Intro to Automobile Insurance Flashcards
what does SPF stand for?
standard policy form
SPF No.1 is always issued to…..
whoever owns the vehicle
SPF No 1. is always rated for….
the most primary driver
the best/newest vehicle always gets rated for…
the worst driver
which sections of SPF No 1 are MANDATORY for drivers in Alberta?
sections A and B
under section C, a driver is only covered for…
what they pay premiums for
what are the 4 optional sections for coverage under section C?
-Section 1 : All Perils
-Section 2: Collison
-Section 3: Comprehensive
-Section 4: Specified Perils
describe the Priority of Payment rule:
80-95% of the minimum limit required to be carried for 3rd party liability (Section A) is reserved for bodily injury claims, then any remaining limit can be shifted to property damage claims
what is Section A of SPF No 1?
Third Party Liability
what is Section B of SPF no 1?
Accident Benefits
under the Additional Agreements of Section A of SPF No 1, what is true of the relationship between insurer and attorney?
the insurer becomes irrevocable attorney
under the Additional Agreements of Section A of SPF No 1, what does the insured agree to do if have been paid out for a claim in error?
they agree to reimburse the insurer
define ‘dependent relative’?
a person:
-under 18 who is legally liable to be supported by the head of the household/their spouse OR
-18 years of age and older who lives in same dwelling premises as the head of the household and is physically/mentally infirm
define head of the household?
the member of the household with the largest income in the year preceding the accident
what happens if the head of the household dies?
any amount payable goes to their surviving spouse
under Section A of SPF no 1, who is insured?
-the named insured, and,
anyone who, WITH CONSENT:
- drives the vehicle
-operates any part of the vehicle (doors, etc)
….causing bodily injury to a 3rd party, property damage to a 3rd party, or death as a result of either
what are the exclusions listed under Section A of SPF no 1?
-workers comp
-garage personnel
-property in or on vehicle
-
under Section A of SPF no 1, the insurer is only liable up to…
the limit the insured purchased,
PLUS expenditures listed in the additional agreements section
what are the expenditures listed in the additional agreements section of Section A of SPF no 1?
-investigation, negotiation and settlement costs
-defense costs (legal fees) in civil court
-interest accumulating in civil action (bc could take a while to get to court)
-liable up to minimum limit in Canada where driving
-not deny a claim that is legal where you are driving in Canada
which 2 points of the additional agreements section in Section A of SPF no 1 can be summed up by ‘the law of the land will rule’?
-liable up to minimum limit in Canada where driving (ex: if this limit is lower in SK than in AB you would be liable up to the SK limit if driving in SK even if have AB license)
-not deny a claim that is legal where you are driving in Canada
what is Absolute Liability?
the obligation of an insurer to indemnify an innocent third party who was injured by our insured, while the insured was in violation of the insurance policy ($200k)
ex: insured was driving impaired and struck a pedestrian
how will claims made under Section A of SPF no 1 affect the insured’s premium?
-will increase premium
claims made under Section B of SPF no 1 are paid out on a ______ _______ ________
no fault basis, meaning will not increase premium
who is insured under Section B of SPF No 1?
-named insured/their spouse
-all occupants of the vehicle
-pedestrians
-dependent relative in the household
what is subsection 1 of Section B of SPF No 1?
-medical payments
what is subsection 2 of Section B of SPF No 1?
death, grief counselling, funeral, disability benefits
what is subsection 3 of Section B of SPF No 1?
uninsured motorist cover
2 insureds are covered for how long after the date of the accident?
2 years
under subsection 1 of section B of SPF no 1, how many doctors are provided?
2, insured’s own doctor and one provided by insurance company to give a second opinion/confirm
under subsection 1 of section B of SPF no 1, how much is provided per person for all reasonable medical expenses?
$50,000
what are the available limits for chiropractic, acupuncture, and massage under subsection 1 of Section B of SPF No 1, respectively?
-chiro $1,000
-acupuncture $350
-massage $350
in what order are medical payments under subsection 1 of Section B of SPF no 1 paid out?
-first is 21 diagnostic doctors visits that do not contribute to any limit
-then 50,000 per injured person
-then limits for chiro, acupunc, massage
what is the funeral benefit per deceased person under subsection 2 of section B of SPF no1?
$6150 per person
what is the benefit available for grief counselling under part 2 of subsection 2 of section B of SPF No 1?
