Chapter 3 Flashcards

1
Q

What are two sources of automobile insurance in Canada?

A

i) Private Insurers
ii) Government Insurers

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2
Q

What do the following abbreviations mean? S.P.F. / S.E.F.

A

i) S.P.F. – Standard Policy Form
ii) S.E.F. – Standard Endorsement Form

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3
Q

Which three common law provinces currently have government automobile schemes?

A

i) British Columbia
ii) Saskatchewan
iii) Manitoba

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4
Q

Identify the minimum amount of third party liability insurance required in common law provinces.

A

Answer: $200,000

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5
Q

S.E.F. No. 44 Family Protection Endorsement provides valuable coverage for insureds. When will this endorsement respond to bodily injury losses of insureds.

A

This endorsement will respond when insureds are injured or killed by an underinsured motorist or uninsured motorist

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6
Q

Indicate how coverage amounts are determined using this endorsement.

SEF No. 44 Family Protection Endorsement

A

The S.E.F. No. 44 Family Protection Endorsement will provide the difference between the insured’s Third Party Liability limit and Third Party Liability limit of the at fault driver.

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7
Q

Your insured has $1,000,000 TPL coverage with the S.E.F. No. 44 Family Protection Endorsement. She is injured by an underinsured driver who only carries $200,000 in TPL coverage. Your insured successfully sues the responsible party and receives a judgment in the amount of $1,000,000. Indicate amounts paid by the following policies.

A

i) Responsible driver’s policy - $200,000
ii) Insured’s policy - $800,000

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8
Q

Accident Benefits are paid to injured parties on a no-fault basis. What does that mean?

A

Accident Benefits are available regardless of who is at fault.

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9
Q

What coverage options are available to insureds when they wish to insure their own automobile?

A

i) All Perils
ii) Collision or Upset
iii) Comprehensive
iv) Specified Perils

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10
Q

What are the two conditions of coverage in “Loss of Use by Theft” which is included automatically in all automobile policies insuring the peril of “theft”.

A

i) Coverage is provided for $25 - $30 per day
ii) Coverage is provided for up to 30 days

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11
Q

How does the S.E.F. No. 20 Loss of Use Endorsement differ from the Loss of Use by Theft coverage mentioned above.

A

S.E.F. No. 20 Loss of Use Endorsement will provide coverage for loss of use expenses when insured automobiles are damaged from any insured perils, not just theft.

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12
Q

What are two expenses covered by the S.E.F. No. 20 Loss of Use Endorsement?

A

i) Costs to rent substitute automobiles
ii) Costs to use taxicabs or public means of transportation

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13
Q

What are the three “triggers of coverage” in the S.E.F. No. 20 Loss of Use Endorsement?

A

i) When insured automobile cannot be operated under its own power, coverage begins immediately
ii) When insured automobile is stolen, coverage begins day following report to police or insurer
iii) In all other cases when insured automobile is dropped off for repairs coverage begins

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14
Q

Your client rents their automobiles on a short-term basis (usually under 2 weeks). What endorsement is needed to provide coverage on these rented automobiles?

A

S.E.F. No.5c Permission to Rent or Lease Endorsement

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15
Q

Your client leases their automobiles on a long-term basis (usually 2 or 3 years). What endorsement is needed to provide coverage on these leased automobiles?

A

S.E.F. No. 5 Permission to Rent or Lease Endorsement

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16
Q

Identify and explain two other coverages that should be purchased by businesses leasing automobiles on long-term leases.

A

i) S.P.F. No. 8 Standard Lessor’s Contingent Automobile Policy.
This policy will provide coverage on automobiles when lessee fails to maintain coverage on automobile required in lease agreement
ii) S.E.F. No. 5d Conversion Coverage Endorsement
This endorsement provides coverage when automobile is lost or damaged resulting from dishonest acts of lessee

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17
Q

When renting automobiles on the short-term basis in their name, insureds with an S.P.F. No.1 Owners Form have two coverages which will automatically apply to the short-term rental automobiles. What are these two coverages?

A

i) Third Party Liability
ii) Accident Benefits

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18
Q

Physical damage coverage on S.P.F. No.1 will NOT extend to cover short-term rented automobiles. What options are available to insureds to receive this coverage?

