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Media kit: overview of the property and casualty insurance in Québec
Press releases and news
Media kit : Overview of the property and casualty insurance in Québec
Subjects of Interest
- Severe weather has become a formidable foe; insurance claim payments stemming from natural disasters, even when adjusted for inflation, have doubled every five to ten years since the 1950s.
- That is why IBC funds high-level research into preparing for severe weather and is involved in discussions with governments about the need to invest in critical infrastructure at the municipal, provincial and federal levels, as well as the need to introduce building codes designed to mitigate losses in future storms.
- Chart : Natural disasters
- Insurance fraud is not a victimless crime : Making a fraudulent claim is stealing not only from insurance companies but from all policyholders, as compensation is paid out of premiums paid by each of these policyholders.
- Insurance fraud accounts for more than $3 billion in losses annually across the country.
- Insurance fraud affects us all: 10 to 15% of everyone's insurance premium is used to cover fraud-related claims.
- Chart : Main sources of insurance fraud
- Fighting insurance fraud : the Insurance Bureau of Canada's anti-fraud line, accessible 24/7, allows the public to call in a confidential tip at 1 866-422-4331.
Industry Portrait
- Sales of $7.3 billion in 2007.
- Industry employs about 23,000 people.
- Investments totalling more than $10 billion in 2004.
- $1 billion in taxes and levies to the Quebec government (represeting more than 2% of the state's revenue from independent sources).
Automobile insurance
The Quebec automobile insurance program, introduced in 1978, is a blended program :
- Private insurers provide compensation for damage to property. Under the program, the liability of each party involved in an accident is taken into account.
- Société d'assurance automobile du Québec (SAAQ) provides compensation for bodily injury. Compensation under this universal plan is provided regardless of fault.
Automobile insurance is mandatory :
- Every owner of an automobile driven on Quebec roads must have minimum third-party liability coverage of $50,000.
- All Quebec residents are also covered, de facto, by the SAAQ public insurance (bodily injury) without being required to hold a driver's licence or own a vehicle.
In Quebec, the 127 insurers authorized to sell automobile insurance offer a single standard policy approved by the Autorité des marchés financiers.
The policy has two parts: Civil liability, and Loss of or damage to insured vehicle.
Section A: Civil liability
- This coverage covers property damage (in Quebec, elsewhere in Canada and in the United States) and bodily injury (outside Quebec) caused by a vehicle.
Section B: Loss of or damage to insured vehicle
- This coverage covers property damage to the vehicle. It is optional (coverage includes collision for which the insured is liable, theft, fire, vandalism, broken glass, etc.).
- It should be noted that if property is stolen from the vehicle, automobile insurance covers damage to the vehicle (such as broken glass), while home insurance covers the loss of stolen items, including a laptop, sports equipment or clothing.
Endorsements
Additional coverage, known as endorsements, can be added to the content of the insurance policy.
The most popular endorsements are :
Endorsement 20: "Loss of use" extension
This endorsement covers the cost of renting a vehicle to replace the insured vehicle which may have been stolen or damaged in an accident.
Endorsement 27
This endorsement covers damage caused to a vehicle that does not belong to the policyholder. The best example: the policyholder rents a vehicle while on a trip to Florida. If the rental were damaged in an accident for which the policyholder is responsible, the damage could be paid under this endorsement.
Endorsement 43
This endorsement guarantees the policyholder full replacement cost in case of an accident.
A number of factors influence how automobile insurance premiums are calculated:
- Type of vehicle (sports car, sedan, hybrid, car frequently targeted by thieves, etc.).
- How much you drive (touring, to work, for work, for business, etc.).
- Where you live and vehicle usage.
- Driver profile (age, sex, etc.).
- Driver record and claims (number of years' driving experience, number of demerit points, number of claims in the last years).
- Quebec has the lowest average automobile insurance premium in Canada.
- In 2007, the average premium in Quebec was $694, which included the $130 in fees paid to the SAAQ (via the driver's licence and car registration).
- Also in 2007, our Ontario neighbours, on average, paid nearly twice as much for automobile insurance: $1,290 versus $694 in Quebec.
- L'Autorité des marchés financiers considers automobile insurance rates in Quebec to be "adequate"
- In addition, the AMF confirms the downward trend in automobile insurance premiums: "The downward rate trend noted in 2007, for the fifth consecutive year, is indicative of an efficient market, which benefits consumers."
- Chart : Evolution of the average written premium for private passenger automobile
Since automobile insurance is mandatory, the insurance industry provides a mechanism for accessing insurance.
