Chapter 11 - Endorsements for use with Owner's Policies; Driver's Policy

Question 1

What is an endorsement?

Answer 1

• are attachments to a policy which vary the terms of the contract
• overrides any provision in policy which is inconsistent with it, unless a stipulation to the contrary is embodied therein
• it can broaden, restrict or alter coverage
• in ont endorsements are called policy change forms

Question 2

What is the OPCF 2?

Answer 2

DRIVE OTHER AUTOS

• the purpose of this end is to expand on the definition of insured person for the purpose of third party liability when operating a non owned or other auto
• standard wording restricts coverage to named insured and spouse only, but this end allows drivers that are listed on that end to have the benefit of liability coverage while operating other autos or non owned autos

Question 3

What is OPCF 3?

Answer 3

GOVERNMENT OWNED AUTOS

• when an insured also drives a gov owned auto, a special situation arises because the fed gov is not required to carry auto insurance
• this end provides coverage against liability imposed by law or assumed under contract/agreement for loss or damage arising from one of the insured perils
• notice that the person covered is the insured and not the gov that actually owns the auto
• in order to claim under this coverage, one would need to prove negligence on the part of the insured/insureds driver and that the peril insured against happened
• the following special conditions apply to this end.:
  i) no more than 1 auto owned by the gov is in the care of the insured at one time
  ii) coverage under this endorsement is subject to a limit per occurrence under physical damage section
• a person who does not own an auto but who wants coverage while operating a gov owned auto, may purchase a drivers policy

Question 4

What is OPCF 4 series?

Answer 4

PERMISSION

• a # of end are available to grant permission for the insured to use the auto for purposes otherwise excluded under policy:
  i) explosives
  ii) radioactive material

Question 5

What is OPCF 5 series?

Answer 5

RENTED OR LEASED AUTOS

• the owners policy expressly excludes coverages if an auto is rented or leased to another, but permission to do so can be obtained by this end.
• when an auto is leased on a longterm basis, the lessee applies (on behalf of reg owner) for an owners policy
• the lessor as the reg owner of the auto, also has responsibilities under the insurance act and is protected under owners policy
• this end amends the policy conditions granting permission for the auto to be leased or rented on a longterm basis
• the lessee is given all the rights of a named insured including the right to grant permission for other persons to operate auto

Question 6

What is OPCF 5D?

Answer 6

CONVERSION (lessee theft coverage)
- owners policy excludes loss/damage resulting from a dishonest claim of ownership, illegal disposal, or theft of auto by anyone who has legal possession of it under a written agreement (mortgage, cond. sale, lease) or from a change in ownership that is agreed to, even if that change was brought about by trickery or fraud
- this endorsement amends that exclusion to read..
“a written agreement except a lease. If a lessee disappears with the vehicle, a policy with this endorsement will pay the loss, assuming theft is otherwise covered under the policy. Coverage is subject to a ded”

Question 7

What is OPCF 6 series?

Answer 7

PASSENGER RISKS
There are a number of endorsements available, each one designed for a particular purpose. The type of business must be clearly stated in the end. or protection may be jeopardized.
a) taxis, private buses
- used for risks such as taxis, private buses used to transport employees, hotel, golf and country club buses, car pools which do not qualify under general exclusions section 1 of owners policy and other uses where permission to carry passengers for compensation or hire is required and which would not qualify for one of the other specifically designed endorsements below.
note: autos used on behalf of volunteer orgs, driven by volunteer drivers to transport individuals, including those who receive reimbursement for driving expenses and meals, do not constitute as commercial exposure/need additional premium.

b) school buses
- sets liability limit on a per person basis rather than on an aggregate basis and performs the following functions:
i) gives permission to use the auto to carry passengers for compensation or hire for school purposes only
ii) provides specific coverage and separate limits for passenger hazard in addition to liability limit. Coverage for passengers is provided as long as bus is being used for school purposes.
iii) provides coverage for insured’s legal liability for loss of or damage to property of passengers in school bus

c) Public buses
This endorsement does the following:
i) gives permission to use the auto to carry passengers for compensation or hire
ii) grants specific coverage for BI to passengers and PD. The limits applicable to this coverage are specified in the endorsement and in addition to limits specified for liability coverage
OR
iii) instead of the above, gives the option of single limit coverage which includes passenger hazard and PD

d) Driver training school
- grants permission for auto to be used for driver training school purposes by amending coverage under liability section of policy to include the student driver/observer
- special limits of liability are specified for BI to student driver, which are in addition to limits shown on policy itself
note: if driving school is a secondary school, college, or uni, the endorsement would not be used

Question 8

What is OPCF 8?

