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Aram Piruzyan – Insurance Broker – Toronto – Ontario 2016-03-14T21:21:27Z http://www.aramcan.ca/feed/atom/ WordPress Aram Piruzyan <![CDATA[How TYPE of car affects the cost of your Auto insurance premium?]]> http://www.aramcan.ca/?p=2653 2015-10-11T14:04:53Z 2015-01-12T06:19:22Z Continue Reading]]> Automobile type (year manufactured, make and model) is one of the key factors on forming final insurance premium. Through years many methods have been considered by insurance companies to assemble appropriate formula for considering factor of Type of Vehicle.

  1. In early days rates for public liability and property damage were based solely on the horsepower of automobiles.

However insurance companies found out that rating only based on horsepower is not correct and is not fair. Some automobiles with higher horsepower were less susceptible to be involved in losses (for example because mostly mature and established drivers drive particular types of cars with high volume of horsepower), or when involved, some cars with higher horsepower may have less replacement value and vice versa, cars with less Horsepower may have high replacement value.

  1. The above method was abandoned in favour of rates based on.
  • The manufacturer’s suggested retail price (MSRP) – The amount of money for which the company that produces a product recommends that it be sold in stores.
  • The use of Automobile, the age of drivers, and their accident record for liability coverage.

Later Insurance companies came to a conclusion that rating vehicles based on MSRP has notable drawback. For example many claims require vehicle to be repaired rather than to be replaced. In this kind of cases MSRP factor does not have any connection to costs that put up actual loss amount. In addition to this, equipment like antitheft devices and airbags do increase MSRP of vehicle, making insurance premiums higher, even though that equipment will lower likelihood of claim or may dramatically reduce cost of claims.

Approach currently practiced by insurance companies in Ontario.

  1. To address these issues, many insurers now use the Canadian Loss Experience Automobile Rating (CLEAR).

The property and casualty insurance industry gathers and analyzes statistics on the number and cost of collision, comprehensive, direct compensation property damage (DCPD) and accident benefit claims for the most popular Canadian models of cars, passenger vans, SUVs and pickup trucks. This information Insurance companies use as a Main factor for Auto insurance premium formation based on Type of Vehicle.

How it works?

Insurance companies with the Insurance Bureau of Canada assign each vehicle model four digit number and insurance companies submit claims data for each of these car codes. Information from every reported accident contributes to this database and helps determine risk factors for each vehicle model.

For those who are more curious and willing to explore CLEAR data for main types of vehicles driven in Canada, can go through the below link to Insurance Bureau of Canada webpage and download appropriate pdf. or xls. files.

“CLEAR” data (pdf.)
“CLEAR” data (xls.)
Aram Piruzyan <![CDATA[Workers’ Compensation]]> http://aram.ttag.biz/?p=2368 2014-11-25T04:09:39Z 2014-10-27T02:24:08Z Continue Reading]]> Workers’ Compensation is available to employees whose injury or sickness is work-related. Thus, an injury or sickness that occurs while a person is not “on the job,” is disqualified.
Workers’ Compensation premiums are fully (100%) paid by the employer.
Workers’ Compensation Benefits pay up to 90% of net pre-disability take-home pay. Benefits are paid either as a lump sum if the disability is permanent, or for the duration of the disability, or until the worker returns to work. Benefits are also available as a death benefit if death occurs on the job.

Workers’ Compensation has no elimination period, thus benefits started to be paid just after insured event (disability) occurred.

Workplace Safety & Insurance Board (WSIB)
Workers compensation Insurance in Ontario is carried out by Ontario government agency WSIB. WSIB stands for Workplace Safety & Insurance Board. It used to be called the Workers Compensation Board.
Most businesses in Ontario that employ workers must register with the WSIB within 10 days of hiring their first full or part-time worker. WSIB works like this

  • Employers contribute to a province-wide insurance fund. Contributions (insurance premiums) are based on the employer’s payroll and the accident experience in their industry.
  • Injured workers are compensated by the WSIB on a “No Fault” basis. This means that compensation is paid no matter who is at fault, the employer, the employee or someone else. In return for automatic compensation, the employer is shielded from any other liability. This means you cannot sue your employer for negligence if that negligence causes a work-related injury or disease.
  • Benefits for non-economic loss
    If someone suffers permanent impairment from a work-related injury or illness, the WSIB will pay him a non-economic loss benefit to compensate for the physical, functional, or psychological loss the impairment causes. This benefit is determined when injured’s condition has reached a point where no further improvement can be expected.
  • If injured is under 64 years of age and has received loss of earnings (LOE) benefits for 12 continuous months, the WSIB sets aside an amount equal to 5% of all subsequent LOE benefits to pay for a loss of retirement income (LRI) benefit. (This 5% is over and above your regular payments, but will not be paid to you until you turn 65.)

