Understanding damage insurance
What is damage insurance?
The idea of an insurance policy to protect one’s property in the event of a loss is not a new one; it is a practice dating back 4,000 years. The best-known historical reference is the Code of Hammurabi, a Babylonian legal text which stipulated that in the event of a loss or theft of goods, the designated carrier would be relieved of its delivery liability if it could prove it was not complicit in the crime.
Since then, the types of insurance have multiplied to meet consumer needs: life insurance, auto insurance, disability insurance, home insurance … almost everything is insurable. The basic principle is that where there is a possibility of a loss due to an unforeseeable event (i.e., a risk), an insurable interest exists.
Damage insurance protects the property and civil liability of an individual or a business against the financial risks associated with sudden and accidental events. Therefore, it is intended to repair or compensate for material and financial losses caused by such events, but without enriching the insured named in the policy.
What are the two main categories of damage insurance?
Damage insurance is divided into two main categories:
Property insurance
Covers material losses (fire, theft, water damage, natural disasters).
- Home
- Automobile
- Commercial property
Liability insurance
Covers claims for damages caused to others.
- Injuries (e.g., someone gets hurt at your home)
- Property damage
Is it mandatory to have insurance?
Home insurance is not mandatory unless required by a lender. However, it is strongly recommended because, in addition to protecting your property and your home, it generally includes liability insurance.
Driving without auto insurance in Quebec is illegal. Insurance covering property damage to one’s own vehicle is not mandatory, but every owner or driver of a motor vehicle is required to carry minimum auto liability insurance* to cover property damage or bodily injury that the insured may cause to others and their vehicle.
* Section A – Coverage for civil liability arising from property damage and bodily injury caused to another person
Shopping for insurance
Auto insurance
Auto insurance consists of two parts:
- Coverage for civil liability arising from property damage and bodily injury that the insured may cause to others (mandatory insurance).
- Coverage for damage to the insured’s vehicle (optional insurance).
Home insurance
This insurance covers property owned or used by the insured, which is typically located in a home. Other property, such as a boat, trailer or student’s belongings, may also be covered. Home insurance also includes liability coverage.
In addition, depending on the type of home, insurance will also cover the building itself (owner-occupant insurance) or improvements made to a condo unit (co-owner occupant insurance).
Co-ownership insurance
When it comes to co-ownership insurance, there are two types of policies to consider: those held by individual co-owners and the one held by the syndicate of co-owners. Here is what you need to know about insuring your condominium, whether you are a co-owner or director of the syndicate.
Business insurance
Business insurance concerns all entrepreneurs, regardless of the size or nature of their business. Depending on the type of risks, it may cover, among other things, property damage, business interruption losses, theft, embezzlement by employees or civil liability for damages to third parties (related to product or service).
Civil liability insurance
Under Article 1457 of the Civil Code of Québec, we all have a duty not to cause harm to others. If we fail to fulfill this duty, we may be held liable for any moral, property or bodily harm we cause and, in certain cases, be required to provide financial reparations. Liability coverage protects the insured as well as their spouse and children living in the same household. It is generally included with home insurance and covers legal defence costs in the event of a civil liability lawsuit.