Answer 8

PROPERTY DAMAGE REIMBURSEMENT

• an insured may wish to have a third party liab PD ded or it may also be imposed at the insurers request to minimize small PD claims for which insured is responsible for
• when it is attached to policy, the insured agrees to reimburse the insurer the sum stated in end. or amount of loss (whichever is less)
• loss still must be reported to insurer
• is mainly used when heavy vehicles such as trucks are insured

Question 9

What is OPCF 9?

Answer 9

AMPHIBIOUS VEHICLES

• since water risk with these vehicles is quite different and there are differences in laws pertaining to land and water transportation, only the auto risk is insured under the policy
• the water risk would be insurable under another form of policy, therefore an end. is attached to the policy excluding coverage for marine use of vehicle

Question 10

What is OPCF 13?

Answer 10

RESTRICTING GLASS COVERAGE

• glass claims use up a good part of comp premiums especially where gravel roads are common
• insurers offer reduced premiums when this end. is used to limit glass cover under comp to specified perils which do not cover damage caused by gravel and stones
• underwriter may insist if insured makes frequent glass claims

Question 11

What is OPCF 16 and 17?

Answer 11

SUSPENSION AND REINSTATEMENT OF CVG

• to provide for suspension of coverages at any time of the year
• this may occur when an insured wishes to park auto for winter or takes a long vacation
• this end. suspends coverage in relation to use or operation of described, NA, or TSA
• note: however, it maintains coverage in full force for liabilities arising from ownership of des auto (to maintain DCPD coverage while parked and struck by another auto) and also maintains coverage for operations of other autos (non owned), as well as AB if named insured, spouse, dependents, and listed drivers are injured as occupants of non owned auto/struck by uninsured non owned auto
• the suspended policy will remain in force for primary liab insurance if insured is driving non owned auto and as excess insurance
• as for AB the policy will be primary where there is no other insurance
• another end. is available to reinstate coverage

Question 12

What is OPCF 19 series?

Answer 12

• was designed to limit the settlement on an auto in cases where ACV exceeds rating values used in auto rating manuals
• this end. restricts settlements under section 7 of policy to the lesser of ACV and the amt listed on end.
• the purpose of this form is to guard against paying claims on vehicles that have been customized
• end. requires heavy maintenance as limited values recorded should be adjusted annually to reflect their depreciated value

OPCF 19A Valued Auto Endorsement

• used if auto has equipment or are valued greater than their ACV
• insured would need an appraisal, pay a greater premium and be afforded a richer settlement
• this end would then override and enhance stat condition “insurer liable for cash value of auto”

Question 13

What is OPCF 20?

Answer 13

COVERAGE FOR TRANSPORTATION REPLACEMENT

• policy provides loss of use or auto by theft up to a max amt per day and an overall max. This coverage is built in and no additional premium is charged
• loss of use arising out of other perils covered by the physical damage section of policy may be insured with this end.
• the limits are stated in the end. and are subject to policy ded, and an additional premium is charged

Question 14

What is OPCF 22?

Answer 14

DAMAGE TO PROPERTY OF PASSENGERS

• owners policy excludes liability for damage to property of passengers
• some risks such as taxis/public buses may require coverage for legal liability for damage to such property

Question 15

What is OPCF 23 series?

Answer 15

MORTGAGES AND LIENHOLDERS
- holders of a lien, mortgage, assignment of auto want to protect their financial interest in auto which is security for the money owed and could be compromised if auto is damaged/destroyed

Standard Mortgage End.

a) the lienholder protection end. is designed to protect the interest of lienholder, mortgagee, or assignee in the following ways:
i) if damage to auto covered by physical damage section of policy is not repaired, or lost/damage parts are not replaces, the loss will be payable - as their interests may appear - to both the mortgagee and the insured
ii) the insurer agrees to notify mortgagee in writing, of cancellation of policy, giving 15 days notice. This does not extend beyond expiration date of policy
note: mortgagee is provided with copy of this end. (not full policy) as evidence of coverage

Broad Form Mortgage End.

b) coverage under this end. is considerably broader than the coverage under above end., and comes with an additional premium
- this end. provides protection for lienholder in that a breach of condition by the insured or a misrep in app, or fraud by insured in making a claim will not invalidate protection as far as lienholder is concerned.

The lienholder agrees to the following:

1) if insured does not pay premiums, the lienholder will pay them on demand
2) when a material change comes to the attention of lienholder, he/she will notify insurer within 15 days of change, and pay on demand any additional premium arising from it
3) if lienholder knows of a misrep/other breach of policy conditions, he/she will notify insurer within 15 days of learning it
note: if insurer pays lienholder because of provisions of this end., where insured would not otherwise have been paid, insurer gains the right of recovery against insured

Question 16

What is OPCF 25A?