If someone misses time from work because of a work-related injury or illness, WSIB pays for loss of earnings. This benefit starts from the working day after the injury or illness occurred. Currently WSIB pays 85% of take home pay. Some limitations are applied to wages that are above industry average for more than 175%.
Loss of earnings (LOE) benefits continue until injured no longer impaired by his work-related injury or illness, or until he no longer has a loss of earnings, or until he reaches age 65.
LOE payments are subject to be paid every two weeks. After 72 months, the LOE benefit be turned to permanent. It may be turned into a lump sum payment if the amount of the benefit is less than 10% of what injured would have received if he/she were unable to work at all. WSIB benefits are adjusted for inflation.

Alternatives utilized in Industry
With the high cost of WSIB many small businesses feel they cannot afford the coverage for all employees, this is why they sublet works they do and allow their subcontractors to opt out and purchase private coverage.
What options do subcontractors have when they have opted out?

  1. Personal WSIB coverage through the board?
  2. Private coverage (Disability Insurance)?
  3. Nothing at all?

Although #3 is actually an option, it is not recommended, because when a subcontractor opts out of WSIB, they still may sue the business. Although mandating a comprehensive alternative does not totally eliminate this risk of a lawsuit, it will drastically reduce their risk and exposure compared to having nothing at all. If you are selecting private coverage, don’t just look at the cost and benefits, pay close attention to the terms, limitations and exclusions of the policy. If you are accepting numerous different coverages, be sure to get a copy of the policy for your subcontractors. It is strongly recommended that you collect ongoing certificates of insurance from your sub-contractors to ensure coverage has been maintained every 90 days.
As an alternative, Disability Insurance has many options and variations, you should contact to your broker to get an advice for most appropriate coverage for you.

Pulling Out of WSIB (read more)

Aram Piruzyan <![CDATA[Telematics, Usage Based Insurance (UBI)]]> http://aram.ttag.biz/?p=2342 2014-11-23T20:16:39Z 2014-10-26T02:36:14Z Continue Reading]]> Some people have better driving habits than others, and due to that Insurance companies started to develop Usage Based Insurance (UBI) programs to reward good driving behavior.

Some companies over the time may offer up to 25% discount on their ordinary car insurance premiums, with 5% enrollment discount for signing up to the program. Premium discounts most Insurance companies provide in each renewal based on previous 12 months of data collected, upon the completion of initial assessment. Normally initial assessment period defined as 180 days.

Once you enrolled to the program Insurance Company mails you Device to be installed in your car. This is a small, easy to install device which is compatible with most of vehicles. Only few vehicles are not compatible with the device. Once you have connected the device, it starts to collect information about your driving behavior and send it via regular cell phone networks to secure servers.

download (1)

1. Hard Braking
Hard braking increases the risk of being involved in an accident. Insurance company calculates the ratio of hard braking events on total km driven to determine your personalized hard braking factor. Insurance company may define a hard braking event as any decrease of speed for a certain amount of km/h or more in less than 1 second. For this purpose Insurers use around 12 km/h indicator.

2. Rapid Accelerating
Rapid accelerations increase the risk of being involved in an accident. Insurance company calculates the ratio of rapid acceleration events on total km driven to determine your personalized rapid accelerations factor. Insurance company may define a rapid acceleration event as any increase of speed for a certain amount of km/h or more in less than 1 second. For this purpose Insurers use around 12 km/h indicator.

3. Time of day
Driving at night (between 12 a.m. and 4 a.m.) increases the risk of being involved in an accident. Many elements, such as reduced visibility and fatigue, make this time of day the riskiest. Insurance company therefore evaluates the time of day that you’re driving to determine your personalized high-risk period factor. The less you drive at night the more you could save.