$500 per family for death of any ONE person
for the insured to receive total disability benefit under part 2 of subsection 2 of section B of SPF No 1, what requirement must be met?
they must have been employed at the date of the accident
what qualifies an insured to receive total disability benefit under part 2 of subsection 2 of section B of SPF No 1?
an insured is ‘totally disabled’ if, within 60 days of the accident, their injury prevents them from performing ANY and EVERY normal work duty
when do total disability benefits kick in?
after 7 days
for how long are total disability benefits paid under part 2 of subsection 2 of section B of SPF No 1?
104 weeks
what is the total disability benefit?
-the LESSER of
$600 a week OR
80% of average gross weekly earnings
what are the total disability benefits for a ‘homemaker’?
-$200 a week for no more than 104 weeks
what qualifies an insured as ‘employed’ in order to receive total disability benefit?
actively employed for wage at the date of the accident, OR
-if 18 or over, so engaged for any 6 months for the 12 months leading up to the accident (ie: part time workers, 6 months do not have to be consecutive)
what is the name of the provincial program that provides benefit for uninsured motorist cover?
Alberta Motor Vehicles Victims’ Indemnity Fund
what is the payment limited to for the Alberta Motor Vehicles Victims Indemnity Fund?
compulsory $200,000 minimum
what is the definition of an unidentified automobile under subsection 3 of section B of SPF No 1?
-driver or owner cannot be ascertained
-accident must be reported to police within 24 hours
-statement must be filed within 30 days
-insured’s vehicle must be available for inspection
what are the exclusions to Section B of SPF no 1?
-suicide or attempt within the vehicle
-WCB
-race or speed test
-sickness/disease
-explosive
-nuclear
-radioactivity
how do claims filed under Section C of SPF no 1 affect the insured’s premium?
increase the premium
what is covered under ‘All Perils’ (Section C)?
-everything except specified exclusions or items with limits
-is basically comprehensive and collision but with one deductible
-theft by a household member or employee
what is covered under ‘Collision’ (Section C)?
impact with:
-another vehicle
-the surface of the ground
-anything on the surface of the ground
-upset (ie: rollover)
what is covered under ‘Comprehensive’ (Section C)?
-anything else besides collison
what is excluded under ‘Comprehensive’ (Section C)?
theft by a household member or employee
what is covered under ‘Specified Perils’ (Section C)?
only listed perils:
-fire
-lightning
-theft
-attempted theft
-windstorm
-earthquake
-hail
-explosion
-riot
-civil commotion
-falling or forced landing of aircraft or its’ parts
-the stranding, sinking, burning, derailment or collision of any conveyance in or upon with the auto is being transported on land or on water
what is not covered and excluded under ‘Specified Perils’ (Section C)?
not covered:
-vandalism
-falling objects
excluded:
-theft by HH member or employee
define ‘conveyance’?
what is carrying the auto
ex: trailer an insured vehicle is on
what are the 3 causes of loss under SPF no 1 for which the insurer WAIVES THE DEDUCTIBLE under section C?
-fire
-lightning
-theft of ENTIRE vehicle
commercial auto policies should always be sold with what type of optional coverage under Section C of SPF No 1?
all perils
why? because theft by an employee or family member is covered
definition of ‘general average’:
a principle of maritime law whereby all stakeholders in a sea venture proportionately share any losses resulting from a voluntary sacrifice of a part of the ship/cargo to save the whole in an emergency
what is salvage cost?
cost of getting the vehicle off the side of the road to be repaired
what principle is now used in place of general average?
subrogation
what are the additional agreements under Section C of SPF No 1?
-to pay general average, salvage, fire department charges
-to waive subrogation against every person who, with the insured’s consent, has care, custody or control of the automobile, provided always that this waiver shall not apply to any person
-this excludes garage workers and if the auto was operated by insured/person w insureds consent in breach of conditions of policy (ie: driving w no license, driving impaired, etc)
which subsections under Section C of SPF No 1 have included coverage for loss of use by theft?
subsections 1, 3 and 4
(all perils, comp and specified perils)
under Loss of Use by Theft, what limit of reimbursement for rental of substitute vehicle (including taxis, uber, public transport) is available?
up to $900
when does reimbursement for Loss of Use by Theft under Section C kick in?
after 72 hours
what are the criteria for Loss of Use by Theft indemnity under Section C?
