Chapter 5 - Liability Coverage; DCPD

Question 1

Who purchases an OAP 1?

Answer 1

• the registered owner as they have an insurable interest in auto
• the owner is the named insured

Question 2

What does legal liability protection?>

Answer 2

• designed to provide financial protection for the insured’s legal liability for
  i) inhury to others (BI)
  ii) damage to property of others (PD)
• to be legally liable for injuries/damage to others, the driver/owner must either have deliberately caused the injury/damage or be considered negligent to some degree

Question 3

What does SECTION 239 contain?

Answer 3

Who is insured & when

• every contract evidenced by an owners policy insures the person named, and every other person who with the named insured’s consent drives, or is an occupant of… against liability imposed by law upon the insured named in the contract or that other person for loss of damage

i) arising from ownership or directly/indirectly from the use or operation of any such auto
ii) resulting from BI to or the death of any person and damage to property

Question 4

What types of losses are not covered? (exclusions)

Answer 4

1) claims for damage to property carried in or upon auto or claims for damage to other property owned/rented by, or in care, custody, or control of named insured/other insured persons
2) claims arising from contamination of property carried in auto

3) nuclear energy hazards means radioactive, toxic, explosive, or other hazardous properties of substances described in regulations made under the Atomic Energy Control Act
- was added in 1970 in Ont
- if named insured/other insured persons are involved in accident where the loss/damage is directly/indirectly caused by a nuclear hazard, the policy will pay up to $200,000 if the named insured/other are covered under policy for a nuclear hazard and are also insured under a nuclear energy hazard liability policy

Question 5

What does SECTION 3.3.2 contain?

Answer 5

• clearly states that policy will not cover amounts in excess of limit purchased, other than legal costs and post judgment interest

Question 6

Summarize what there is no coverage for.

Answer 6

1) insureds own property or property which he/she is responsible while being carried in auto
2) contamination of property being carried
3) nuclear hazards - unless insured also has a nuclear energy hazard liability policy
4) amounts over policy limit purchased

Question 7

When dis direct comp for vehicle damage get introduced in Ont?

Answer 7

• June 1990

Question 8

Explain how DCPD operates.

Answer 8

• brought by SECTION 263
• insured deals with only their own insurers & cannot claim against third parties or their insurance companies
• own insured will indemnify them for the cost of repairs & damage to contents carried in the auto and its loss of use subject to % NOT AT FAULT
• claim could be made under this section even if the other driver didn’t directly strike car, even if they indirectly forced them off the road causing damage to auto
• applies if damage occurs in Ont & both vehicles are insured under auto policies issued by licensed insurers in Ont/insurers outside of Ont, who have signed agreements to be bound by this section
• fault is determined by fault determination rules in Ont
• provision is made that an insured can still sue if unsatisfied with the degree of fault/settlement, but such action would be against the insured’s insurer (not third party insurer)

Question 9

What happens if no DCPD agreement exists?

Answer 9

SECTION 6, regulation 664
- insured is prevented from suing any other person involved in an accident for such damage/loss of use UNLESS the negligent party is insured with an insurer outside of Ont (the insurer is not a subscriber to the DCPD agreement)

Question 10

What happens in the case of automobile businesses?

Answer 10

SECTION 7, reg. 664
- when someone who is in a business relating to autos is negligent and damage to an insured auto results, the insurer may subrogate against the responsible party

Question 11

What happens if damage occurs while being towed?

Answer 11

SECTION 8, reg. 664
- if the tower is negligent, the insurer may subrogate for the attributable portion under fault rules when damage occurs when an auto is being towed

Question 12

Explain content losses in detail.

Answer 12

• if a contents loss is over $20,000, an insurer may recover from the insurer of the at-fault party and will be apportioned according to fault rules
• must be 2 autos insured by an Ont auto policy before DC rules take effect
• when a loss occurs involving an auto and other property such as a building/bridge, the fault determination rules do not apply (ordinary rules of tort)
• own damage cover such as collision or comp is not affected by these DC provisions

Question 13

Explain the physical damage deductible.

Answer 13

• in Ont all physical damage claims (collision, comp, AP, DCPD) are subject to a standard deductible of $500
• there is a provision to reduce/eliminate deductible on any/all coverages
• standard ded. for DCPD is $500, but can reduce or increase amount

Question 14

What is the OMPP?

Answer 14

• Ontario motorist protection plan
• the right to sue a 3rd party in the event of injury was severely curtailed by limiting it to certain non-pecuniary losses
• claimants had to establish that their injury met the severity threshold
• whether the threshold was met would be decided by a judge on a motion before or after trial

Question 15

Explain the threshold.

