Chapter 1 - Intro to Auto Insurance Flashcards
Define precedent.
- is a legally enforceable decision made by a judge that will guide judges in making subsequent decisions in similar cases.
What are the 2 distinct legal system used in Canada?
1) Civil code of Quebec
2) Common law (applies to rest of Canada)
How does the Civil code operate?
- general written law
- courts in civil law system first look to the code as a basis for a decision, and then refer to previous court decisions for consistency
- governs all auto insurance contracts (and all civil rights)
- law that contains all basic provisions that govern life in society, namely the relationships among citizens and relationships between people and property
How does the Common Law operate?
- aka judge made law
- originated in Great Britain
- found only in past decisions
- cannot be found in any code or legislation
- is flexible and adaptable to changing circumstances
- system based on precedent
What are the 3 levels of law in Canada?
- authority to MAKE laws is divided between
1) Federal - Gov of Canada
2) Provincial/Territorial gov
3) Municipal/Locacl gov - can make bylaws dealing with a variety of local matters
- all 3 levels of gov have laws pertaining to the operation of autos
What does the federal legislation deal with?
- matters that affect Canada
ex) criminal law, trade between provinces, telecommunications, immigration, and extradition & fisheries - has several sections on driving offences
ex) Section 220 - criminally negligent operation of a motor vehicle
ex) Section 253, 254, 255 - cover impaired driving, driving with more than 0.08 mg of alcohol in blood, and refusing to give a breath sample to a peace officer
ex) Other sections - provide penalties for motor vehicle related criminal offences such as vehicle theft, failure to stop at the scene of an accident, and dangerous driving - these offences are tried in courts and courts apply punishment
- if insured driver is CONVICTED of offense, auto policy has exclusions to deny coverage (based on CONVICTION)
What does the Provincial legislation deal with?
- provinces & territories make laws in such areas as education, property, and health services
- sets out the rules of the road which include speed limits, rules respecting traffic lights & stop signs, who has the right of way in various situations
- auto insurance falls under provincial jurisdiction
- insurance policy does not allow insurer to deny coverage unless there is an exclusion in policy
What does Municipal Bylaws deal with?
- can make bylaws dealing with local matters such as zoning, smoking, animal control, and issuance of construction permits
- also enact crosswalk & parking bylaws, and set speed limits within their borders
- generally not denied coverage under auto policy unless exclusion in policy
- parking tickets don’t affect premium
What occurred in 1770?
- French inventor, Nicolas-Joseph Cugnot, developed a vehicle that was propelled by steam produced in a large boiler that was suspended from the front of the vehicle
- steam was the first means of locomotion
What occurred in 1831?
- in the British house of commons, a special committee reported that it considered the auto movement to be fully established
- noted that prohibitive & excessive tolls were being charged on highways because of popular prejudice against strange new invention
- law required that a man carried a red flag during the day, and red lantern at night must walk 100 yards in front of every auto
When did provinces enact mandatory conditions for auto policies?
- early 1920’s
- statutory conditions were the only thing that was the same in the polices
- included specific obligations of both insured and insurer in event of an accident
- in early 1930’s standard policy wordings were introduced
- became mandatory canada wide
- no fault AB (except for NWFD/Labrador)
How is auto insurance distributed in Canada?
1) Sold by private insurance companies which sell their products either:
i) directly to the public - direct writers (state farm/ belair)
ii) through brokers or agents selling on behalf of private companies - (RSA)
2) Sold by crown corporations set up by provincial gov (ICBC). These corps may sell their products:
i) through brokers/agents (who also sell for private companies)
ii) through own direct sales department
iii) through other gov agencies (motor license offices)
How do government operated auto insurance work?
- Saskatchewan, Manitoba, BC
- premium is paid annually when vehicle license plate is renewed
- some cases a fee is charged when driver’s license is renewed
- no policy is issued, but a motor vehicle certificate of registration is issued
How does auto insurance operate in Quebec? (dual system)
1) bodily injury claims are covered by a gov compensation plan
- funded by premiums collected when license plates/drivers licenses are renewed and gasoline sales tax
2) property damage claims are covered by standard auto policies issued by private insurance companies
- covered by premiums paid to private insurance companies
What does Section 227 of Ontario Insurance Act contain?
- insurer must use forms approved by superintendent:
1) application for insurance
2) policy, endorsement, renewal
3) claims form
4) continuation certificate
What are the approved auto policy forms?
1) SPF 1 - standard auto policy (owner’s form), provides coverage for owners of vehicles
2) OAP 1 - Ontario auto policy (owner’s policy)
3) SPF 2 - standard auto policy (driver’s form), provides coverage for drivers who are driving vehicles they do not own
4) OAP 2 - Ontario auto policy (driver’s policy)
5) SPF 4 - standard garage auto policy, provides coverage for garages in respect to owned, non-owned, and customers vehicles
6) OAP 4 - Ontario auto policy (garage policy)
New Ontario forms have not yet been released to replace:
1) SPF 6 - standed non-owned auto policy coverage applies to a business entity when the business and its owners could be held legally liable for damages caused by a vehicle that they do not own
2) SPF 7 - excess auto policy, provides liability coverage, for use along with SPF 1,2,4 and/or 6
3) SPF 8 - lessor’s contigent auto policy, provides a contingent coverage for businesses that lease vehicles on a long-term basis
Define insured.
- first party
- the party that is protected by the policy
Define insurer.
- second party
- party that provides insurance
Define others.
- third party
- refers to anyone else involved in a motor vehicle accident
- there can be multiple third parties in any claim
- third parties who make a claim for damages from an insured are called claimants.
What is proof of financial responsibility?
- is the ability to pay if responsible for causing BI/PD to another person through negligent operation of auto
- is accomplished by having valid auto ins. liability policy that meet required min. limit
- proof may be required to be filed either because of a conviction, or involvement in an accident while uninsured
- may also be required with elderly or underage drivers
- its possible to file proof of financial responsibility in some cases even if person doesn’t own an auto but wishes to be licensed in a given province (by purchasing a drivers policy (OAP 2) - an non-owned auto coverage)
- filing proof can be accomplished by an insurer submitting certificate with registrat of MV showing MV liability policy has been issued
- insurer guarantees policy won’t be cancelled without giving Reg of MV adequate notice
What is a pink card?
- serves as evidence of auto third party liability insurance
- must be carried at all times
What info does the pink card contain?
1) name & address of insurer
2) name & address of insured
3) agency/brokerage name or number
4) description of vehicle
5) policy number (license plate # in provinces with full gov plans)
6) effective date and expiry
7) warnings of penalties for its misuse
Explain accident benefits.
- first introduced in 1960’s in response to length of time to settle auto claims
- no-fault basis
- innocent third parties & at fault parties receive benefits while cases are settled
When is Physical Damage Coverage (own damage coverage) useful?
1) one’s own negligence (hitting a tree)
2) unknown persons (theft, vandalism)
3) natural occurrences (hail, lightning)
4) someone else’s negligence ( 3rd party going through stop sign)
What is physical damage coverage also known as?
- loss of or damage to the insured auto
- own damage
- first party vehicle damage
