Chapter 12: Introduction to Automobile Insurance

Question 1

People who are eligible to purchase automobile insurance are…

Answer 1

1. automobile owners
2. people who drive autos they don’t own (ie. rented or leased)
3. people with no car or driver’s license (for injury or death from underinsured motorist)

Question 2

automobile insurance is provided by…

Answer 2

1. private insurers

2. compulsory government insurance

Question 3

Which provinces insure automobile through private?

Answer 3

Alberta, Ontario and Atlantic provinces

Question 4

Which provinces insure automobile through compulsory government plan?

Answer 4

BC, Saskatchewan, and Manitoba

Question 5

Excess coverage provided by private insurers on top of government insurers includes…

Answer 5

1. increase 3rd party liability limits

2. physical damage coverage (BC) or decrease of deductible (SK/MB)

Question 6

No fault insurance

Answer 6

some provinces provide payment regardless of fault

“pure no-fault” plan: give up all legal action, claim with your own insurer

Question 7

Basic Autoplan includes 5 main types of coverages:

Answer 7

1. 3rd party liability
2. accident benefits
3. underinsured motorist protection
4. hit & run and uninsured motorist protection
5. inverse liability

Question 8

Requirements for licensing and purchasing insurance

Answer 8

1. all residents operating vehicles on public roads (new resident must register within 30 days)
2. vehicles brought into BC must be inspected
3. commercial vehicles over 5000kg GVW and trailers= register + insure immediately
4. aircare certificate: current models exempt (cars <1992= every 2 years; cars>1992= every year)

Question 9

Factors affecting premium

Answer 9

1. rate class: intended use
2. territory: area the vehicle is operated in
3. claim record: determine the final premium charged on the base rate (only 3rd party liability + collision claims count for surcharge)
4. when “Own Damage” coverage is selected

Question 10

Recovery Rule is…

Answer 10

if CRS level -1 or better: get back to your prior level if no chargeable claims for 3 years

Question 11

Base Rate Rule is…

Answer 11

if CRS level at surcharge: go back to 0 after 3 years

Question 12

“Own Damage” coverage factors affecting premium includes…

Answer 12

1. make, model and year of vehicle
2. type of coverage selected: collision, comprehensive or specified perils
3. amount of deductible chosen

Question 13

Persons insured includes…

Answer 13

owners + allowed drivers

excludes: garage policy stuff (ie. not covered if a valet drivers the car and crashes)

Question 14

Territorial limits covers…

Answer 14

Canada, US or vessels travelling between the ports

excludes: countries outside Canada or US (ie. Mexico)

Question 15

3rd Party Liability basic coverage…

Answer 15

when insured is legally liable to a 3rd party for bodily injury or property damage

1. private passenger & light commercial vehicle: $200,000
2. transportation of goods of others + passenger vehicles for compensation: $1mill
3. dangerous goods: $2mill

Question 16

Basis of Claim Settlement is..

Answer 16

“priority of claims” or “the 90/10 rule”

• split into 90% for bodily injury and 10% for property damage
• any unused amounts can be applied to the other category

Question 17

Accident Benefits policy covers..

Answer 17

1. the insured, insured’s spouse, member of household, occupants of vehicle, any cyclist/pedestrian hit by a BC vehicle
2. no fault basis
3. medical + rehab expense not covered by existing policies
4. death benefits: to dependents if head of household killed; initial lump sum + weekly payments for 2 years
5. funeral expenses: max. $2500
6. wage loss benefits: if employed for 6 of the last 12 months (pays 75% of weekly wages; max of $300/week) (payment reduced if insured receiving other benefits)

Question 18

Underinsured Motorist Protection covers…

Answer 18

injury caused by underinsured motorist

1. basic limit= $1mill
2. covers insured/household/occupant of BC vehicle/BC driver’s license holder
3. exclusions: buses, taxis or limos
4. no coverage if the insured voluntarily rides a stolen or known uninsured vehicle or in no-fault provinces

Question 19

Uninsured or unidentified motorist protection covers..

Answer 19

up to $200k for any claim for injury/death caused by uninsured or hit-and-run driver

hit & run deductible= $750 (amount of collision deductible carried on)

Question 20

Inverse liability…

Answer 20

covers cost to repair vehicle by accident caused by driver from a no-fault jurisdiction

(can’t sue him if he has no-fault insurance)

Question 21

Insured breaches conditions if…

Answer 21

1. violates MVA (ie. DUI)
2. different purpose than that insured (if insured as pleasure use but doing business)
3. intentional act of violence (ie. road rage)
4. not authorized to drive (ie. expired driver license)
5. illegal purposes (ie. racing or escaping police)
6. operating outside of BC as a permanent resident for longer than permitted

Question 22

Own Damage Coverage options includes…

Answer 22

1. specified perils
2. collision
3. comprehensive

Question 23

Exclusions to collision and comprehensive coverage…

Answer 23

1. warranty-type stuff (tires, mechanical breakdown, rust, wear & tear)
2. freezing or explosion in combustion chamber
3. contents except equipment (seat covers or safety gear)
4. theft by “insider” (employee or person residing with insured)

Question 24

Additional coverage automatically included when “own damage” coverage is purchased:

Answer 24

1. general average
2. salvage
3. fire department charges
4. customs duties of Canada or US

Question 25

Roadstar Package includes…

Answer 25

1. loss of use
2. rental vehicle
3. vehicle travel protection
4. locks/keys

Question 26

Replacement cost policy for own damage…

Answer 26

no depreciation, allows inflation

excludes: fire, theft, vandalism in the 3rd year

Question 27

New vehicle replacement plus covers…

Answer 27

replace a totaled new vehicle with the same car but new, another model or cash