Answer 15

• introduced in June 1990
• provided that suits could only be initiated if the injured person:
  i) died
  ii) sustained permanent serious disfigurement
  iii) sustained permanent serious impairment of an important bodily function caused by continuing injury which is physical in nature

Question 16

Explain Bill 164.

Answer 16

• effective January 1, 1994
• introduced Statutory accident benefits schedule
• and amended the threshold to allow suits on the grounds of:
  i) death
  ii) serious disfigurement
  iii) serious impairment of an important physical, mental, or psychological function
• a ded. of $10,000 was applied to damages recoverable

Question 17

Explain Bill 59 and 198.

Answer 17

• Bill 59 in 1996, Bill 198 in 2003
• the threshold definition was again revised
• allowed suits on grounds of:
  i) death
  ii) permanent serious disfigurement
  iii) permanent serious impairment of an important physical, mental, or psychological function

Question 18

What happened on Sept 1, 2010?

Answer 18

• passage of new SABS
• new provisions were added to the insurance act and the regulations that deal with these changes
• SECTION 267.5
  1) owner of auto/occupants or any person present at the incident are not liable in an action in Ont for following damages for income loss/loss of earning capacity from bodily injury/death arising directly/indirectly from the use/operation of auto:

a) damages for income loss suffered in the SEVEN days after incident
b) damages for income loss suffered MORE THAN SEVEN days after the incident and before trial of action in excess of 70% of amount of gross income that is lost during that period
c) damages for loss of earning capacity suffered after the incident and before tiral of action in excess of 70% of the loss of earning cap. during that period

2) SUBSECTION 1: applies to all actions including actions under subsection 61 (1) of the Family Law Act:
3) the owner of an auto/occupants and any person present at incident are NOT LIABLE in an action in Ont for damages for expenses that have been incurred/will be incurred for health care resulting from BI arising directly/indirectly from the use/operation of auto unless as a result, the insured person:
i) died
ii) sustained perm. serious disfigurement
iii) sustained perm. serious impairment of a physical, mental or psychological function

Question 19

What are the exceptions in Ont?

Answer 19

1) we can sue without meeting a threshold for pecuniary losses subject to limitations specified in the act
2) we cannot sue for pain and suffering unless a threshold is met and if it is met the judgment is subject to ded. specified in act.

Question 20

How is economic loss treated in Ont?

Answer 20

• there is a right to sue without the need to meet a threshold for certain types of economic loss
• recovery from tort feasors for loss of income/loss of earning capacity (both determined by reg.) is limited to 70% of gross income suffered more than 7 days after the accident and up to the date of trial
• post trial, recovery for future losses is on a 100% gross income basis

Question 21

What are the non-economic loss conditions?

Answer 21

• threshold must be met
• subject to a per person ded.
• ded. can be increased/decreased by reg.
• if plantiff is at fault, the amount of damages is reduced by the ded. before the award is reduced for contributory negligence
• note that suits are still permitted against motorists insured outside of Ont, unless their insurer has an agreement with the commission

Question 22

Define protected defendant.

Answer 22

• as the owner of an auto, occupants of auto, and any person present at the incident.

Question 23

Can an uninsured motorist sue?

Answer 23

• an owner/lessee operating/occupying his/her own uninsured auto is prohibited from bringing an action in damages even though there may not have been a prosecution or conviction under that act

Question 24

Explain the provision regarding joint and several liability.

Answer 24

SECTION 267.7

(1) If an action for loss/damage from BI/death arising from the use/operation of an auto, 1 or more other protected defendants and 1 or more other persons are found to be liable for damages,
a) the other persons are:

i) jointly and severally liable with the protected defendants for the damages for which the protected defendants are liable having regard to section 267.5 and
ii) are solely liable for any amount by which is less than the amount that the other persons would have been liable to make contribution and indemnify the protected defendants in respect of damages

b) the other persons are liable to make contribution and indemnify the protected def. in respect of damages to the same extent at is section 267.5 did not apply (up to the amount for which pro. def. are liable having regard to section 267.5)
c) the pro. def. are liable to make contribution and indemnify the other persons for the amount that the pro. def. are liable, having regard to section 267.5, reduced by the amount that the other persons are liable to make cont./indemnify the pro. def. under clause (b)

Question 25

Explain the separate determinations provision.

Answer 25

SECTION 267.7

(2) liability shall be determined under subsection (1) separately for each of the following:
1) damage for loss and loss of earning capacity
2) damages for expenses that have been incurred or will be incurred for health care
3) damages for pecuniary loss, other than damages referred above
4) damages for non-pecuniary loss, including damages for non-pecuniary loss under clause 61 (2)(e) of the family law cat

(3) for the purposes of subsection (1), the liability of all persons involved in the incident from which the action arose shall be determined as though all persons wholly/partly responsible for the damages were parties to the action even though any of those persons is not actually a party

(liability will be determined taking into consideration all parties who contributed to the accident)

Question 26

What are the additional agreements of the insurer?

