1 - Introduction to Automobile Insurance and Autoplan

Question 1

Identify the two distinct legal systems used in Canada.

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Answer 1

Canada’s legal system reflects its English and French heritage by drawing on both English common law and French civil law. As a result, there are two distinct legal systems in use in the country:

1. The Civil Code of Quebec.
2. The common law, which applies throughout the rest of Canada.

Question 2

Why is common law also called “judge-made law”?

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Answer 2

The common law developed in Great Britain and was based on the decisions of judges in the royal courts. It is called “judge-made law” because it is a system of rules based on precedent.

Question 3

Define “precedent”.

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Answer 3

A precedent is a legally enforceable decision made by a judge that will guide judges in making subsequent decisions in similar cases.

Question 4

Explain the use of precedent in common law.

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Answer 4

The common law is unique because it exists only in past decisions, and cannot be found in any code or legislation. This characteristic makes common law flexible and adaptable to changing circumstances.

Question 5

What is the Civil Code of Quebec?

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Answer 5

A general law that contains all of the basic provisions that govern life in society, namely the relationships among citizens and the relationships between people and property.

It governs all civil rights, including automobile insurance contracts. Unlike common law courts, courts in the civil law system first look to the Code as a basis for a decision, and then they refer to previous court decisions for consistency.

Question 6

For each of the three levels of government in Canada, give an example of a law that has been enacted with respect to the operation of an automobile.
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Answer 6

Federal: The Criminal Code is Federal Legislation that applies in all provinces, has several sections on driving offences. ie Section 220 deals with the criminally negligent operation of a motor vehicle.

Provincial: Provincial legislation sets out the rules of the road. Speed limits, rules respecting traffic lights and stop signs, right of way. There are a variety of penalties that can be imposed as a result of conviction under such legislation.

Municipal: Municipal governments can make bylaws dealing with local matters, such as enact crosswalk and parking bylaws and set speed limits within their borders. There are a variety of penalties that can be imposed as a result of conviction under these bylaws.

Question 7

What coverages were first provided by automobile insurance policies?
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Answer 7

The first coverages provided by an automobile policy were those indemnify it the insured for injury or death and damage to the property of others. Later the contract was extended to cover damage to the automobile itself by collision, fire, or theft.

Question 8

Why did the provinces establish standard policy wordings for automobile insurance policies?
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Answer 8

Unfortunately, a few companies sold policies with so much fine print in them that when a legitimate claim was reported, some insureds found themselves without coverage. To address this problem, all provinces established standard policy wordings by the early 1930s.

Question 9

How has automobile insurance developed along with the automobile?
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Answer 9

Automobile insurance has evolved with the development and use of the automobile. Increased traffic congestion, higher accident frequency, and escalating repair costs and injury awards have led to the development of an important and complex insurance product.
– Initially insured for Bodily Injury, Death & Third Party property damage.
– 1920s provinces enacted conditions for automobile policies.
– 1930s provinces established standard policy wordings.
– Eventually all provinces made auto Liability insurance mandatory.

Question 10

In which province are accident benefits optional?

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Answer 10

Accident benefits are now mandatory in all provinces except Newfoundland.

Question 11

In what two ways is automobile insurance distributed in Canada?
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Answer 11

Private insurance companies:
– Directly to the public through the telephone or Internet, sometimes called direct writers.
– Through brokers or agents selling on behalf of a number of private companies.
– Through a combination of both direct writing and brokers or agents.

Crown Corporations:
– ICBC use brokers, agents and direct
– Government Auto in Saskatchewan, Manitoba, and BC
– Quebec Accident Benefits (No-Fault)

Question 12

Who is responsible for purchasing insurance for an automobile?
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Answer 12

It is the responsibility of the owner of an automobile to purchase insurance.

Question 13

In which provinces do crown corporations provide the basic compulsory automobile coverage?
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Answer 13

British Columbia, Manitoba, and Saskatchewan have crown corporations that provide the basic compulsory automobile coverages.