A

i) Purchase coverage from the rental car company
ii) Purchase an endorsement on their S.P.F. No.1 Owners Form

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19
Q

Which S.E.F. will provide physical damage coverage to certain short-term rented automobiles?

A

S.E.F. No.27 Legal Liability for Damage to Non-Owned Automobile Endorsement

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20
Q

S.E.F. No.27 Legal Liability for Damage to Non-Owned Automobile Endorsement

What are the five conditions of coverage found in the S.E.F. mentioned above?

A

i) Coverage is restricted to insured and spouse
ii) Coverage is for the same perils as are insured on client’s own policy
iii) No more than one automobile may be rented or leased by client’s or spouses at any time
iv) Coverage is restricted to certain types of automobiles
v) Coverage is restricted as to amount . . . ($15,000)

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21
Q

When transporting people or goods for compensation, an unendorsed S.P.F. No.1 Owners Form will not provide coverage. Indicate if the following automobiles would be covered or not covered:

Automobiles rented to others

A

Not Covered

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22
Q

When transporting people or goods for compensation, an unendorsed S.P.F. No.1 Owners Form will not provide coverage. Indicate if the following automobiles would be covered or not covered:

Double Decker tour bus

A

Not Covered

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23
Q

When transporting people or goods for compensation, an unendorsed S.P.F. No.1 Owners Form will not provide coverage. Indicate if the following automobiles would be covered or not covered:

Taxis

A

Not Covered

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24
Q

Certain uses of automobiles are allowed when covered by an S.P.F. No.1 Owners Form, even when some “compensation” is provided. Indicate if the following uses are allowed:

Car pooling where all participants share driving responsibilities

A

Yes

25
Q

Certain uses of automobiles are allowed when covered by an S.P.F. No.1 Owners Form, even when some “compensation” is provided. Indicate if the following uses are allowed:

Car pooling where one member of the car pool does not own a car, but pays a monthly fee to others in the car pool

A

No

26
Q

Certain uses of automobiles are allowed when covered by an S.P.F. No. 1 Owners Form, even when some “compensation” is provided. Indicate if the following uses are allowed:

Taking a client to lunch in your automobile

A

Yes

27
Q

Certain uses of automobiles are allowed when covered by an S.P.F. No.1 Owners Form, even when some “compensation” is provided. Indicate if the following uses are allowed:

Automobile used to transport students from school to attend annual music festival

A

Yes

28
Q

Certain uses of automobiles are allowed when covered by an S.P.F. No. 1 Owners Form, even when some “compensation” is provided. Indicate if the following uses are allowed:

Taking your housekeeper to the store to buy cleaning supplies

A

Yes

29
Q

Identify two ways in which insureds may purchase coverage provided by an S.P.F No.6 Standard Non-Owned Automobile policy.

A

i) Clients may purchase a stand-alone S.P.F. No. 6
ii) Clients may purchase an endorsement to their CGL

30
Q

Which method to obtain this coverage is most popular?

A

The most popular method is endorsing the client’s CGL

31
Q

Identify three types of non-owned automobiles covered by a S.P.F. No.6 Standard Non-Owned Automobile policy

A

i) Automobiles owned by employees
ii) Hired automobiles
iii) Automobiles operated under contract for clients

32
Q

What legal standard requires employers to purchase this coverage?

A

Employers are responsible for actions of employees while acting in normal course of their employment (driving to bank to make employer’s deposit using their own automobile)

33
Q

State three businesses that are candidates for an S.P.F. No.4 Standard Garage Automobile policy.

A

i) Automobile dealers
ii) Repair garages
iii) Service stations

34
Q

What is the purpose of an S.P.F. No.4 Standard Garage Automobile Policy?

A

This policy provides coverage for automobile exposures of business involved in automobile businesses

35
Q

State five coverages sections in an S.P.F. No.4 Standard Garage Automobile Policy.

A

i) Section A – Third Party Liability
ii) Section B – Accident Benefits
iii) Section C – Loss of or Damage to Owned Automobiles
iv) Section D – Uninsured Motorist Coverage
v) Section E – Legal Liability for Damage to a Customer’s Automobile in the Care, Custody or Control of the Insured

36
Q

What are the two kinds of automobiles insured by Section A – Third Party Liability?

