JOANNE LAUCIUS | Ottawa Citizen
Some victims of the September 2018 tornadoes in Ottawa say they’re frustrated over how long it has taken even to get an agreement with an insurance company. Why does it take so long?
We posed this question and others to Pete Karageorgos, the Ontario director of consumer and industry relations for the Insurance Bureau of Canada, the national association that represents insurers.
Q: There have been complaints that the settlement process is long and drawn-out. Why does it take so long, particularly if a house is completely destroyed?
A: There challenges, especially if you are dealing with a home that is completely destroyed. As with any insurance claim, the challenge is proving what kind of damages did you have. What kind of kitchen cabinets did you have? What quality? What kinds of countertop? With a completely destroyed home, it’s custom build from the start. The insurance wants to restore the home to the condition before the tornado struck. Part of the challenge is determining what was there in the first place. We always promote having a home inventory. Keep receipts. You don’t have to keep them in a shoebox. Store them electronically. Send yourself an email, for example.
Q: Are there time limitations?
A: Usually you have a year to submit a claim. Sometimes it takes time to create a list of what has been lost. You might not realize you have lost your Christmas tree and decorations, for example. In terms of resolving the claim and doing the work, there is no time limit. In the case of a tornado, people are at the mercy of tradespeople and their availability. Sometimes tradespeople are too busy, or the prices are inflated because they are too busy and have to charge a premium. An insurance company is using their clients’ money to do this. It requires some oversight.
Q: Why do people have such different experiences with settling their claims?
A: You may have the same insurance company as your neighbour, but your policy may be completely different. Sometimes people spent more time researching a TV purchase than their policy and how that TV will be covered if it is damaged. When you take out or renew your insurance, review the policy. If a tornado were to happen, am I covered and by how much? There are wildfires, there are tornadoes, there are floods.
Q: What is a guaranteed replacement?
A: With guaranteed replacement on a $500,000 home, at the end of the day, there may be a payout in excess of a million dollars if you include everything — although there may be a cap in your policy. Rebuilding your 1,200 square foot house with hardwood floor means you will get the house built to same standard. You may also have cash value replacement and only get the depreciated value of what was lost. For example, if your had a 50-inch TV that cost $1,000 10 years ago, it may have minimal or no cash value. A guaranteed replacement cost policy gives you a new 50-inch TV.
Q: What the difference between market value and insurance value?
A: You may own a $1 million home, but some of its value is because of its location. It may only cost $350,00 to rebuild it. You still own the property.
Q: What recourse do people have if they have a complaint about the way a claim has been handled?
A: First, try to work it out with the adjustor. If you can’t get a resolution, go the adjustor’s manager. The final assessor at the insurance company level is the complaint liaison officer or ombudsman. Every company has one. Their role is to assess and review the complaint and provide the customer with the company’s final position. They are paid by the company, but they should be impartial and review the complaint from both the customer’s and the adjustor’s perspective.
If you are still dissatisfied, you could then go to the General Insurance OmbudService (GIO), which will mediate complaints between insurance companies and their customers. It is more economical than hiring a lawyer and going to court.
If you still disagree, an insurance policy is a legal contract. Your final recourse is to go to court.
The Insurance Bureau of Canada can also offer direction. You can do so anonymously.
Q: Does the insurance industry have a code of conduct or ethics?
A: The Insurance Bureau of Canada has a code of consumer rights and responsibilities. Individual companies have their own statements, but they are not obligated to adhere to the insurance bureau’s code.
Q: What is the government oversight of the insurance industry?
A: Governments license insurance companies and practices and finances. The financial oversight is conducted at the federal level, and the rest is through the provincial regulator, the Financial Services Commission of Ontario.
(This interview has been edited for length and clarity)
Source: Ottawa Citizen