Question 14

Where can a vehicle owner in British Columbia, Manitoba, or Saskatchewan purchase additional coverages?
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Answer 14

Additional coverages maybe purchased either through the crown corporation or through private insurers.

Question 15

When is the premium paid in a province where a crown corporation provides basic compulsory coverage?
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Answer 15

The premium is paid annually, when the vehicle license plate is renewed, and in some cases, the fee is charged when the drivers license is renewed.

Question 16

Why is it said that Quebec has a dual system of automobile insurance?
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Answer 16

In Quebec, bodily injury claims are covered by a government compensation plan and property damage claims are covered by standard automobile policies issued by private insurance companies.

Question 17

How is the government bodily injury plan funded in Quebec?

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Answer 17

The government bodily injury plan is funded by premiums collected when license plates are renewed and when drivers’ licenses are renewed, as well as by a gasoline sales tax.

Question 18

How can coverage granted by approved standard policy forms be varied?
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Answer 18

Coverage granted by the approved standard policy forms may be varied only by the use of approved standard endorsement forms or by specific approval of the provincial superintendent of insurance. No other variations are permitted.

Question 19

What is SPF 1?

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Answer 19

Standard owners automobile policy – provides coverage for owners of vehicles.

Question 20

What is SPF 2?

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Answer 20

Standard drivers automobile policy – provides coverage for drivers who are driving vehicles they do not own.

Question 21

What is SPF 4?

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Answer 21

Standard garage automobile policy – provides coverage for garages in respect to owned, non-owned, and customers’ vehicles.

Question 22

What is SPF 6?

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Answer 22

Standard non-owned automobile policy – provides coverage where there is responsibility for the use and operation of non-owned vehicles.

Question 23

What is SPF 7?

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Answer 23

Excess automobile policy – provide access liability coverage for use along with an SPF 1, 2, 4, and/or 6.

Question 24

What is SPF 8?

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Answer 24

Lessor’s contingent automobile policy – provides a contingent coverage for businesses that lease vehicles on a long-term basis.

Question 25

What is SPF 9?

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Answer 25

Transportation network policy – covers accidents that arise from the use or operation of the automobile as a transportation network automobile (Alberta only).

Question 26

What was the mandate of the insurance Corporation of British Columbia when it was first established?
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Answer 26

Its original mandate was to provide universal automobile insurance, but its responsibilities now include driver licensing and vehicle licensing and registration.

Question 27

What is Autoplan?

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Answer 27

Under the insurance vehicle act, ICBC is mandated to provide the universal compulsory vehicle insurance plan, known as Autoplan, and the owners of vehicles licensed in British Columbia are required to purchase basic Autoplan insurance from ICBC as part of the vehicle licensing procedure.

Question 28

State two types of vehicles not required to obtain basic Autoplan coverage, and give an example of each.
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Answer 28

1. Government vehicles:
   Vehicles owned, leased, or operated by Canada, or a state are exempted from the insurance vehicle act and accompanying regulations.
   However, vehicles belonging to the government of British Columbia are not exempted and must participate in Autoplan.

For example, RCMP cruisers registered in the name of the government of Canada are exempt from Autoplan.

2. “Extraprovincial undertakings”:
   An extraprovincial undertaking is an undertaking to transport passengers or goods by motor vehicle or trailer between British Columbia in another province of Canada, or extending beyond the limits of British Columbia.

For example, a tour bus that is licensed to travel in multiple provinces but is based in another province is exempt from Autoplan.

Question 29

What coverages does a vehicle require to be operated legally on British Columbia Highways?
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Answer 29

Basic Autoplan.

Basic Autoplan insurance includes third-party liability coverage, accident benefits, and first party coverage. Unless the vehicle is exempted under the insurance vehicle act, it must be covered by basic auto plan to be legally operated on provincial highways.

Question 30

What does the insurance companies act deal with?

