Have you ever heard of material change in risk? If your answer is no, you’re like most Quebecers. However, anyone who has home, car or business insurance should know and understand what it is.
With this article, Assurances Multi-Risques wants to raise your awareness about material change in risk to allow you to avoid the worst. Continue reading to find out more!
What is material change in risk?
The concept of material change in risk comes from an article of the Civil Code of Quebec, Article 2466, to be specific!
This article stipulates as follows:
“The insured is bound to promptly notify the insurer of any circumstance that increases the risks stipulated in the policy and that result from events within their control if they are such as to materially influence an insurer in setting the rate of the premium, appraising the risk or deciding to continue to insure them. If the insured fails to discharge his obligation, the provisions of article 2411 apply, adapted as required.”
In other words, as a policyholder, you are obligated to disclose to your insurer any change that increases your risk of loss, and therefore, is likely to change the policy initially taken out.
For example: Pierre now works at home. It would therefore be important for him to notify his insurer so that they can adjust his civil liability coverage, based on the business activity that Pierre is engaged in. The insurer will adjust his insurance premiums accordingly or could even decide to no longer insure him. If Pierre did not notify his insurer and a customer fell on his stairs and broke a leg, Pierre could be sued, which would be a lot more expensive than insurance premiums. This is worth keeping in mind!
Notify your insurer of a change that increases your risk factors
All deeds and actions likely to have a significant impact on the determination of your insurance premiums must be reported to your insurer. Otherwise, you risk losing a lot.
In the course of our business, we have observed many instances of material change in risk, including the following examples:
- A house that is no longer occupied (house or building)
- An occasional driver (young driver or other)
- The adoption of a pet that is considered dangerous (Pitbull, Doberman, Rottweiler, reptiles, etc. Read our previous article on this subject by clicking here.)
- A new spouse with a criminal record who comes to live with you
- Operating a business at home (e.g. daycare, aesthetic services)
- Accommodating roomers in your house
- Using a vehicle to commute to work
- Adding an activity or service to your business (e.g. welding outside the areas specified in the insurance policy)
When an insurer is notified of the change in place of work or circumstances and they consider that the risk of insuring you is too high, they may decide to maintain your policy and increase your premiums (applying a premium surcharge) or they may decide to terminate your insurance policy in writing.
At Assurances Multi-Risques, we’re aware that your lives are busy and that certain details may escape your attention when it comes to insurance. This is particularly true if you didn’t know that your insurer must be informed of this type of change!
Insurance is a lot more complicated than it seems: every insurance company is different and every case is unique, and that’s why our best recommendation is always to contact your insurance broker if you have the slightest doubt or concern.
Also, don’t hesitate to contact us if your insurer refuses to insure you because of a material change in risk; we’ll be able to find an insurer who will agree to cover you at a fair price!