Insurance

Our policy is with State Farm. We deal with the Brian Mulligan Insurance Agency in Peterborough, 273 Hunter Street West, Unit 12, (705) 749-5424. Our policy is renewed on March 10 every year.

Reassessment 2011:

In 2011 our coverage was reassessed through an on site visit by our broker, and as a result, our coverage was increased from $113,300 to $152,000, with a corresponding increase in our premium.

CURRENT COVERAGE:

We have the following coverage, which is current for 2011:

• dwelling (cottage) $155,500 (our coverage is automatically increased each year, according to inflation)
• dwelling extension (boathouse) $15,500 (10% of dwelling coverage)
• personal property $85,525 (55% of dwelling coverage)
  
• personal liability $1,000,000
• damage to property of others $500
• medical payments to others $5,000

We increased the personal liability from $500,000 for a mere increase of $10.00 in our premium. Personal property coverage is automatically set at 55% of cottage coverage, and cannot be reduced, and even if it were reduced the saving would be minimal.

Boats are covered automatically if they are 16' or less, for up to $1,000 a boat. For boats longer than 16', or if we want coverage greater than $1,000, we need to take out a boat policy, which would add roughly $100 to our premium. Our green boat with the outboard motor is 14'. If we ever get the fireplace or woodstove going again, we need to advise the insurance company and this may alter our premium.

DEDUCTIBLE:

In 2008 our deductible was increased by State Farm Insurance to $1,000. This may explain why we had a relatively small increase in our premium in that year.

It had previously been $500. At that time we were able to set the deductible at $500, or 1/2%, 1%, 2%, or 3% of the dwelling coverage. In 2004 I calculated that increasing our deductible to 1% of the dwelling coverage would have saved us approximately $60 a year on our premium. Thus, if we made a claim in the next nine or so years, and had to pay a deductible of $1,066 instead of $500, we would lose the advantage of the lower premium. Put another way, the 1% deductible would only save us money if we made no claims in the next nine or so years. I circulated this information in 2004 and there was no overwhelming response in favour of increasing the deductible.

CLAIM FREE DISCOUNT:

Because we have not made a claim for 3 years (or ever), we receive a claim free discount of $162.

INFLATION ADJUSTMENT:

Coverage for the cottage is automatically increased every year according to an inflation index. Since coverage is for replacement of the cottage, the index is based on the cost of building a new cottage, which means the cost of contractors and building materials, and this index may be different from the general cost of living inflation index.

In 2003 our cottage coverage was $87,300. By 2007 it had increased by $19,300 or 22% which is probably higher than inflation as measured by the CPI. From 2006 to 2007 the Inflation Coverage Index at the cottage increased from 242.2 to 253.7, whereas in Mississauga it increased by only 2.00%. In 2008 it only increased to 254.9.