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Answer 30

It deals with federal licensing and supervision of insurance companies and solvency standards for insurers. These are enforced through the office of the superintendent of financial institutions.

Question 31

What is the role of the office of the superintendent of financial institutions?
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http://www.osfi-bsif.gc.ca/eng/Pages/default.aspx

Answer 31

The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987 to contribute to the safety and soundness of the Canadian financial system. OSFI supervises and regulates federally registered banks and insurers, trust and loan companies, as well as private pension plans subject to federal oversight.

Question 32

Who administers the Insurance Act in British Columbia?

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Answer 32

The Insurance Act is administered by the superintendent of financial institutions.

Question 33

What requirements does the Insurance Act set out?

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Answer 33

The Insurance Act sets out the statutory requirements that apply to most types of insurance contracts. It contains provisions that set out the required contents of insurance policies and establish procedures for making claims and payments.

Question 34

What is the purpose of the Insurance Corporation Act?

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Answer 34

The Insurance Corporation Act set up the Crown Corporation of ICBC. It also establishes its Board of Directors and provides for ICBC’s operation.

Question 35

What is the purpose of the Insurance (Vehicle) Act?

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Answer 35

Certain sections of the Insurance Motor Vehicle Act were amended or repealed and the title was changed to the insurance vehicle act.

The Insurance (Vehicle) Act uses the skeleton legislation method and requires the use of the Insurance (Vehicle) Regulations BC to prescribe the detail of Autoplan.

Question 36

What does the Motor Vehicle Act deal with?

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Answer 36

It deals with the registration and licensing of motor vehicles, the licensing of drivers, and traffic control on highways.

Question 37

Why are there two limitation periods that apply to automobile insurance in British Columbia?
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Answer 37

The Limitation Act fixes the time within which the plaintiff must commence legal action against the defendant. In general the time limit for motor vehicle claims in British Columbia is two years.
This second limitation period applies to insurance. The limitation period for lawsuits against an insurer by and insured is one year.

Question 38

What is the purpose of the Insurance Vehicle Regulation?

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Answer 38

To prescribe the detail that gives shape and life to the statutory concept.
Regulations cannot amend, alter, widen, or narrow the concept of the parents statute and must always conform to the concept of the statute.
Regulations are made by the cabinet of the provincial government approving an order.

Question 39

What does basic Autoplan insurance include coverage for?

Answer 39

Third-party liability, accident benefits, and first party coverage.

Question 40

Under the Limitation Act, the time limit for filing an automobile claim is?

Answer 40

Two years.

Question 41

Discuss the government’s role in automobile insurance.

Answer 41

Canada has a system where the authority to make laws is divided between the government of Canada and the provincial and territorial governments.

There are also local and municipal governments created under the provincial laws that can make bylaws dealing with a variety of local matters.

All three levels of government have laws pertaining to the operation of automobiles.

Question 42

Discuss how federal legislation applies to the operation of automobiles.

Answer 42

The federal government deals with matters that affect all of Canada.

The criminal code, which is federal legislation that applies all provinces, has several sections on driving offenses.

Criminally negligent operation of a motor vehicle: impaired driving, driving with more than .08 mg of alcohol in the blood, and refusing to give a breath sample to a peace officer.

Other sections provide penalties for motor vehicle related criminal offences: vehicle theft, failure to stop at the scene of an accident, and dangerous driving.

Question 43

Discuss how provincial legislation applies to the operation of automobiles.

Answer 43

Provincial legislation sets of the rules of the road. These rules include speed limits, rules respecting traffic lights and stop signs, and who has the right of way in various situations, among other matters. Automobile insurance falls under provincial jurisdiction.

Question 44

Discuss how municipal bylaws apply to the operation of automobiles.

Answer 44

Municipal governments can make bylaws dealing with local matters like zoning, smoking, animal control, and the issuance of construction permits.
Municipalities also enact crosswalk and parking bylaws, and set speed limits within their borders.