurance, and how does it work?
Dustin – Home insurance, really it’s just a transfer of risk. When you make a purchase, something as major as your home, there is always a risk of losing that massive asset that you’re paying on so with insurance, insurance comes in and it gives you theability to transfer that risk onto an insurance policy. What happens there is, the insurance company and you will reach an agreement on a premium paid, that premium is put into a pot with thousands and thousands of other home owners and that pot of money sits there until such time as someone has a loss and those individuals who do have losses can use the money from that pot to put themselves back whole.
Mark – talking about Fort McMurray, they said 1,600 units, BMO said $9 Billion dollars they’ve estimated is lost so far, there’s some losses there, is that losses for insurance, is that called an “act of God”, how does that work?
Dustin – That is something we’ve heard a lot. People are wondering if this is going to be covered, is it just considered an act of God and the reality is if you got fire insurance on your house, it’s a fire, and if your house catches on fire, more than likely that’s going to be covered by your insurance company. People in Fort McMurray who’s houses have burned, if they did have fire insurance, they will be taken care of.
Mark – so it could do something to the pot. You were telling be before off the air, but that 4 out of 5 of the big disasters we’ve had in Canada have happened here in Alberta.
Dustin – yes, it has been a very unfortunate time over the last 5 or 6 years in Alberta. Four of the top five catastrophic loss that have happened in Canada over that time, have happened right here in Alberta. Obviously the flood that hit Calgary and High River, we had the Slave Lake fire, we’ve had massive hail claims. We had a big hail storm that went through Alberta a couple years ago and it wiped out whole towns pretty much, and then this Fort McMurray fire.
Mark- are we going to be expecting insurance premiums to go up, is that what you anticipate?
Dustin – We have already seen that, we saw that definitely after the floods in High River and Calgary a couple years ago, and the reality of it is after that pot starts to empty out, we do have to replenish it. That way we can keep the insurance in place. Insurance is a shared cost. Even though the price of our insurance does go up, it is still a lot less than paying for these losses our selves. It stops people from, obviously, becoming bankrupt, homeless, things like that so I would imagine we will see some increases from it.
Mark – is there a difference between the insurance I might get from the bank vs say HUB International for example?
Dustin – Definitely, going to the bank, they will have a product, their product. And if you’re going to buy insurance from them, they will sell you their product, if you fit into that box. There’s no real variations to it, where when you come to us, we’re a broker, with us being the largest broker in Canada, we can draw on several insurance companies, we have contracts with several insurance companies, so we will sit down and we will give you the options, and we will look for the best fit for you, pricing wise and coverage wise. And we can lay it out with several different insurance companies, and help you make a properselection for your needs.
Mark – now if I’m purchasing a house, say last month, the average house in March sold for about $280,000. So if I’m looking for an insurance policy that will cover 250, 300, 350, can you give us a window of what that might cost?
Dustin – Unfortunately I can’t. The reason for it is there is just so many variables. A lot of the insurance companies offer discounts for different things, whether it’s a brand new house, whether you have a history of house insurance without claims, there are claim free discounts. Other things can contribute to it whether it’s a log home, that will be more expensive, heritage homes, whether it’s protected by fire protection, or outside fire protection, there is just so many variables that the price will fluctuate.
Mark – would you encourage someone to give the insurance company a call then ahead of time.
Dustin – most definitely. One of the big reasons there is if you’re going to close your house, that fire insurance has to be in place before the bank will release the funds. So by getting to an insurance broker ahead of time, getting all that done, it’s going to limit any delays on the back end when you want to get the keys to your new house.