Chapter 6 Flashcards
Why are governments concerned about automobiles accidents? What laws have governments enacted to address these concerns?
Governments want to ensure that everyone who operates automobiles on public roads will be financially responsible for losses they cause to third parties.
As a result, all provinces have passed Financial Responsibility Laws.
What is the limit of Third Party Liability coverage required to satisfy Financial Responsibility Laws?
Limit of Third Party Liability required to satisfy these laws is $200,000
Explain Third Party Liability “priority of payments.”
When losses exceed $200,000, coverage is designated for bodily injury and property damage. Most of the available $200,000 limit is reserved for bodily injury losses.
How do your clients prove compliance with Financial Responsibility Laws?
Clients prove compliance with an Inter-Province Motor Vehicle Liability Insurance certificate or “pink card” and in government automobile provinces with certificates of vehicle registration
How do private insurers write insurance in provinces with government automobile schemes?
Private insurers compete for excess coverages only, in provinces where Government provides automobile insurance
What is the role of Facility Associations?
In provinces where private insurers provide automobile insurance, the Facility Association provides coverage to those who cannot purchase automobile insurance from traditional insurers
Describe information required on application forms regarding: List of Drivers
Insured must provide
1. names of all drivers in the household
2. including the number of years licensed
3. the percentage of their use
Describe information required on application forms regarding: Driver History
Insured must report all convictions in the past three years and number of accidents in the last six years
Describe information required on application forms regarding: Use of Automobiles
Insured must report:
1. the purpose for which the automobile is used
2. whether it is used to commute, the distance of any commute
3. the usual distance driven annually
How can clients jeopardize coverage?
When Clients:
- Provide a false description of automobiles that prejudice insurer
- Knowingly misrepresent the risk or fails to disclose required fact
- Breach a policy term
- Commit fraud
- Willfully make a false statement in respect of a claim they may jeopardize coverage
What coverages are found in Section A – Third Party Liability?
Section A provides coverage when clients are found legally liable for bodily injury or property damage to third parties arising from the ownership, use or operation of insured automobiles
What are the Additional Agreements of Insurer in Section A – Third Party Liability?
Insurer agrees to”
- Pay all costs to settle claim
- Defend insured
- Pay costs taxed against insured in court actions
- Reimburse insureds for first aid expenses
- Provide minimum limits are satisfied everywhere in Canada not use a defense that would not be available in other jurisdictions.
Clients agree to:
- Appoint insurer as irrevocable attorney a
- Pay insurer back amounts paid for losses occurring in other jurisdictions where insurer was required to pay because of statute
Who may be eligible for coverage under Section B – Accident Benefits?
- Injured drivers
- Occupants of automobiles
- Pedestrians
What is the basis of coverage in Section B – Accident Benefits?
Section B – Accident Benefits are paid without regard to fault
What coverages are available in Section C – Loss of or Damage to Insured Automobile?
Coverage options available in Section C – Loss of or Damage to Insured Automobile include:
- All Perils
- Collision and Upset
- Comprehensive
- Specified Perils
Describe benefits of All Perils coverage in Section C with regards to theft coverage.
All Perils will provide coverage when automobile is stolen from person residing in Insured’s dwelling premises.
When will deductibles be waived in Section C – Loss of Damage to Insured Automobile?
When loss is caused by fire, lightning or theft of the entire automobile
Name the 7 Additional Agreements of Insurer in Section C – Loss of Damage to Insured Automobile.
- General Average
- Salvage
- Fire Department Charges
- Custom Duties of Canada, or the United States of America
- Agree to Waive Subrogation
- Temporary Substitute Automobile
- Loss of Use by Theft
In which countries is coverage provided by automobile policies?
Coverage is provided in Canada, the United States of America and upon vessels plying between the ports of these countries.
May thieves access any coverage on your client’s automobile policy?
No, when operators do not have the consent of the insured, there is no coverage available.
Summarize coverage provided on newly acquired automobiles.
When an automobile replaces the insured automobile or when insured purchases an additional automobile and has all their automobiles insured with the same insurer, these newly acquired automobiles will be insured for 14 days from the date of acquisition.
Summarize coverage provided on temporary substitute automobiles.
Temporary Substitute Automobiles are insured under Section A & B in the General Provisions, Definitions and Exclusions of an automobile policy. We saw Section C coverages provided for Temporary Substitute automobiles for the same perils as provided for insured’s automobile.
Summarize coverage provided on rented automobiles.
Insureds who rent automobiles of the private passenger types are insured by Section A and Section B only.
What are three business uses which may cause coverage denials?
Three business uses which may cause coverage denials are:
- When automobiles are rented or leased to others
- Used for carrying radioactive or explosive materials
- When used as taxicabs, sightseeing conveyance or carrying passengers for compensation or hire, and not reported to insurer
