Insurance and the ice storm: Are you covered?

Hundreds of thousands of Canadians have been inconvenienced by the big ice storm thats swept through southern Ontario, Quebec and the Maritimes. And for many of them, its also caused costly damage: falling tree limbs have crashed down on their cars or damaged their homes,power failures have led to huge quantities of spoiled food or frozen pipes, while others have been forced into hotels to keep warm.

Thats when people start asking: Will insurance pay for any or all of this? Am I covered?

The answer to that depends on individual policies, but here are some general guidelines:

Damage to homes

Damage to homes from falling trees or ice is generally covered by a homeowners policy, says the Insurance Bureau of Canada. This includes damage caused by flying debris or falling branches or trees, or damage to your home and its contents when water or snow enters through openings caused by high winds, the IBC says.

Many homeowners policies have standard deductibles of $500, so youll have to figure out if its really worthwhile to make a claim if the damage is minor.

If the damage is caused by your neighbours tree, you should still contact your insurance company to report the damage, IBC spokesman Steve Kee told CBCNews.ca. Your insurer may then go after your neighbours insurance company for payment, he said. If the tree is owned by the city, you should still report the damage to your own insurer. But the damage may be something the city would ultimately be responsible for, Kee said. He also advised potential claimants to take pictures of anydamage "once it's fresh."

A claim for food spoilage or burst water pipes caused by a power failure could also form part of an insurance claim, but there may be limitations.

What if a big tree goes down in your yard but doesnt actually cause any damage? Would you be covered for the cleanup and removal of the tree? Probablynot. Insurance covers damage to your fences, your roof, eavestroughs, windows, porches and outbuildings. But debris removal from your yard, in the absence of physical property damage, will generally be at your own expense.

For those whove chosen to check into a hotel or motel to escape a cold house, the Insurance Bureau of Canada warns that the hotel bills may not be covered. If theyre going to a hotel because of insurable damage to their home or if theyre forced to leave their homes by a police order, they may be entitled to additional living expenses, Kee said. But if theyre checking into a hotel just to be more comfortable and are not reporting physical property damage, the hotel billswould generally not be covered, he said.

Following the 1998 ice storm that ravaged parts of Ontario and Quebec, some insurers said they would consider a call by Quebec's premier for Quebecers to leave their unheated homes tobe "the equivalent of an evacuation order," and therefore would be coveredeven if there wasno physical damage to the insured property, according to the Toronto-based Institute for Catastrophic Loss Reduction.

Damage to cars

Damage to cars from flying debris, falling ice, trees, or tree limbs is covered only if you have comprehensive or all-perils insurance. This is optional coverage, so check your policy. For those who have purchased this coverage, the deductibles vary widely. The standard deductible is $300, so if the only damage is a broken windshield, it may not be worthwhile to make a claim. On the other hand, if your vehicle has been seriously dented, its easy to rack up damage of more than $1,000.

And as with home damage, if you can show that the damage to your vehicle was caused by a neighbours tree, your neighbours insurance company may ultimately be responsible for the claim.

Will your premiums go up?

People are often reluctant to make small insurance claims because of fears that premiums will go up, even from ice storms which are not considered at fault incidents.

The industry acknowledges that this could happen following this ice storm. Premiums are based on claims records, the insurance bureau's Kee said. Each insurer will have different responses to ice storm claims, depending on the firms own claims experience and on the particular claims record of their client. Someone who has made three claims on their homeowners policy in the last five years could well see their premiums rise on renewal. What is the likelihood that premiums will rise? There is a potential for things to go up, is about as specific as Kee would go.

But premiums may not rise acrosstheboard. The Institute for Catastrophic Loss Reduction, which acts asthe research arm forCanadian property and casualty insurers, studied the aftermath of the 1998 ice storm and found "no evidence that rates were bumped higher after the '98 event," according toICLR managing director Glenn McGillivray. "It's not a given [that rates will rise]," he says.

Losses by businesses

Thousands of businesses have also incurred major losses from the ice storm. Because it occurred just before Christmas, retail stores that have been forced to close have lostthousands of dollars in sales. Many grocery stores without generators have had to dispose of huge quantities of spoiled food.

Commercial insurance policies reflect the individual circumstances of each business, so its difficult to come up with general coverage guidelines. CanadianUnderwriter.ca estimates that 30 per cent of the claims following the 1998 Quebec-Ontario ice storm were commercial claims, with the average claim being a little more than $8,000.

Property and casualty insurers paid out $1.6 billion for about 840,000 claims following the 1998 ice storm. So far, the industry says its still too early to estimate the number and extent of damage claims that will arise from the current ice storm.