Answer 26

SECTION 3.3

1) reimburse the insured for out of pocket expenses for immediate medical aid to third parties injured in an auto accident. This applies whether or not the insured is legally liable.
2) To investigate, negotiate, and settle all reported claims.

3) To defend any civil action brought against the insured with respect to the incident, even if it is groundless
- if you are sued for more than the limits of the policy, you may wish to hire, at your own cost, your own lawyer to protect yourself against the additional risk
- SECTION 3.3.2 the most we will pay on your behalf/behalf of all other insured persons insured, will be determined by the extent of coverage

4) i) to pay court costs assessed against the insured (subject to well defined legal rules of practice)

ii) to pay post judgment interest on insured portion of judgments for damages against the insured.
- the insured is responsible for paying the interest on that part of a judgment that is in excess of the policy limits
- pre-judgment interest is included in the limit of liability available

5) To pay up to the minimum limits of the jurisdiction within Canada, USA, or other jurisdictions designated in the SABS where the accident occurs
6) That if will not use any legal defense available in Ont that would not be available if the policy had been issued in the jurisdiction where the accident occurs

Question 27

Explain what happens when there is an accident outside of Ontario?

Answer 27

SECTION 3.3.3 (additional agreement #6)
- the basic principle applied is that the insurer follows the laws of the jurisdiction where the loss occurred, not the laws of the jurisdiction where the insured lives

Question 28

What does SECTION 3.3.4 include?

Answer 28

Multiple Names

• we will protect you/others named as insured by this policy, for claims made against each other
• we will act as if a separate policy was issued to each named insured
• the total amount we will pay cannot exceed the maximum coverage shown on the certificate of auto insurance

Question 29

Who has insurable interest?

Answer 29

• it’s important that only the names of registered owners of the auto shown on the policy
• only the owners have insurable interest

Question 30

What are the responsibilities of the insured?

Answer 30

3. 4 your and other persons responsibilities
   1) to notify us in writing within SEVEN days of any incident involving loss/damage to persons or property (or if unable because of incapacity, ASAP) giving us full details of the incident and any claim arising from it
   2) if requested, to gives us a statutory declaration that the claim arose out of the use/operation of an auto, and that you/other insured were using, operating or responsible for the operation of it

3) to help us obtain all necessary info and ecidence about the incident
- including the attendance of witnesses, and to cooperate, but not financially, in any legal actions if we ask

4) to send immediately to us everything received in writing concerning the claim, including legal documents

5) not to assume any liability for the incident, settle claims, except at your/other insured persons own cost
- and not to interfere in any legal proceeding or in any negotiations we conduct to settle any claim

NOTE: we may, on occasion, be required by law to make payments, even though we are not otherwise liable for them under this policy. If so, you/other insured will have to reimburse us upon demand for those payments

Question 31

What are the agreements of the insured?

Answer 31

1) insurer appointed as attorney
- the insurer is irrevocably appointed the insureds attorney to conduct civil defences in actions arising out of use, operation, ownership of auto
- this ties in with the insurer’s agreement to defend the insured in such actions
- the insurer cannot properly defend the insured if the insured does not carry out his/her responsibilities

2) absolute liability
- the insured agrees to reimburse the insurer for all amounts the insurer is required to pay because of the absolute liability provisions of the law and for which the insurer would not otherwise be liable under the policy

Question 32

What are the policy limits regarding liability in all provinces besides quebec & nova scotia?

Answer 32

• third party liability insurance is mandatory and no auto policy may be issued for less than $200,000

Question 33

Explain the priorities of payment.

Answer 33

• all jurisdictions prescribe that a certain amount of the policy limit must be reserved for BI claims, and a certain amount for PD claims
• is heavily weighed in favour of BI claims
• are only applied when the total liabilities of the insured to the claimant are more than the limit purchased
• In Ontario, Alberta, NWT, PEI, Saskatchewan and Yukon - BI=$190,000, PD= $10,000
• In BC, Manitoba, New Brunswick, Newfoundland - BI= $180,000, PD= $20,000
• In Nova Scotia - inclusive limit of $500,000
• In Quebec for auto accidents - BI= N/A, PD= $50,000
• In Quebec for vehicles excluded from gov plan (snowmobiles, tractors, etc)/accidents outside of quebec - BI= $45,000, PD= $5,000