Chp 2- Third party liability coverage; Direct Compensation-Property Damage Coverage Flashcards
What are the two systems used in Canada to settle claims?
Tort (Adversarial) systems- Under tort law, when person A is found at fault due to negligence for damage to Person B’s vehicle, person B as the third party, has the right to sue Person A, and looks for them to pay damages. People purchase liability insurance for financial protection against claims of another party.
When one person sues another, the law puts the onus of proof upon the person suing -the plaintiff. Liability can also be determined by drivers fault charts.
What are the two systems used in Canada to settle claims continued….
Direct Compensation system- Allows people to be compensated by their own insurer for damage caused by a third party. Insureds cannot claim against third parties.
Aims of this system are:
- Less investigation, less subro activity, less litigation
- Speedier settlements
- Insureds deal only with their insurer
Ultimate aim is:
- Cost savings that result in lower premiums
Third Party liability coverage
- In BC, people driving or operating vehicles, must be insured under a drivers certificate. The vehicle must also be insured as shown by owners certificate.
- Basic coverage is provided by ICBC under basic autoplan
- Autoplan also covers passengers against liability, but excludes property being carried in or on the vehicle
- Third party liability extension insurance is available from ICBC or private insurer to provide higher limits of insurance
Who are the people that automobile third party liability insurance insure?
While driving the insured vehicle:
- The owner (policyholder)
- Persons driving with owners consent
Where the owner is deceased:
- Owners personal representative or another person having custody of vehicle pending settlement of will
Where the owner is not an individual:
- officer, employee, partner of the owner, for whose regular use of vehicle described is provided
- Members of the household of such officers, employees or partners
Minimum amounts of insurance
All provinces/territories require their automobile owners to carry a stated minimum amount of insurance.
Min amount is $200,000 in all provinces/territories except for following:
Nova Scotia- $500,000
Quebec- $50,000 for auto accidents
Quebec- $500,000 applies to vehicles excluded from government plan (snowmobiles,tractors, etc.)
Priorities of payment
A system that specifies how much of the minimum policy limit will apply to bodily injury claims and how much will apply to property damage claims in situations where there is not enough insurance to cover all the combined claims. Review table on page 2-9 for limits.
Exclusions under third party liability coverage
- Damage to property carried in or on vehicle
- Damage to property owned or rented by the insured,or in the care, control of insured
- Liability directly/indirectly arising out of operation of attached equipment, unless attached equipment is used in accordance with insurance regulation (ex. snow removal vehicle)
- Garage service operators while working on customer vehicles
- Losses suffered when insured is operating vehicle for which insured does not have owner certificate
-Loss or damage arising out of nuclear acts - Punitive, exemplary, or other non-compensatory
damages - Driving a vehicle while not authorized or qualified
Summarize the duties and rights of ICBC in third party liability claims
- Insurers (ICBC) cover certain additional costs, including the cost to defend if TP claim arises, on top of the original limits of liability insurance
In cases of TP liability losses, ICBC will do the following:\ - Reimburse insured for medical aid necessary to a person injured as result of accident
-Pay costs incurred for fire extinguishers, jacks, or other necessary emergency equipment provided to insured - Pay all costs taxed against the insured and interest on any part of the judgement that is within policy limits
-Investigate, negotiate, and settle claims
-Defend the insured and pay the costs of any civil action
When insureds are sued for greater amounts than there policy limits, they may need to hire a lawyer at their own cost
When accident happens outside of own province, the insurer follows the laws of the jurisdiction where the accident happened
What are the duties of the insured person?
- notify insurer in writing of any incident and giving insured details of incident and any claim arising from it and any other valid insurance
- Sending immediately in writing to insurer, everything involving the claim including legal documents
- Cooperating with ICBC in all parts of claims process
- Allowing ICBC to inspect insured vehicle at any reasonable time
- Refraining from assuming any liability for the incident and settling any claim
- Reimbursing insurer for any payments it was required by law to make
Coverage for Non Owned Vehicles
Auto TP liability coverage can be transferred to a vehicle other than the one described on the owners certificate. .
Who is the coverage transferable to?
- A person named as an owner in an owners certificate
- A member of said owners household
- An employee or partner of the owner for whose regular use of vehicle is described in owners certificate
- the spouse of insured employee or partner when the spouse resides with the employee or partner
Non owned vehicles not covered.. When is TP liability coverage not transferable?
- Insured operating vehicle in connection with the business of a garage service operator (operating vehicle while working for garage, dealership, etc.)
- Motor vehicle is owned and regularly operated by insured. (Husband driving wife car)
- motor vehicle is used for carrying passengers for compensation or hire or for commercial use (taxi)
- Motor vehicle is not licensed under Motor vehicle act
- No coverage if insured operates a non owned vehicle owned or operated by Govt
- Operating vehicle without consent of the owner
What is absolute liability?
Under absolute liability, the insurer is responsible for paying TP claims even though insured has breached a policy condition. Insured cannot claim under their own policy when they have violated its provisions
Absolute liability provisions
Insurance act contains provisions so that the right of any TP’s to payment under a policy in a judgement against a insured will not be prejudiced by:
- any assignment, waiver, surrender, cancellation of the policy by the insured after the claim has occurred
- any act or default of the insured before or after the event In violation of the act or policy
- Any violation of the criminal code by owner or driver of automobile
Absolute liability provisions mean that even though an insured may be convicted of a crime, this will have no effect on TP’s right to claim against insureds policy
Best defence for absolute liability for insurers is to do research on client beforehand
Direct compensation- Property damage coverage (DCPD)
NB, NS, Ont., PEI, and Quebec have auto schemes providing direct compensation property damage (DCPD)
If insureds have bought own damage coverage (Coverage for damage to insureds own vehicle), it can cover any damage for which they are at fault.
Applies when your at fault, unable to claim DCPD if your 100 percent at fault. You can still however claim for portion of it, say if you are 50% at loss.