Answer 16

ALTERATION (CHANGES)

• it is often necessary to amend, add, delete, or restrict coverage on a policy or make changes relating to the vehicles insured. The following changes can be made with this one end.:
  1) change of name or address of insured
  2) sub of auto
  3) addition of auto
  4) deletion of auto
  5) change in coverage or limits
  6) addition of coverage
  7) deletion of coverage
  8) change in rating classification

Question 17

What is OPCF 27?

Answer 17

LIABILITY FOR DAMAGE TO NON-OWNED VEHICLES AND PROVIDING OTHER COVERAGES WHEN INSURED PERSONS DRIVE OTHER AUTOS
There are 2 main purposes for this end.:
1) to provide legal liability protection for physical damage to a non-owned auto for the named insured, spouse, and those drivers listed on the policy, if the named insured on contract of insurance as an individual
- if names insured is a corp, unincorp asso, partnership, sole proprietorship, or other entity, the drivers listed on policy are not protected, but must now be listed on end. to have same benefit as named insured

2) to extend liability insurance from the normal named insured/spouse offered under basic policy wording to those individuals listed in the end. This is a must if a vehicle is rented and may possibly be driven by someone other than named insured/spouse regardless of consent

• it should be noted that this end does not and cannot provide direct damage coverage for physical damage to rented vehicle (non-owned auto are not and cannot be defined under physical damage section of owners policy)
• this end does however provide a legal liability protection for driver if driver is responsible for damages or assumes responsibility for damages to rented auto
• an insured in ontario (rental company) cannot take any action under an agreement (rental agreement) unless the operator was at fault/negligent
• this end was created by the amalgamation of 3 previous end’s. (OEF 2, OEF 27, OEF 27A)

Question 18

Summarize the coverage under OPCF 27.

Answer 18

the coverage under this end is applicable where it can be shown both that:
a) the insured is legally liable or has agreed under a contract/agreement to be responsible for damage

b) an insured peril caused the damage
- this end provides coverage against the same perils as are stated in the physical damage section of the owners policy

Question 19

What are the specific conditions/other provisions of the OPCF 27?

Answer 19

a) coverage applies to one vehicle only
b) coverage applies only to an auto of 4500 kg or less (gross vehicle weight) or of a specified type
c) it covers the insured, his/her spouse, and all drivers listed in policy
d) if the policy is in the name of a corp/other entity, the persons named in the end and their spouses are covered
e) the end. does not cover if the auto is owned/licensed in the name of the insured or a resident in the same dwelling premises
f) coverage applies when the auto is being used with the owners or lessees consent
g) coverage is limited to a specified dollar amt
h) since this is liability coverage, even though it is against specified causes, section 3.3 of the policy applies (defense, interest, costs)
- the end will also provide Liability, AB, UAC, and DCPD when insured persons drive other autos

Question 20

Define other auto.

Answer 20

Any auto of 4500 kg gross vehicle weight or less, other than the described auto, while driven by an insured person (as defined earlier in OPCF 27) when the auto:

1) is not being driven by insured person in connection with the business of selling, repairing, maintaining, servicing or parking autos
2) is not owned or frequently used by an insured person or anyone living in same household as insured person
3) is not owned, hired or leased by an insured persons employer or by an employer of anyone living in the same dwelling as insured person
4) is not being used to carry paying passengers or to make commercial deliveries at the time of the los

Question 21

What is OPCF 28 series and OPCF 29?

Answer 21

EXCLUDING, REDUCING, OR INCREASING COVERAGE FOR NAMED PERSONS

• this end amends coverage available under OAP 1 for specific named individuals
• it may be necessary at times to restrict the amt of coverage in the case of a poor driver
• but it is not permissible to reduce liability below min limits in province or to delete AB, but coverage under own damage (section 7) may be reduced or deleted
• it is also possible to exclude a named ind from all coverages except certain AB
• the 29 can be used to add additional coverages for specified drivers

Question 22

What is OPCF 32?

Answer 22

MOTORIZED REC VEHICLE

• when snowmobiles, dirt bikes, ATV, etc are covered under an auto policy, an end is required to waive compliance with Stat condition pertaining to qualification and age of operator of vehicle while it is being operated off of the highway
• as this type of vehicle is normally operated off the highway and often by under age/unlicensed operators
• special laws exist pertaining to use and operation of rec vehicles and “rec vehicle” and “public highway” are defined in this end

Question 23

What is OPCF 35?

