Chp 8: Statutory Conditions and Prescribed Conditions Flashcards
Statutory Conditions - General info about them
- Known as mandatory conditions in Nova Scotia, General conditions in Quebec, and Prescribed conditions in British Columbia
- Are made up of rules, definitions, and regulations that govern every auto policy. Outline specific ways of dealing with various situations, and their purpose is to protect the rights of both the insured and insurer by stating clearly what is expected of each.
- The conditions must be part of every policy and cannot be changed in any way that would provide the insured with less than minimum coverage
- In BC, the prescribed conditions must be printed in the ICBC autoplan optional policy, or the optional insurance policies of private insurers
What are the prescribed conditions found on the optional policies in BC? (12)
- Application and interpretation
- Changes during term of contract
- Material change in risk
- Prohibited use
- Requirements if loss or damage to persons or property
- Requirements if loss or damage to vehicle
- Statutory declaration
- Inspection of vehicle
- Time and manner of payment of insurance money
- Who may give notice and proofs of claim
- Termination
- Notice
Application and Interpretation
- First part defines the words “insured, territory and vehicle rate class”
- Second part states that the prescribed conditions apply only to coverage provided by the contract. and do not extend coverage to amounts that exceed the limit
- No comparable statutory condition, although insured is defined in the intro paragraph of the stats condition
Changes during term of contract (No comparable stat condition)
This condition specifies the insured must disclose certain changes of territory and vehicle use to the insurer within a specified period of time.
Insured must notify insurer withing 10 days after:
-Changing their address
-Acquiring a substitute vehicle for the vehicle described in the contract
Insured must notify the insurer before:
-Changing the use of the vehicle described in the contract to a use that falls under a different class
-Using a vehicle in a different territory than the one set out in the contract, when the premium is established based on the territory where it is used
If premium is based on territory where the vehicle is located when not in use, the insured must report any changes in territory within 30 days to the insurer
Material change in risk (Stat and prescribed conditions are similar)
- Requires the insured to notify the insurer of any change in the risk that is material to the contract.
- A material change is change in exposure which may lead the insurer to charge a different premium because the exposure has changed. Includes the following:
- Sale, assignment, or other change in the insureds insurable interest described in the policy, except by succession, death, or bankruptcy
- Any change in mortgages, liens, etc on the automobile
- Other insurance being placed on the automobile
Prohibited Use
Condition states that the insurer is not liable to an insured who breaches this by using the vehicle:
- If the insured is not authorized and qualified by law to operate the vehicle
- For an illicit or prohibited trade or transportation
- To escape or avoid arrest or other similar police action
- To participate in a race or speed test
Difference between being authorized and being qaulified
- A person must have a valid drivers license to be authorized, where as a person does not need a valid drivers license to be considered qualified by law to drive
- In practice, if a person is involved in an accident and is not authorized to drive, but could normally have obtained a license, ICBC can ask the person to take a drivers test immediately and if the person passes the test, the breach is waived.
Prohibited Use - Breach
Insured will not be considered to have breached this condition if the premium paid based on the use of the vehicle declared in the application is greater than or equal to the premium required based on its actual use.
Basically if premium paid for use > premium required for actual use= no breach
Prohibited use- What does this condition prohibit the insured from doing?
- Operating a vehicle with a trailer attached that is required to be registered and licensed separately but is not
- Permitting others to use the vehicle for purposes that breach this condition
- Using the vehicle to commit intentional acts of violence
- Operating vehicle while under the influence of alcohol or drugs
- Operating a vehicle if convicted of a motor vehicle-related criminal code offence (driving while suspended, intoxicated, etc)
Prohibited use- What are some additional breaches the insured is prohibited from doing?
- Failure or refusal to provide a breath sample under the criminal code or MVA
- Other offences numbered under the criminal code or MVA related to operating a vehicle while impaired, or with more than the legal limit of alcohol in their blood
Prohibited use- Differences between SPF 1 statutory conditions and BC’s prescribed conditions
- SPF 1: Two stat conditions related to prohibited use of the vehicle (prohibited use by insured and prohibited use by others)
- Prohibited use by insured: states that insured must be either authorized by law or qualified to drive. This is different from prescribed conditions as the insured must be both authorized and qualified by law to drive. Other provisions are similar in both (illicit trade, transportation)
- Prohibited use by others: Contains similar provisions for both, but they apply to other people driving the vehicle, rather than the insured
Requirements if loss or damage to persons or property (7)
Following requirements are required after a loss:
- Give prompt written notice to the insurer of any accidents
- Verify claim arose from insured vehicle being operated and the responsible party is insured under policy
- Forward immediately to insured all docs. (writs, claims, correspondence, etc
- Do not assume or admit liability
- Do not interfere with the claims process
- Aid in securing info and evidence and the attendance of witnesses. and co-operate in the defence of any action
- Allow the insurer to inspect insured vehicle and equipment at any reasonable time
Requirements if loss or damage to persons or property- Differences between SPF 1 stat conditions and prescribed conditions
- Very similar, have same name except for few additional provisions under SPF 1 which are:
- The insured can be required to submit a statutory declaration at the insurers request, verifying the claim arose out of the use of the automobile
- Prohibits the insured from interfering in any negotiations for settlements or in any legal proceedings.
Requirements if loss or damage to vehicle (7) (stat conditions are similar to prescribed conditions)
Condition states the following:
- When loss occurs, insured is required to give prompt notice of loss, protect vehicle from further loss, and submit a proof of loss within 90 days
- Any further loss is excluded if caused by insureds failure to protect the vehicle
- There are to be no repairs made nor any removal of evidence of damage unless insurer gives consent, or repairs are made to protect from further damage
- Insurer may require insured to submit examination under oath and present all docs related to the loss
- Insures max limit of liability is least of the ACV of the vehicle or the cost to repair or replace vehicle with like, kind, and quality materials
- Insurer may chose to repair, replace, or rebuild the vehicle, and whether to pay a garage service operator for the repair instead of an insured
- Insured may not abandon the vehicle to the insurer without insurers consent
Salvage
- If insured is reimbursed for the loss as though the property was totally destroyed, the insurer is entitled to possession of the property remaining. The insurer can that sell the property and retain the proceeds as salvage and thus reduce its loss
- Occasionally, insureds want to keep the salvage themselves. Its value is than deducted from the total loss settlement so that the insured does not profit from loss
