Have you ever heard of increased risk? If your answer is no, you are like most Quebecers. However, anyone with home, auto, or business insurance should be aware of and understand aggravation of risk.
In this article, Assurances Multi-Risques wants to raise your awareness about increased risk so that you can avoid the worst.
What is increased risk?
Increased risk is a law that stipulates that you are responsible for informing your insurer of any changes that could increase your risk of making a claim. Risk aggravation is therefore an increase in the likelihood of an incident occurring that could require a claim.
It is important to understand that the nature of these changes would result in a change in your insurer’s premium.
The aggravation of risks stems from an article in the Civil Code of Québec, Article 2466 to be precise!
“The insured must promptly disclose to the insurer any circumstances that aggravate the risks stipulated in the policy and that result from his or her actions if they are likely to significantly influence an insurer in setting the premium rate, assessing the risk, or deciding whether to maintain the insurance. Where the insured fails to fulfill this obligation, the provisions of Article 2411 shall apply, with the necessary modifications.”
Example of increased risk in insurance
Let’s take a man named Pierre as an example.
Pierre decides to change his working arrangements and switch to teleworking. He plans to invite clients to his home for meetings. It is therefore in his best interest to notify his insurer of this change. His insurer will be able to adjust his civil liability coverage based on Pierre’s professional activity.
The insurer will adjust the insurance premium accordingly, or may even decide to no longer insure him. If Pierre does not notify his insurer and, unfortunately, a client falls down his stairs and breaks a leg, Pierre could face legal action, which would cost him much more than an insurance premium.
Notify the insurer of any changes in risk
When it comes to insurance, we recommend that you always be transparent and not hide any information.
Anything you do that could affect the risks associated with your insurance premium must be reported to your insurer. Otherwise, you could lose a lot…
Common cases of increased risk
In the course of our work, we have witnessed several cases of increased risk. We are sharing a non-exhaustive list of cases we have encountered.
- A house that is no longer inhabited (house or building);
- An occasional driver (young driver or others);
- Adopting an animal that is considered dangerous or poses a risk (Pitbull, Doberman, Rottweiler, and reptiles, including snakes).
- A new spouse with a criminal record moving into your home;
- Operating a home-based business (e.g., daycare, beauty salon);
- Hosting guests in your home (e.g., Airbnb);
- Using a vehicle for work purposes;
- Adding an activity or service to your business (e.g., welding outside the locations specified in the insurance contract).
Termination due to increased risk
When an insurer is informed of a change in risk or circumstances, it must reassess your file. It will analyze the risk you represent and make a decision.
If the insurer determines that the risk is too high, it may decide to increase your premium or even cancel your insurance policy. Generally, the insurer will send you a notice informing you of this cancellation and giving you a period of time to find a new insurer.
However, keep in mind that cancellation by one insurer does not mean that you will not be able to find a new insurer!
Assurances Multi-Risques: Expertise at your service
At Assurances Multi-Risques, we understand that you lead busy lives and that certain details regarding insurance may slip your mind. This is especially true if you were unaware that such changes needed to be communicated to your insurer!
The world of insurance is much more complex than it appears. Every insurance company is different, and every case is unique.
That’s why our best advice will always be to contact your insurance broker if you have any doubts or questions. This could save you a lot of insurance problems!
Also, don’t hesitate to contact us if your insurer refuses to insure you in the event of increased risks. We will find an insurer who will agree to protect you at a good price!