-ENTIRE vehicle must be stolen
-must be reported to authorities for covg to take effect
if damage to the vehicle is caused by something that had left the ground when our insured hit it, which Section C coverage (provided they opted in) would cover this?
comprehensive
generally speaking, animal collision is ___________ and therefore paid as a ____________ claim
unavoidable
comprehensice
would animal collision be covered if our insured purchased Specified Perils?
no, because animal collision is not a peril named
what is the definition of an occupant?
a person driving, being carried in or upon or entering or getting onto or alighting from an automobile
SPF 1 policy only applies while the auto is being operated, used, stored or parked in….
Canada or the USA OR on a vessel plying between ports of either countries
who counts as ‘garage workers’?
-valet, mechanics, salesmen, etc
the insured must report a newly acquired vehicle to insurer within ______ days of when they….
14 days of when they take possession of the car
the insured must tell the insurer about a newly acquired vehicle IF….
it ha no insurance on it
-replaces a vehicle on the SAF or
-if the insurance company already insures all the other vehicles the insured owns
what sort of coverage would a trailer need?
section C
why wouldnt a trailer need section A coverage
because has no steering wheel
in the case of trailers, section A always extends from….
the towing vehicle
when the head of the household dies as a result of an accident. when there are 2 or more survivors who are either the spouse and a dependent relative, or one or more dependent relatives, the principal sum payable is increased by…
20% for each survivor other than the first
when the head of the household dies as a result of an accident and the spouse or dependent relative is living in the house hold, the death benefit is increased by…
-$15,000 for first spouse or dependent relative survivor and
-a subsequent $4000 for each of the remaining survivors
if head of the household dies and there is no surviving spouse,
the $ is divided evenly between dependent relatives
if head of the household dies and there are no remaining dependent relatives,
there is no amount payable
what are accident benefits for?
damages or injuries to people in the insured;s own vehicle
tickets and traffic violations remain on a drivers record for how many years?
3
accidents and claims remain on a drivers record for how many years?
6
what is the Facility Association?
an insurance company, co-owned by all of the insurers in the province of Alberta, designed to provide insurance for those who do not qualify for preferred rates
-claims costs and profits are shared based on the percentage of business written into the pool
what are 3 excluded uses of an automobile by the insured under an SPF No 1?
-renting/leasing vehicle to others (for profit or not)
-carrying explosives
-carrying passengers for compensation
the three excluded uses of an automobile under SPF No1 could be covered if..
insured buys an endorsement
what are the 5 circumstances under which the insured may carry passengers for compensation and would not need an SEF?
- carpooling
- occasional rideshare
- transporting “domestic servant”
- transporting a client
- occasional use of vehicle for the transportation of children to and from educational activities
Under the statutory conditions of an SPF 1, what are the requirements after a loss?
under the statutory conditions of an SPF 1, what should an insured NEVER DO?
voluntarily assume any liability
under the statutory conditions of an SPF 1, in the case of an accident, an insured must do what is reasonable to…
protect the vehicle from further damage.
-any further losses to the vehicle as a result of insured not taking adequate measures to protect it will not be covered
if the insurer is going to repair/replace the vehicle, they have how many days to inform the insured they plan to do so?
7 days
the insurer must pay the insurance money for which it is liable under the contract within ______ days after proof of loss has been submitted, or where an appraisal process is conducted, within _______ days after a decision is rendered.
60, 15
endorsements on the SPF No 1 can…
change, add or reduce the amount of coverage for certain situations
what are endorsements to the SPF No 1 called?
SEFs
what is SEF 6a? name and function
Permission to Carry Passengers for Compensation
-for use on passenger vehicles not operated under the Public Vehicles Acts
ex Uber
what is SEF 6b? name and function
School Bus Endorsement
gives permission for carrying passengers for compensation or hire for school purposes only.
what is SEF 13d? name and function
Limited Glass Endorsement
-applies to section C subsection C Comprehensive section
-provides a discount when purchasing comprehensive coverage..
-damage to glass is covered when caused by any of the 13 specified perils plus damage caused by vandalism
-common in AB and Yukon
what is SEF 13h? name and function
Limited Hail Endorsement
-deletes hail endorsement
-ex: on a vehicle that was purchased during a ‘hail sale’
what is SEF 20? name and function
Loss of Use
-used only when Section C coverage is purchased
-when there is loss to the automobile that results in its loss of use to insured, insurer agrees to pay all reasonable expenses incurred for taxis/public transportation or rental care.
when does coverage start on an SEF 20?-
-starts the day following report of theft to insurer OR police (when vehicle is stolen)
-starts immediately when the damage is such that the vehicle cannot be operated under its own power
what is SEF 19 A? name and function
Valued Automobile(s) Endorsement
-when section C is purchased, this endorsement agrees that the described vehicle is values and insured for the amounts stated. (appraisal value)
-usually added on to vintage, classic and restored vehicles
what is SEF 27? name and function
Legal Liability for Damage to Non-Owned Vehicles
offers protection for your legal liability for damage to a vehicle you do not own but that is in your care, custody or control. restrictions on who can drive the non-owned car.