Can premiums go up because of driving habits? Most Insurance companies say “NO”, they assert that premiums may have reflected only by means of adjustments in discounts.

Many clients asking what if they have to brake hard to avoid an accident, and whether that will impact on premiums (i.e. reduce discount). Certainly the safety is the first: even the best drivers have to brake hard occasionally. Insurance companies look for the frequency of event and regular driving behavior. So one single case of hard breaking most probably will not have any impact on your UBI discount.

Most Insurance companies who offer UBI products give you access to your personalized website where you can regularly view your driving behavior.

Aram Piruzyan <![CDATA[Personal Umbrella Liability Insurance]]> http://aram.ttag.biz/?p=2332 2014-11-25T05:00:04Z 2014-10-26T00:51:17Z Continue Reading]]> The Personal Umbrella coverage provides a higher level of Liability protection to policy holders. The fundamental role of Umbrella policy is to provide liability coverage over and above your automobile or homeowner’s policy. Although there is no standard wording for umbrella policy it has its main feature to cover losses that are not covered under the primary underlying policy or underlying policy’s limits were exhausted. Umbrella policy may have its own exclusions and limitations.

Umbrella policy is recommended to mature, financially stable individuals who have a need for a higher limit of liability than is normally provided under a primary policy. It is also recommended to Parents of Teen Drivers, Single Professionals, Retirees, dog owners, boat owners and etc.

Some notable Features that could be covered under Personal Umbrella Policy

  • Personal Injury including Libel, Slander & Defamation
  • False Arrest
  • Bodily injury & Property damage arising out of the personal activities of the insured anywhere in the world (Worldwide protection)
  • Unlimited Legal Defense costs
  • Property, Cars & Watercraft in USA
  • Other features that normally excluded under standard homeowner’s and automobile policy
  • Liability limit up to $5 mil. and even more may be arranged

Cases demonstrating why you need umbrella policy

Case 1:
18 year old son drove car and was involved in major at-fault accident with several injured claimants.
Investigation found that he was driving car with no Insurance.

Case 2:
An insured”s daughter hates math class including the teacher. The daughter made several “disparaging” and false remarks about her teacher online.
The teacher sued the parents for personal injury and $750,000 was paid.

Case 3:
One neighbor offered to help varnish the other’s living room floor.
Visiting neighbor went out on the porch  for a ‘celebratory cigarette’
Massive explosion, damages neighboring property & results major injuries



Aram Piruzyan <![CDATA[Mortgage Insurance]]> http://aram.ttag.biz/?p=2321 2014-10-26T02:31:04Z 2014-10-26T00:01:26Z Continue Reading]]> When you are approved for a mortgage, your lender will offer you to buy mortgage insurance. Before you say yes, you should know that there are other ways to protect your mortgage: individually – owned Term Insurance plans offered by some Life Insurance companies. Those products provide more flexibility and in most cases have lower costs.

Below are some significant advantages of Individuals insurance plans vs mortgage insurance arranged by your lender.

