Canadians forego insurance in tough economic times: study

The majority of Canadians say they consider insurance an essential part of their financial health, but with an uncertain economic forecast on their minds, many cost-conscious consumers are putting their coverage on the chopping block. According to the TD Insurance State of Insurance Report, 42% of Canadians are less likely to purchase a new policy or buy enough insurance due to the economic environment.

The second annual report found some Canadians have decided not to make claims in order to keep their premiums low (33%) or to avoid a high deductible (29%). Even more alarming, 21% of Canadians have cancelled or forgone insurance altogether in an effort to save money. As a result, one-in-five Canadians now admit they don’t think they have enough insurance (19% versus 9% in 2011).

“If you want to save money and preserve your personal finances, the last thing you should be doing is curbing your insurance coverage,” says Dave Minor, Vice President, TD Insurance in a press release. “Especially in an uncertain economy, insurance is an important part of financial planning. For working families, it’s one of the best ways to ensure your assets and income remain intact in the event that something unexpected happens. Speaking with your insurance provider is the first step to cutting costs. They can help you look for additional savings and tailor your coverage to ensure you’re getting the best value.”

According to the report, 79% of Canadians say they consider insurance an integral part of their financial planning. Yet, 39% of Canadians don’t have any life insurance.

“Our report unveiled a serious disconnect between what Canadians think and what they do when it comes to insurance,” Minor said in a release. “Canadians say they understand the importance of insurance, yet many admit they don’t have enough insurance to protect their assets and loved ones, now and into the future.”

Not all Canadians think honesty is the best policy

One-fifth of Canadians now admit they have not been completely truthful or omitted information when filling out an insurance application, compared with only 13% in 2011.

According to the Insurance Bureau of Canada, organized insurance crime – which includes insurance fraud, auto theft and filing fraudulent claims – costs insurers and policyholders about $542 million annually.

Consumers are concerned about how extreme weather may affect their coverage

With household expenses under the microscope, many Canadians admit they’re concerned about external factors that may affect their coverage, including extreme weather. Water damage is now the leading cause of property damage in Canada, amounting to approximately $1.7 billion in claims annually.

According to the report, 70% of Canadians are concerned that a natural disaster won’t be covered by their insurance policy. As a result, many Canadians are taking precautions to help protect their homes and valuables from severe weather and natural disasters:

• 62% ensure they have an adequate number of working smoke detectors and fire extinguishers
• 46% check their properties for blockages that prevent water draining away from their home
• 36% remove weak branches and trees on their properties that could fall on their homes or on power lines
• 24% keep a detailed inventory of their valuables in a safe place
• 20% choose landscaping that helps resist soil erosion
  

“Some extreme weather-related damage may not be covered by a basic home insurance, like water damage caused by flooding, damage to antennas and satellite dishes as a result of strong wind, and damage caused by earthquakes,” MInor said in a release.  “Speak to your insurance provider if you’re unsure about your coverage.”

Canadians are more confused than last year about their coverage

The State of Insurance Report found 29% of Canadians are not sure what they are covered for (versus 25% in 2011) and 64% of Canadians don’t bother to read the fine print of their policies thoroughly (compared with 83% last year).

This story was originally published by Canadian Insurance Top Broker.