This access mechanism guarantees the owner of every automobile on Quebec's roads insurance coverage that meets the requirements of the Automobile Insurance Act or the owner's needs.
In 2008, Groupement des assureurs automobiles handled 3,197 requests for assistance to access automobile insurance :
- As a result, 2,140 cases were settled thanks to discussions between consumers and insurers.
Call the Insurance Information Centre at 1 877-288-4321 or 514 288-4321.
Home insurance
Although home insurance is not mandatory in Quebec, virtually all homeowners are insured, as are three out of four tenants :
- 98% of owners are insured.
- 76% of tenants are insured; therefore, one in four has no home insurance
IBC developed home insurance forms to enable insurers to offer consumers standardized policies.
Home insurance policies in Quebec are, in all cases, comprised of four specific sections
The object of the policy: Name of policyholder, address, location of the property to be insured, coverage chosen and insurance premium.
Property coverage: This section covers the home, outbuildings and personal property against adverse and unforeseeable events, such as fire, theft, water damage or any other loss covered under the policy.
Liability coverage: This section provides coverage against legal action that may be brought against the policyholder as a result of material damage or bodily injury that he or she may unintentionally cause to others. This is the classic case of a visitor who slips on the steps of a poorly maintained staircase and who then sues.
Additional coverage: This section covers occasional residence employees, if they are injured or have an accident while working for the policyholder.
Chart : Coverage and policies
Insurable perils
Regardless which policy you choose, your insurance policy includes coverage against the following perils :
- Fire or lightning
- Explosion
- Smoke
- Falling object
- Aircraft or vehicle impact
- Riot
- Vandalism
- Water damage
- Windstorm or hail
- Transportation
- Theft or attempted theft
- Broken glass (owner-occupier only)
However, note that most insurable perils comprise certain exclusions.
Exclusions
The following exclusions are examples. The complete list can be found in the policy and exclusions may vary, depending on the policy purchased.
- Loss while the dwelling has been vacant for more than 30 consecutive days (the owner has unquestionably moved out and does not intend to return)
- Illegally acquired property
- Pollutants
- Loss resulting from any criminal act or wilful negligence by the insured
- Potential consequences of war
- Lawfully seized property
- Damage caused by landslides, earth movements and earthquakes
- Nuclear incident
The limits correspond to the maximum payable for each property category in the event of a loss. These limits represent the suggested minimum amount on IBC insurance forms in Quebec.
Chart : Limits
Home insurance premiums are based on several factors :
- Territory (municipality, sector, etc.) and related risks.
- Replacement cost.
- Value of insured property.
- Fire protection (proximity of fire hydrant, of fire station, equipment maintenance, communications systems between various emergency services - each municipality is given a fire rating).
- Use of building (single family, multiplex, commercial, etc).
- Type of construction (wood/brick, wood/aluminium siding, concrete, etc.).
- Age of construction.
- Heating system, including secondary heating systems.
- Loss experience (number of claims in the last years).
The Insurance Information Centre provides assistance to consumers to help them access home insurance.
This service, which is free, was put in place to assist consumers who were having difficulty finding home insurance.
However, the consumer must first have contacted several insurers and/or brokers.
Call the Insurance Information Centre at 1 877-288-4321 or 514 288-4321.
An Insurance Bureau of Canada (IBC) study carried out in 2006 of insurers representing 83% of the premium volume written in the home insurance sector in Quebec showed damage by water, fire and theft to be the three leading causes of claims.
Water damage
Water damage topped the list by far: in 2005, water damage accounted for 45% of the compensation paid out by Quebec home insurers.
Chart : Leading causes of home insurance claims
Theft
- A private residence is the target of burglars every 14 minutes.
- In 2007, 37,440 incidents of breaking and entering were reported.
- Theft is the third cause of home insurance claims (in this case, theft is not limited solely to claims resulting from breaking and entering).
Chart : Residential breaking and entering
Fire
Material losses
- Fire is the second source of home insurance claims.
- Average of 10,800 structure fires in 2003-2005.
- Four out of five buildings that catch fire (78%) are homes (single family, attached or apartment buildings).
- Material losses totalled $862 million in 1998-2002 (residential sector).
- Chimney fires accounted for more than a third (37%) of residential fires between 2003 and 2005.
- In more than half of cases, faulty operation of a heating unit or cooking appliance was the source of residential fires.
Chart : Fires in private homes, number and material losses
Death
- Smoker's negligence as well as faulty operation of a cooking appliance or heating unit topped the list of fire-related deaths in homes.
- The risk of dying in a residential fire doubles if there is no detection system (such as smoke detectors) or a malfunctioning system.
Prevention tips
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