Questions - Chapter 6 - Section 2 - SPF No. 1 - Owner's Form Coverages

Question 1

Identify three persons insured under Section A of the SPF No. 1.

Answer 1

a) the Named Insured
b) Everyone else who personally drives the car with the consent of the Named Insured
c) Everyone who personally operates a part of the car with the consent of the Named Insured

Question 2

Identify five exclusions that are general to Section A - Third Party Liability.

Answer 2

1) For any liability imposed by any worker’s compensation law upon any person insured by this section
2) For loss or damage resulting from bodily injury to or death of any employee of any person insured by this Section while engaged in the operation or repair of the car
3) For loss of or damage to property carried in or upon the car or to any property owned or rented by, or in the care, custody or control of any person insured by this section
4) For any amount in excess of the limits stated in Section A of item 4 of the application, and expenditures provided for in the Additional agreements of this section; subject always to the provisions of the section of the Insurance Act relating to the nuclear energy hazard
5) For any liability arising from contamination of property carried in the car

Question 3

Explain how Section A would respond if the insured was intoxicated at the time of loss.

Answer 3

Section A - Third Party Liability does insure bodily injury and property damage cased by intoxicated insureds.

Question 4

Identify two agreements of the insured under Section A.

Answer 4

1) By the acceptance of the policy, the insured “constitutes and appoints the insurer as his irrevocable attorney”.
2) The insured also agrees to reimburse the insurer for any amounts paid under the policy by reason of the provisions of any statute relating to automobile insurance and which the insurer would not otherwise be liable to pay under the policy.

Question 5

Section B - Accident Benefits is on a “no fault” basis. Explain what this means.

Answer 5

There’s no requirement to show that the insured was legally responsible for the injuries caused to the claimant.

Question 6

Identify the three subsections of Section B - Accident Benefits.

Answer 6

1) Subsection 1 - Medical Payments and Funeral Expense
2) Subsection 2 - Death Benefits and Loss of Income Payments
3) Subsection 3 - Uninsured Motorist Coverage

Question 7

Identify two areas which might be considered reasonable expense under Subsection 1 - Medical Payments and Funeral Expenses.

Answer 7

The insurer will reimburse the insured for all reasonable expenses within two years for:

• medical, surgical, chiropractic, dental, hospital professional nursing and ambulance service.
• Other services and supplies essential to treatment or rehabilitation.

Question 8

Identify the three conditions that must apply before payment of any loss of income under Subsection 2.

Answer 8

Subsection 2 - Death Benefits and Loss of Income Payments

• Benefits payable on a weekly basis subject to a 7 day waiting period.
• Insureds must be able to establish that they were employed at the time of the accident, or, if 18 years of age or over, employed for any six months during the proceeding 12 month period.
• Benefits cease at end of 104 weeks.

Question 9

Define:

• Uninsured Automobile

- Unidentified Automobile

Answer 9

• Uninsured Automobile: Neither the driver nor the owner has applicable and collectible bodily injury liability insurance.
• Unidentified Automobile: An unidentified car is one which causes bodily injury or death to an insured person arising out of actual contact of that car with the car where the insured was an occupant.

Question 10

Three conditions to meet before a claim will be paid for an unidentified automobile under Subsection 3.

Answer 10

a) It must be shown that the identify of either the owner or driver cannot be ascertained.
b) The accident must be reported to authorities within 24 hours.
c) A statement must be filed, under oath, with the insured within 30 days.

Question 11

Identify the coverage option or subsections of Section C - Loss or Damage to Insured Automobile of the SPF No. 1 and briefly explain the perils provided by each.

Answer 11

Subsection 1 - All Perils: From all perils
-Its the broadest form of physical damage coverage available.
Subsection 2 - Collision or Upset: Caused by collision with another object or by upset
-the usual collision accident involves the insured automobile striking or being stuck by another automobile.
Subsection 3 - Comprehensive: From any peril other than by collision with another object or up upset
-Collisions losses not insured: Loss due to impact with a vehicle to which the automobile is attached or loss due to impact with the surface of the ground any object therein or thereon.
4) Subsection 4 - Specified Perils - caused by fire, lightning, theft or attempt thereat, windstorm, earthquake, hail, explosion, riot, or civil commotion, falling or forced landing of aircraft or of parts thereof, rising water, or stranding, sinking, burning, derailment or collision of any conveyance in or upon which the automobile is being transported on land or water.

