Why are changes in the circumstances constituting the risk important?
Change is a constant in life. However, when it comes to insurance, the change can jeopardize coverage if not promptly reported and acted upon.
When an insurer purchases an insurance policy, they agree to provide coverage for a given premium under certain terms and conditions based on the risk information you provide them when purchasing or renewing your policy. If the circumstances change during the warranty period of the policy, this may represent a change in the circumstances constituting the risk, which should be promptly reported to your broker. A change in the circumstances constituting the risk can be described as "any material change in the risk under the control of the insured and of which he is aware". Failure to report a change in the circumstances constituting the risk can have serious implications for your warranty, such as reducing or canceling it entirely.
Those who report a change in the circumstances constituting the risk will ensure that they comply with the terms of their insurance contract and that their coverage is adjusted according to their current situation. This ensures that the protection they have purchased will be sufficient when they need it most. Please take the time to regularly review your coverage and report any changes in the circumstances constituting the risk to your insurance broker. Each insured should aim to obtain a policy that properly reflects their risk profile and coverage needs.
Examples of changes in the circumstances constituting the risk
Changes can occur almost always during a warranty period, and sometimes without notice. This is why reporting changes in risk circumstances should be standard practice to ensure you have the collateral you need when you need it. Here are some examples of changes in the circumstances constituting the risk.
Renovating your home - Any major alteration to your home will likely increase its value and therefore require an increase in your insurance coverage amounts. Upgrades such as new kitchens and bathrooms, finishing basements or additions such as decks, cabanas and swimming pools can have an effect on the value of your property.
Change in use of the home - Contact your broker if your home will be unoccupied or vacant for any period or if occupancy has increased due to the arrival of an additional family.
Modifications to Your Vehicle - Whether you wish to modify the appearance of your vehicle or improve its performance, modifications to your vehicle should be reported to your insurance broker.
Changes to the use of your vehicle - Notify your broker of any new drivers residing in your household, or if the use of your vehicle has changed and you are now using it to commute to work or if the distance to commute at work increased.
Commercial activities - If you use your home or automobile for commercial purposes, this constitutes a change in the circumstances constituting the risk. Commercial activities may include operating a home-based business, renting your home or cottage, or using your vehicle to make deliveries or to work for a ridesharing business.
Valuable Items - If you have purchased high value items such as jewelry, artwork, collectibles, all-terrain vehicles, etc., be sure to contact your insurance broker to assess whether additional coverage is needed to insure them under your policy.
Remember that not all changes in the circumstances of the risk increase your insurance premiums. Some can have a beneficial effect by reducing risk and allowing you to be sure that you are properly insured.
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