Answer 23

COVERAGE FOR EMERGENCY ROAD SERVICES

• provides up to a stated amt of coverage for each time insured auto is disabled and requires emerg road service
• note: it does not apply to cost of parts, supplies, gas, oil, batteries or tires

Question 24

What is OPCF 40?

Answer 24

FIRE DEDUCTIBLE

• under standard owners policy wording, the ded does not normally apply to fire and lightning
• this end may be added to extend ded under AP, comp or specified perils to losses caused by fire

Question 25

What is OPCF 43?

Answer 25

REMOVING DEPRECIATION DEDUCTION

• applies to new vehicles
• when end is purchased, insurer waives the application of deprecation for repair or total loss of insured vehicle should it be damaged by insured peril
• waiver applies for a specified time after purchase, when the auto is purchased new, and insured is the original owner
• in the event of a partial loss, no depreciation is applied to replacement cost of required parts
• if vehicle is a total loss, the insurer pays the value or price of the vehicle without deduction for depreciation
• this end does not apply to tires and batteries

Question 26

What is OPCF 44R?

Answer 26

FAMILY PROTECTION ENDORSEMENT

• when the insured cannot fully recover his/her damages for BI or death, this end covers the difference between the value of the insureds claims and the 3rd partys limit of liability insurance
• when a 3rd party is at fault, it covers the shortfall when the 3rd party is inadequately insured to cover the insureds claims or when the 3rd party is uninsured
• it is important to note that this end tops up the limit of uninsured motorist coverage from the min $200,000 limit to the end limit
• if a driver cannot be determined, material evidence must exist to corroborate the incident
• there is also a provision to prevent stacking of limits where there are multiple FPE from which the insured can claim as a result of an accident

Question 27

Define insured person.

Answer 27

is defined as the named insured, his/her spouse, and any dependent relatives of either while:

1) an occupant of insured auto
2) an occupant of another auto provided that it is not owned or leased by insured and it is not covered by a family protection end
3) not an occupant of an auto who is struck by an auto (ped or cyclist)
- similar provisions apply when the insured is a business and the vehicle is provided to employees
- the limit of insurance is the section 3 - liability coverage limit or the limit shown on endorsement (44R)

Question 28

What is OPCF 47?

Answer 28

AGREEMENT NOT TO RELY ON SABS PRIORITY OF PAYMENT RULES

• this end is necessary because persons who are entitled to receive optional stat AB under the policy to which the end is attached, by the priority of payment rules in section 268 of ins act, be required to claim under another policy that does not provide them with the optional stat AB that have been purchased under the policy containing this end
• this end allows these persons to claim SABS under this policy including optional AB provided by this policy, provided they do not make a claim for SABS under another policy
• if an insured purchases one or more of the optional AB that all insurers must offer, then the insurer must issue this end

Question 29

What is OPCF 48?

Answer 29

ADDED COVERAGE TO OFFSET TORT DEDUCTIBLES

• under standard owner policy wording, claims payment for BI liab suit for non-eco loss is subject to a per person ded
• this end offsets or reduces the ded permitted in the regulation
• in the effect the insured can buy-down the BI tort ded
• coverage provided is a first party coverage, that is the insured claims the reduction in ded from his/her own insurer (not 3rd party insurer)

Question 30

Explain what needs to happen when reducing coverage.

Answer 30

• all ends or changes that in any way reduce or delete coverages, add ded or limitations, or delete vehicles must be issued with extra care
• the implications of adding such ends must be carefully explained to the insured
• a copy of the end reducing or restricting coverage must be signed by the insured as an indication that he/she understands and agrees to the change
• note that it is not permissible to reduce or delete liab limits below the min limit of $200,000

Question 31

Explain the drivers auto policy (OAP 2)

Answer 31

PURPOSE

• when a person drives a vehicle which belong to another, and does not have auto insurance of his/her own which could extend coverage to other autos, a drivers policy is available to provide coverage
• it is also used when there is uncertainty as to whether or not the vehicle to be driven is insured
• most frequent use is to facilitate filing proof of financial responsibility to obtain a drivers license for commercial purposes

NON-OWNED AUTO
in this policy a non-owned auto is defined as:
1) one which the insured is in control of personally as driver or occupant and that is neither owned by nor registered to the insured
2) one that is in the care, custody, or control of the insured, but is not operated by the insured
3) a trailer or semi-trailer - an auto and attached trailer are considered one vehicle with respect to limits of liability under this policy

COVERAGE
- the basic coverage provided is liability, but the policy can be extended by end to cover legal liab for damage to non-owned auto in the care, custody, control of insured

RATING
- BI and PD are rated based on highest exposure and this depends on the type of auto the applicant is likely to drive