Chapter 7 - Loss of or Damage to Insured Auto Flashcards
Describe own damage coverage.
- indemnifies the insured for DIRECT AND ACCIDENTAL LOSS of or damage to the vehicle and its equipment.
- equipment generally excludes anything that is not permanently attached to the vehicle, unless specifically designed for use with the auto (car jack, spare tire)
- own damage is aka as physical damage insurance or first party insurance
- optional coverage
- insureds leasing/financing auto may be required to purchase coverage under auto lease/purchase finance contract
- In Ont, coverage is offered under 4 subsections of policy as follows:
1) specified perils
2) comp
3) collision or upset
4) AP
Describe specified perils coverage.
- this coverage specifies the perils/causes of loss insured against
- it may be sold in combination with collision coverage but is uncommon to see it sold alone
- specified perils are as follows:
1) fire
2) lightning
3) theft/attempted theft
4) windstorm, hail, rising water
5) earthquake
6) explosion
7) riot/civil disturbance
8) falling or forced landing of aircraft or its parts
9) stranding, sinking, burning, derailment, or collision of any conveyance in or upon which a described auto is being carried on land or water - losses not covered include damage from vandalism, malicious mischief, glass breakage, or impact with an animal (comp coverage is needed to protect against these perils)
Describe comprehensive coverage.
- protects insured auto against all perils OTHER than collision or upset
- perils include, but are not limited to:
1) perils listed in spec. perils
2) falling or flying objects
3) missiles
4) vandalism - is usually sold in combo with collision coverage
Describe collision or upset coverage.
- indemnifies insured for damage to vehicle caused by collision with another vehicle, person, object or surface of the road, or by upset
- if collision is with an animal, most insurers pay claim under comp coverage
- making claim under comp is favourable to insured because the ded. is often smaller
Describe All Perils coverage.
- broadest coverage of own damage coverages
- combines collision or upset and comp coverages
- also covers certain type of theft that are excluded under comp (including theft of auto by person living in insureds household, and theft of auto if stolen by an employee who drives or uses, services, or repairs described auto
List the exclusions.
The following are losses not covered unless they result from a peril which is covered, or they are caused by fire, theft or vandalism and the policy covers those perils. There is no coverage for loss or damage:
1) to tires
2) consisting of/caused by mechanical fracture or breakdown of any part of the auto
3) consisting of/caused by rusting, corrosion, wear and tear, freezing, or explosion within the engine
4) caused by radioactive contamination
5) to contents of auto/trailers other than their equipment
6) in excess of $25 for recorded material/equipment for use with a playing/recording unit.
- we will not pay for recorded material/equipment not contained within or attached to the playing/recording unit.
- recorded material includes, but is not limited to, tapes, compact discs, video cassettes, and digital video discs
- a tape attached to the stereo becomes a part of the auto but coverage is limited to $25
- if stereo is factory installed it is considered part of the auto
- if electronic access. are not factory installed, the policy limits the total ACV payable for loss/damage to a total of $1,500
(Last 2 clarify that anything not permanently attached to the auto/trailer is not covered)
What 4 types of theft are not covered?
loss/damage:
1) resulting from a dishonest claim of ownership, illegal disposal, theft of auto by anyone who has legal possession of it under written agreement (mortgage, cond. sale, lease)
ex) person does not return rental, the rental company will not have that theft coveraged.
2) resulting from a change in ownership that is agreed to, even if that change was brought by trickery or fraud
ex) at a party you sell your car to a stranger in return for a cheque. A week later cheque bounces and you report the car stolen.
3) loss or damage caused when a person who lives in the insured’s household steals auto
4) loss or damage caused when an employee of the insured steals auto and the employee’s duties include driving, maintaining, or repairing auto. This applies ay any time, and not simply during working hours
** 3 AND 4 ONLY APPLY TO COMP AND SPECIFED PERILS, NOT AP**
What are the exclusions for driving under the influence?
