Purchasing insurance is more complex than purchasing a loaf of bread or a new pair of shoes. To begin with, neither bread nor shoes are intended to be worn continuously, nor do either have a detailed warranty or user guide. Concerning bread and shoes, there is no fine print (other than perhaps the list of ingredients contained in the bread).
With shoes or bread, you get exactly what you see.
However, you cannot say this about buying insurance. Regardless of the purpose for which insurance is obtained, every policy has thousands of twists, turns, bobs, and weaves. What you think you are buying isn’t exactly what you get, or the insurance product doesn’t function the way you anticipate it.
Common misunderstanding about insurance:
Let’s use long-term disability insurance as an illustration. Here are some typical misunderstandings:
I will be able to live off of my long-term disability benefits entirely:
FALSE! In most cases, just 60 to 80 percent is covered. Some less expensive policies only cover 50% of your income prior to incapacity.
My lifetime long-term disability benefits are guaranteed:
WRONG! Even though you may have planned to work until you were 70 years old, most insurance policies discontinue coverage at age 65. Other insurance contracts only provide benefits for a maximum of five years, or until the insured person becomes 65, whichever comes first.
My benefits from a long-term incapacity are tax-free:
WRONG! Depending on the language in your policy, you may or may not be required to pay income tax on your long-term disability benefits. Rule of thumb: Your long-term disability benefits are taxed if your employer pays your premiums. Rule of thumb #2: Only previous benefits are taxable if you lump out your long-term disability claim with your insurance. Future advantages aren’t.
To enable me to double dip and earn as much money while disabled (or more) as I did when I was working, my long-term disability benefits are paid in addition to my CPP Disability benefits and other collateral disability benefits.
WRONG! Almost all long-term disability policies that our attorney has seen have a series of provisions allowing the long-term disability insurer to take off any disability income you may be receiving dollar for dollar, lowering the number of long-term disability payments owed to you.
You’ll die reading the fine text of long-term disability policies. Policies don’t operate as expected by policyholders in almost all of the long-term disability cases our attorneys have seen. The same holds true for insurance policies covering life, mortgages, serious illnesses, temporary incapacity, etc.
This is why it’s crucial to have an insurance broker go through your policy details with you—considering that purchasing insurance is not comparable to purchasing a loaf of bread or a pair of sneakers. It’s complicated and perplexing, and you have a lot of options and riders to choose from to customize your policy to meet your specific needs.
Your broker can make mistakes:
An insurance broker is expected to be well-versed in the details of the plans they are attempting to offer you. They are responsible for giving you accurate information so you can choose the insurance that best meets your needs.
- Brokers occasionally make blunders.
- Brokers occasionally only want to make a speedy transaction.
- Brokers may occasionally try to upsell you on policies even if they know they won’t meet your demands because doing so rewards them financially.
- Brokers will occasionally give you information that is just false. It’s unclear whether this is the result of carelessness or a desire to expedite the transaction.
- Brokers occasionally don’t spend enough time describing the policies to their clients, leaving the consumer with many unanswered issues.
These kinds of events frequently occur. And when they do, the client who owns the policy is unhappy and uninformed. The strange thing about insurance is that you only use it when you need it. It’s a kind of “break in case of emergency” sort of product. Therefore, when the client policyholder needs to rely on the policy, all of the questions they had when they originally signed up for the coverage are probably forgotten.
Know the legality so your relationship with your insurance broker:
A fiduciary relationship exists between the insurance broker and the client they represent. It is assumed that the broker has in-depth knowledge and experience of the product they are recommending to their client. The broker is expected to exercise greater caution than the average salesperson. Because of this, Ottawa personal injury attorneys are able to hold brokers accountable for their negligence in first pitching plans that weren’t adequate to cover the demands of their clients. A broker will be held responsible for their carelessness if they fail to give their client options so that they can choose the policy that would work best for them. When a broker is only interested in making a quick sale to gain a commission and only provides the customer with a generic insurer folder without explaining anything about the policy or how it operates, that broker will have some explaining to do.
The basics of selling insurance:
You cannot simply enter from the street and begin selling insurance to gullible people. You must pass an exam given by the Registered Insurance Brokers of Ontario (RIBO) or an exam given by the Insurance Institute of Ontario in order to sell insurance and be recognized as a General Insurance Agent as per the Insurance Act. You must also:
- Fill out a General Insurance Agent application, attach any necessary supporting documentation, and pay the $150 application fee.
- Understand Ontario’s rules governing the licencing of general insurance agents.
- be supported by authorized insurance.
- Hold oneself out in the open and conduct one’s business in good faith solely under the name under which one is licenced as a general insurance agent.
- Not be involved in any other activities that could compromise their expertise, independence, or integrity.
- Have an excellent reputation and character.
- Be a suitable person and satisfy all eligibility requirements for a licence.
- Possess the necessary academic training.
- Give FSCO a mailing address in Ontario that will allow for registered letter delivery.
If you feel you might have a case or have been wrongfully denied insurance, you may want to seek out the advice of an insurance lawyer in Ottawa. Our lawyers can help you understand your rights and options, and may be able to help you get the insurance coverage you deserve. Contact us today for legal advice.