-Canada and USA only
who usually needs an SEF 27?
those who rent vehicles on a regular basis or while on vacation
what is SEF 32? name and function
Recreational Vehicle
-provides coverage for unlicensed, unqualified or underage (under 16) drivers while the recreational vehicle is being used OFF public highways
ex: snowmobiles, dirt bikes, etc
what is SEF 43R? name and function
Limited Waiver of Depreciation Endorsement
-available for certain automobiles insured under section C, loss of Damage to insured automobile.
-provides coverage against depreciation when the loss or damage to the vehicle occurs within 24 months of the purchase of the vehicle by its original owner.
-Coverage limtied to the LESSER OF
-actual purchase price of the auto and its equipment
-MSRP
what is MSRP?
manufacturer’s suggested retail price
what is SEF 44? name and function
Family Protection Coverage
-protects you and certain family members if you are in an accident with an uninsured or underinsured driver.
-pays difference between your claim amount and the third party liability limit of the at-fault drivers’ policy, up to your limit
who qualifies as insured under SEF 44?
-Named insured and their spouse while residing in the same dwelling, and dependent relatives of either
what is SEF 44 Supplement?
covers any other relative of the named insured or of the spouse of the named insured while they are an occupant of the vehicle, a newly acquired vehicle or a temporary substitute vehicle
what is SEF 30? name and function
Excludes Operation of Attached Equipment
for use with a commercial rated vehicle when there is attached machinery (ex: plow, bucket, welder, etc)
excludes the use and operation of attached equipment if causes third party BI or PD. the liability would be paid by CGL policu
what is SEF 28? name and function
Reduction of Coverage for Named Driver
-ex: husband has bad driving record, wife states he will not drive her car. insurance company agrees to charge the better premium for the wife’s driving record if she signs this endorsement
what is SEF 38? name and function
Sound Equipment Endorsement
-adds theft and attempted theft covg to described auto sound equipment, limits liability to declared amount. all other equipment is limited to $1500 as per previous SEF 37. may increase premium
what is an SPF 2?
drivers policy
-doesnt own the vehicle but has an exposure to driving other peoples’ vehicles (ex city bus driver)
-this buys section A (and some section B) for the driver in their own name, but dont need section C because dont own the vehicle
what is an SPF #4?
garage auto policy
-for workers like valets, mechanics, etc
provides Section C coverage:
- collision
- comprehensive
-specified perils
-specified perils excluding theft
which SEF could you put on an SPF 4 to add back open lot pilferage and theft?
SEF 75
what is an SPF #6?
Non-owned policy
-this coverage is bought by businesses where employees are driving their own vehicles
-ex: pizza delivery, uber eats
-provides Section A coverage to the business
what is an SPF #8?
lessor policy
when a client leases a vehicle on a long term lease
what is an SPF #9?
Transportation Network Policy
-for uber drivers, rideshare companies
-would have an SPF 1 on their own vehicle, but as soon as their app becomes active, need SPF 9 to take passengers
what is the definition of a commercial vehicle?
motor vehicles used for commercial purposes such as hauling commodities, transporting passengers for compensation, or transporting large #s of employees.
may carry freight or people
what is needed for commercial vehicles carrying freight?
a bill of lading, which lists commodities being hauled and specifies carrier’s responsibility for such goods while in their care, custody or control
what is a common carrier>?
offers services for hire
what is a private carrier?
transports their own goods with their own vehicles, main business is not transportation
what is a contract carrier?
one who engages in transportation of merchandise under an individual contract for one or a limited number of customers
what is an owner/operator?
a truck driver who owns his or her vehicle and who works under contract for a carrier
what is a highway tractor?
cab and chassis with 5th wheel assemble mounted on rear of chassis for attachment to a semi trailer
SPF 1 is used for both…
commercial and personal risks
most insurers consider a fleet of automobiles to be at least ,….
5 units or more
what is a power unit?
the truck portion of a tractor trailer combo that contains the engine
trailers used in connection with power units are assessed a third party liability premium which is a percentage of….
the third party liability premium charged for the power unit
long term stable business are more favorable than…
new businesses