There is no coverage:
1) if you are unable to maintain proper control of auto because you are driving/operating auto while under the influence
2) if you are convicted of one of the following offenses under the criminal code relating to operation/care/control of auto
a) causing death by criminal neg.
b) causing bodily harm by crim. neg.
c) dangerous operation of motor vehicles
d) failure to stop at the scene of an accident
e) operation of MV when impaired or with more than 80 mg of alc in blood
f) refusal to comply with demand for breath sample
g) causing bodily harm during operation of auto while impaired/over 80 mg of alc in blood
h) operating a MV while disqualified to do so
I) if you use/permit the auto to be used in a race/speed test/illegal activity
j) if you drive auto while not authorized to do so by law
k) if another person with your consent drives/operates auto under any of these conditions
Define deductible.
- is an amt the insured must pay on each loss to which the ded. applies. The insurance company pays the remainder of each covered loss up to policy limits.
Explain the choice of deductibles.
- insured selects ded. amt at time of application
- standard collision ded is $500
- standard comp is $300
- each occurrence giving rise to a claim is subject to ded. EXCEPT in the case of fire or lightning
- if the claims is one to which DCPD coverage also applies, the amt paid will not include the DCPD ded. that applies to the claim. The ded. will be the collision ded. multiplied by the % to which driver is at fault
What are the purposes of deductibles?
- help keep down premiums
- reducing claims cost
- expenses for processing and settling small claims are high, and often exceed the loss itself
What are the additional benefits (agreements of the insurer)?
Payment of Charges
- will pay general average, salvage, fire department charges and any Canadian/US customs duties for which you are legally responsible as a result of an insured peril
1) General average charges
- may arise when the auto is being transported by water
- marine law makes provision for this type of loss by requiring the loss be shared equally by all involved parties, and the policy thus responds on behalf of the insured (instead of making the shipper of goods solely responsible)
2) salvage charges
- any expense involved in recovering property to prevent loss from an insured peril
3) fire dpt charges
- if fire dpt charges for services, the policy will respond to such costs
4) custom duties
- custom duties levied on goods purchased in another country are normally the insureds responsibility
- the policy responds to pay for custom duties levied when auto suffers a loss in US, resulting in repairs having to be made and replacement parts being purchased there
When is subrogation applied?
- the insurance act gives the insurer a right of subrogation against the person who is responsible for the loss
- the additional benefit clause waives that right in certain circumstances
ex) someone has consent and driving insured auto, insurer can’t subrogate against that person unless:
i) person has auto in connection with business of selling, repairing, maintaining, storing, servicing, or parking auto
ii) the person using auto violates any conditions of the policy or operations it in circumstances in 7.2.2
What is a temporary substitute auto?
- is an auto not owned by the insured/anyone living in same dwelling
- it is a vehicle which replaces a described auto due to its breakdown, theft, repair, servicing, sale, destruction
- the policy provides coverage to named insured/anyone living in dwelling with consent, against liabilities imposed by law or assumed under any agreement, for damages to temp sub auto
- there must be a blame/contractual obligation attached to the insured, otherwise there will be no payment under the terms of coverage
- if the owner of the sub auto has it insured for such losses, that policy will be primary
- if the ded. is larger on that policy then the one of the insureds, the most your insurer will pay will be the difference between the 2 ded’s
- the owners policy waives subrogation rights against anyone operating owners described auto with permission
- if owner of temp sub auto does not carry physical damage coverage and if loss which occurs is covered by insured policy, then there is coverage for the damage to the temp sub auto
Summarize loss of use due to theft coverage.
- is automatic coverage
1) there must be coverage purchased under subsection of section 7 of the policy which includes protection against loss by theft
2) theft of entire auto must have occurred
3) coverage is confined to the reimbursement of the actual outlay for rental of a similar sub. auto, the hiring of taxis/public trans
4) reasonable expenses will be reimbursed to a total amt of $900
5) the period of reimbursement does not begin until 72 hours after the police/insurer have been notified. Therefore, to receive full benefits, insured must give prompt notice of loss
6) the reimbursement period ends:
i) when the stolen auto is replaced
ii) if the auto is recovered, when the necessary repairs are completed
iii) upon such earlier date as the insurer makes or tenders settlement for the loss/damage