  1. If you arrange your own Term Insurance policy, then you will own it and you will name your beneficiaries.
    In case of mortgage insurance you are becoming a part of a group policy owned by the lender who will be the beneficiary of the coverage purchased.
  1. If you arrange your own Term Insurance policy, you decide the amount of insurance, it may be more, less or equal to your mortgage balance. You decide whether renew the coverage or not, increase it or decrease, convert to permanent coverage or not.
    In case of mortgage insurance the lender insures you only for the amount of your mortgage balance. You cannot alter, renew or convert the policy. If you chose to move your mortgage to another lender, you cannot transfer the policy. The new insurance that you arrange in this case will be priced based on your current health condition as well as age group, which means that most probably it will cost you more money.
  1. In Term Insurance policy your premiums and benefits are guaranteed for the life of the policy, and only you can cancel or make changes to your policy.
    In Mortgage insurance your premiums and benefits are not guaranteed. The lender can change or cancel the policy at any time.
  1. In Individual Term Insurance policy, you pay for your coverage based on your age, health and smoking status.
    In Mortgage Insurance, due to it is usually provided through a group plan, you pay the same rate for your coverage as everyone else, which means that most probably your policy is overpriced.
  1. In Individual Term Insurance policy, upon insurance event the benefit goes directly to your beneficiaries, and they decide how to best use the money.
    In Mortgage Insurance, upon insurance event, the benefit goes directly to your lender to pay off mortgage.
Aram Piruzyan <![CDATA[Insurance vs Surety Bonds]]> http://aram.ttag.biz/?p=2242 2014-10-19T19:53:18Z 2014-10-19T19:53:03Z Continue Reading]]>
  • Insurance is two party contract (contract is signed between Insured and Insurer)
    Surety bond is three-party contract (contract is signed between Surety /guarantor i.e. insurer/, Obligee /beneficiary/ and the Principal /service or goods provider whose performance has to be guaranteed/).
  • Insurance contracts are cancellable surety bonds do not. This is because of the real nature of this type of contracts.
  • Insurance contracts based on the principle of utmost good faith and the surety bonds are subject to ordinary contract law with respect of disclosure.
  • Insurance contract is risk transfer tool, and the surety bonds are not recognized as risk transfer tools since it is guarantee, and the Principal still carries the risk of non-performance.
  • Insurance contract does not assume reimbursement by the insured, and the Surety bond assumes reimbursement by the Principal.
  • ]]>
    Aram Piruzyan <![CDATA[Contractual Risk Transfer (disadvantages)]]> http://aram.ttag.biz/?p=2238 2014-10-19T19:54:35Z 2014-10-19T19:25:14Z Continue Reading]]> One of the most known and common risk management techniques is Contractual Transfer of the Risk.

    Even though from the first glance contractual risk transfer seems to be more preferable form the point of view of risk management it has several drawbacks:

    • You can control your insurance expenses but not expenses of your counterparts, whose insurance expenses eventually will be considered as part of cost-price and transferred to customers.
    • The insurance of counterpart may become exhausted due to numerous losses that you do not aware and do not have any control over them.
    • The counterpart could become insolvent.
    • There is possibility of overlapping (i.e. unjustified expenses) or gaps (risks to be underinsured or uninsured) existence between own insurance program and risk transfer program.
    • The third party may still sue the liability of the risk transferor, regardless indemnity agreement, because the third party was not a party of that agreement.
    • Courts could interpret the risk transfer agreement differently, than was intended by the transferor when the agreement was signed.
    Aram Piruzyan <![CDATA[Hold harmless agreement vs Disclaimer]]> http://aram.ttag.biz/?p=2233 2014-12-20T05:10:58Z 2014-10-19T19:12:31Z Continue Reading]]> Both hold harmless agreements and disclaimers are methods of contractual transfer of risk.

    Hold harmless agreement, known also as indemnity provision, is a contractual agreement where two or more parties sign and agree to transfer the liability from party it normally will lay to the other party. Above stated liability includes expenses for defense as well as satisfying the judgement.

    A disclaimer is refusal to accept liability for damages. Due to the disclaimer the plaintiff loses right of recovery. Disclaimers we can see while entering parking lots, or on the back side of parking tickets. Here disclaimer denies any liability of parking operators and owners for damages to the cars and lost property form the cars while parked.

    Aram Piruzyan <![CDATA[Risk Management]]> http://aram.ttag.biz/?p=2210 2014-10-19T19:34:47Z 2014-10-18T05:13:22Z Continue Reading]]> Risk Management is known as forecasting and evaluation of economic risks together with the identification of techniques to avoid or minimize their impact.
    There are main 5 steps in risk management process.

    • Identifying and analysing risk exposures,
    • Considering risk management options for each exposure,
    • Deciding which option or combination of options is appropriate for particular exposure,
    • Implementation of the chosen techniques/option or combination of techniques,
    • Monitoring the results and implementation appropriate changes to enhance more efficient risk management

    Identifying and analyzing risk exposures:
    To Identify and analyse the risk we need first to analyse the segment and the market of the economy we are analyzing with risk exposures and risk history of the particular segment of the economy. We need to identify the possible frequency and severity of risk exposures.

    Considering risk management options for each exposure:
    There several ways that could be implemented to manage each exposure. Also combinations of such measures could be implemented for the purpose of effective risk management.