A

i) Owned automobiles
ii) Customer’s automobiles

37
Q

Indicate three types of Owned Automobiles covered by Section A – Third Party Liability.

A

i) Tow trucks
ii) Service loaners
iii) Automobiles held for sale

38
Q

Indicate covered or not covered.
Automobile used by service manager for business and pleasure

A

Covered

39
Q

Indicate covered or not covered.
A customer’s automobile was being driven by a mechanic to determine what repairs are required when she rear-ended a taxi

A

Covered

40
Q

Indicate covered or not covered.
When test driving an automobile owned by a garage, a customer ran over two pedestrians

A

Covered

41
Q

Indicate covered or not covered.
An automobile owned by a garage is used by owner’s son while attending school in Calgary

A

Not Covered

42
Q

Indicate covered or not covered.

An automobile owned by a garage and used by owner’s daughter who is attending school in Saskatoon. While home during Easter break the daughter is helping her father at the garage. The owner asks her to take the deposit to the bank. While on the way to the bank she fails to yield at an intersection and runs into another car injuring the occupants

A

Covered

43
Q

Non-Owned automobile exposures exist for most repair garages. State the major source for this exposure.

A

Customer’s automobiles

44
Q

Identify two situations where non-owned automobiles could cause a third party liability loss.

A

i) While test-driving customer’s automobile to determine problems with engines of customer’s car, client’s mechanic runs into pedestrian
ii) While driving to customer’s home to drop off repaired customer’s automobile, service department employee runs over pedestrian

45
Q

What is the usual minimum deductible used in Section C – Loss of or Damage to Owned Automobiles?

A

$250

46
Q

How are deductibles applied to the following types of losses?

A

i) Collision or Upset
Deductibles apply to each automobile damaged by collision or upset
ii) Other Losses
For insured losses other than collision or upset, deductibles are applied on an occurrence basis

47
Q

What three types of losses will no deductible apply?

A

i) Fire
ii) Lightning
iii) Theft of entire automobile

48
Q

Describe how premium is determined when insureds cover their owned automobiles using a Monthly Average Basis.

A

Provisional premiums are charged based on client’s estimate of maximum value of owned automobiles during policy year.

49
Q

Your insured suffered a severe hail loss to owned automobiles being held for sale. His policy limit was $500,000 on a Monthly Average Basis. Determine amount payable in the following situations:

A

i) Last report was filed four months ago indicated inventory levels at $300,000 (amount of last report filed)
ii) No report was ever filed and loss occurred in the third month of policy $375,000 (75% of amount of insurance)

50
Q

What are the requirements needed to satisfy coverage written on a Co-insurance basis?

A

Clients are required to insure at least 80% of the value of owned automobiles

51
Q

When will Co-insurance be waived when losses occur?

A

Co-insurance will be waived when losses are confined to one automobile

52
Q

As bailees, what level of care are garages required to provide their customers?

A

Bailees are required to exercise ordinary care

53
Q

When this level of care is not provided, what could occur?

A

When bailees do not exercise ordinary care, they may be found legally liable

54
Q

In Section E – Legal Liability for Damage to a Customer’s Automobile while in the Care, Custody, or Control of the Insured, when will coverage respond?

A

This section will provide coverage when client’s have been deemed to be legally liable to customer’s automobile

55
Q

What are two coverage options available in Section E – Legal Liability for Damage to a Customer’s Automobile while in the Care, Custody, or Control of the Insured?

A

i) Collision or Upset
ii) Specified Perils (Excluding Open Lot Pilferage)

56
Q

What endorsement is available to enhance coverage in Section E – Legal Liability for Damage to Customer’s Automobile while in the Care, Custody, or Control of the Insured?

A

S.E.F. No.77 Legal Liability for Comprehensive Damage to Customer’s Automobiles Endorsement (Including Open Lot Pilferage)

57
Q

What endorsement may be purchased to provide payment for damages to customer’s automobiles regardless of legal liability?

A

Waiver of Legal Liability Endorsement

58
Q

How does this endorsement help maintain happy customers?

A

This endorsement helps maintain goodwill by providing coverage for damage to customer’s automobiles regardless of legal liability