Question 12

Most insurers include impact with wild animals under Comprehensive, rather than Collision. What are two advantages to the insured in this circumstance?

Answer 12

This usually has two advantages:

1) The deductible applying to Comprehensive claims is usually less than that provided for collision losses
2) Claims under this section do not count as chargeable losses and, as such do not affect the renewal premium charged to the insured to the same extent.

Question 13

A deductible is normally applied to all losses under Section C - Loss or Damage to Insured Automobile. List three losses where there’s no deductible applied.

Answer 13

1) Fire
2) Lightning
3) Theft of the entire vehicle.

Question 14

How would Section C - Loss or Damage to Insured Automobile would respond if the insured was intoxicated at the time of loss.

Answer 14

There is no coverage for the physical damage caused to the automobiles if the insured is proven to be intoxicated or under the influence of drugs or alcohol.

Question 15

List three exclusions to Section C - Loss or Damage to Insured Automobile.

Answer 15

1) Loss or damage to tires consisting or caused by mechanical breakdown, wear and tear, rusting or corrosion, and freezing or explosion.
2) Caused by contamination by radioactive material.
3) Caused by the voluntary parting with the title or ownership, whether or not induced to do so, by any fraudulent scheme, trick or false pretence.

Question 16

Outline the purpose of the following:
I) General Average
II) Custom Duties

Answer 16

I) Even though there may not be loss to the insured’s automobile, the insurer may agree to participate in the general averaging of the amount of the loss among all insurers of automobiles.
II) If the automobile is damaged in an accident in the USA and repair is made there, those costs are subject to payment of customs duties. The insurer will agree to pay for those custom duties.

Question 17

Identify three situations where the insurer would not waive its right of subrogation under Section C.

Answer 17

1) Those having possession for the purposes of garaging.
2) Those who have breached a policy condition.
3) Those drivers or operators convicted of an alcohol related offence at the time the damage was caused specifically by:
- Impaired driving, breathalyser offence, refusal to undergo a road test or breathalyser test

Question 18

Coverage for loss of use arising directly as a result of theft of the entire automobile is subject to three limitations. Explain what they are.

Answer 18

1) Provides for reimbursement of up to $25 a day for a max of 30 days.
2) Payment is made only for costs incurred to rent a substitute automobile
3) a 72 hour waiting period applies, commencing after the notice of theft of the insured automobile has been provided to the police or to the insurer.

Question 19

Your client is planning to drive to Mexico on holiday and would like to know if his SPF No. 1 he purchased from you will respond to any accidents that may occur while on vacation. How would you answer this?

Answer 19

Insureds who plan to travel to Mexico should be advised that there’s no coverage provided for losses occurring in that country.

Question 20

Your client has called to explain that he purchased a new vehicle and has had an accident before notifying your office. Would there be any coverage under his SPF No. 1 with you? Outline your response.

Answer 20

A newly acquired automobile ( not applicable in BC) is automatically insured when it:

• replaces an automobile described on the policy
• is in addition to others owned by the insured and which are all insured by the same insurer.

Coverage is provided for 14 days without requirement for notice of the insurer.

Question 21

Your client has called to advise that his 18 year old daughter was involved in an accident this past weekend. She was driving a friend’s car that was uninsured. There are third party injuries and damage to the friend’s car. Outline your response.

Answer 21

No coverage unless SPF No. 2 was added to the policy.

Question 22

Outline five prohibited uses by the insured under SPF No.1?

Answer 22

1) The insured shall not drive or operate the automobile unless he is for the time being either authorized by law or qualified to drive
2) While his licence to drive or operate an automobile is suspended or while his right to obtain a licence is suspended or while he is prohibited under order of any court from any driving or operating an automobile.
3) While under age of 16 or under such other age at which licence or permit to drive may be issued to him.
4) For any illicit or prohibited trade or transportation.
5) In any race or speed test.

Question 23

Outline four requirements of the insured in the event of loss or damage to persons or property.

Answer 23

1) Promptly give written notice to the insurer of the accident.
2) Verify by Statutory Declaration that the claim arose out of use or operation of the automobile and that person so involved in use or operation is an insured under this contract
3) Forward immediately any letters, documents, advice or writ received by him from or on behalf of the claimant.
4) Assist the insurer in securing information and evidence and attendance of any witnesses and co-operate, except financially in defence or subsequent prosecution of any appeal.