    • Avoiding or eliminating risks. Example: Discontinuation of allowance of visitors to enter jobsite will eliminate possibility of bodily injury for visitor
    • Reducing the risk by implementing some additional measures. Example: Reduction of the risk by requiring from the visitors to put on helmets and carry safety shoes when entering the job-site.
    • Transferring risks – this could done either by signing insurance contract and transferring the risk to insurer, or transferring the risk of loss to others by other contractual agreements (see ex. Hold harmless agreement). Contractual transfers should be organised and advised by lawyers.
    • Retaining the risks – this technique of risk management could be implemented only when there is appropriate financial resources and stability to retain the risk of loss (particularly several losses), and also in cases when nobody wants to take the risk of loss. Also this type of risk management could be implemented when it is economically is not effective to transfer the risk and other risk management techniques are also unacceptable.

    Which option or combination of options is appropriate for particular exposure?
    Based on the risk particulars such as; tolerance to risks, financial resources particular entity possess, business procedures it has and etc., there is necessity to choose from the above mentioned risk management techniques for each exposure. We need to consider how implementation of above risk management techniques will impact on risk frequency and severity as well as their economical effectiveness.

    Implementation of the chosen technique or combination of techniques.

    Monitoring the results and implementation appropriate changes to enhance more efficient risk management.
    After implementation of appropriate risk management program (particularly insurance program), there is need to continuously monitor operations and loss experience, because circumstances may change through period of the time (production technology, equipment, materials used) and this could have significant impact on risk exposure, and risk management program’s re-evaluation may needed. Risk management program’s re-evaluation may needed, also in cases when the chosen risk management program is not enough effective and losses continue to happen.

    Aram Piruzyan <![CDATA[Construction Risks]]> http://aram.ttag.biz/?p=2206 2014-12-20T05:11:55Z 2014-10-18T04:49:03Z Continue Reading]]> Construction risks include coverages for Builders Risks, Wrap Up Liability, Contractors GL, Contractors Equipment.

    Builder’s Risk

    The owner of the building can also be the builder or he can hire a contractor to do the work for him.

    What does the form cover?

    • Material, equipment, machinery and the temporary structures which enter into or form part of a completed project
    • Installation, reconstruction or repair of property at a project site during the course of construction.
    • Property may be owned by the insured or by others provided the value of such property is included in the amount of insurance.

    Wrap Up Liability

    On larger builders’ risk project, the owner or general contractor arranges one blanket policy covering everyone involved in the project which is called wrap-up liability. The wrap up liability wording consists of the standard commercial general liability wording plus endorsements to named insured. This policy is written only to apply to the specific project.

    There are several advantages that encourages builders to arrange this policy. Below are some of them:

    • Builder gets full control over the arranged insurance coverages,
    • This policy gives to builders more flexibility when they hiring subcontractors,
    • Builder’s regular commercial general liability policy’s loss history gets immunity against losses reported under wrap-up policy.

    Commercial General Liability (CGL)

    For small to mid-sized businesses Commercial Property and Commercial General Liability Insurance comes in one single package.

    • Commercial General Liability insurance protects your business against claims for bodily injury and property damage to third parties arising from your premises, operations, products and completed operations. It also offers protection for advertising Liability and personal injury to third parties, as well as defence costs.
    • Commercial property insurance provides protection for physical assets such as buildings and their contents, equipment and inventory, property in transit, as well as business interruption coverage.

    Contractor’s Tools & Equipment

    The Tool Floater is used to insure small, mostly portable tools such as hummers, saws, and small power tools.

    These coverage designed for businesses that are:

    • Small contractors, including handymen, carpenters, plumbers or similar;
    • Sub-contractors who do not own or rent sufficient equipment to warrant Contractor’s equipment floater
    • Larger Contractors’ who may use both Contractor’s Equipment Floater for large equipment and tool floater for smaller tools

    The Equipment Floater is generally used  to insure larger and heavy equipment such as that used for road building, excavation , building construction equipment, road maintenance,  and snow removal equipment.

    Installation Floater

    • Installation Floater is essentially a policy designed to cover a specific type of property during its installation
    • Normally purchased by a subcontractor (often referred to as “artisan contractor”) installing high valued equipment or materials (i.e. compressors, generators, or other machinery) not covered by a Builders Risk Policy.
    • Examples include electricians, plumbers, heating, air-conditioning contractors
    • If a Builder’s Risk Policy covers all contractors as Insureds including their equipment, separate installation floaters would not be required.