Short Answer Flashcards
Describe the three levels of legal jurisdictions in Canada
• Federal- matter affecting all of Canada o Criminal law o Interprovincial trade o Telecommunications o Customs & Immigration o Fisheries • Provincial & Territorial- Matters affecting provinces and territories o Education o Property o Health o Transportation o Auto insurance • Municipal- Bylaws dealing with Local Matters o Zoning o Construction Permits o Crosswalk o Parking bylaws o Speed limits within municipal borders
State why Automobile insurance was created
• Automobile insurance has evolved along with society’s mass adoption of cars for transportation
• It evolved to cover the following:
o Physical damage to vehicles and destruction or disappearance of vehicles
o Costs due to injuries or death arising from automobile accidents
o Lawsuits to recover damages from accidents
Explain how laws requiring mandatory automobile coverage led to the evolution of standard automobile policy forms across Canada
• Laws in Canada’s various provinces and territories require that all motorists have automobile insurance
• The wording of policy forms and endorsement forms is governed by each province’s and territory’s regulation (except Saskatchewan)
• There are 6 policy forms used in Canada and one extra form used in Alberta only
• They are used for in provinces with private schemes, or for optional insurance in those government schemes
* refer also to chart
Describe what constitutes proof of automobile insurance
- Each Canadian province or territory has mandatory insurance laws, such as Ontario’s Compulsory Automobile Insurance Act
- Every owner or lessee of a motor vehicle being operated on a public road must have insurance
- Motor vehicle liability cards are designed to serve as proof of automobile third party liability insurance
- Most jurisdictions in Canada require physical cards, but there are initiatives to allow electronic cards or “eSlips” ( as in Nova Scotia)
- Filing proof of financial responsibility is accomplished by an insurer filing a certificate with the Registrar of Motor vehicles showing a policy has been issued in the name of the person involved, and giving a description of the vehicle(s) owned.
Contrast tort versus direct compensation systems to settle automobile insurance claims for damage caused by third parties
Tort System- Compensate victims based on the third party’s fault/negligence and provide access to the civil justice system to recover damages
- Onus of proof: is on the motorist who alleges the other is negligent (with exceptions for pedestrians)
- Drivers fault charts: (or similar fault assessment processes) are used to settle common accident types without the courts
Direct compensation Systems- allow people to be compensated by their own insurer for damage caused by a third party
- Access to the civil justice system to recover damages is strictly limited or banned ( insureds cannot claim against third parties or third parties’ insurers)
- Goals: Less investigation, less subrogation, less litigation, speedier settlements, negotiations with own insurer only, and ultimately cost savings and lower premiums
Explain how claims for vehicle damage caused by a third party are compensated under third-party liability coverage
• Automobile third party liability insurance covers legal liability for bodily injury or death of any persons or damage to property belonging to other persons arising out of the ownership, use, or operation of an automobile.
o Insured persons: named insured, and anyone who has, drives, or operates the automobile with the insureds consent
o Minimum limits: required in each jurisdiction and priorities of payment apply if insurance amount does not satisfy the claims
• Exclusions:
o Damage to property carried in or upon the automobile
o Damage to other property owned or rented by, or in the care, custody, or control of insured
o Contamination of property being carried
o Nuclear Hazards
o Amounts over the policy limit purchased- other than legal costs and post- judgement interest
Summarize the additional coverage available under third-party liability coverage
• Insurer additional coverage agreements
o Pay all costs taxed against insureds and interest judgement amounts within the limits of the policy
o Reimburse the cost of medical aid necessary at the time/scene of the accident
o Investigate, negotiate, and settle claims on behalf of insureds
o Defend insureds and pay the cost of any civil action
o Be liable up to the minimum limits of the province or territory where the accident occurred
o Do not use a defense against a claim that is not available in the province or territory where the accident occurred
o Protected insureds for liability claim against each other, as if a separate policy were issued to each (but only up to the policy limit plus legal costs, and post-judgement interest)
• Responsibilities of insured persons
o Notify the insurer in writing within seven days of loss or damage to persons or property (if incapacitated, as soon as possible)
o Give the insurer a statutory declaration, if requested
o Help the insurer obtain all necessary information and evidence about the incident
o Send everything received in writing about the claim to the insurer
o Refrain from assuming any liability, settling claims, or interfering in legal proceedings/ negotiations
o Reimburse the insurer for any payments made under absolute liability
• Rental vehicles have a specified order of liability:
o Person who rented the auto
o The driver of the auto
o The owner of the auto
State the types of injury claims that could be expected under the liability section of the automobile policy
• Pre-1990 Ontario Motorist protection plan (OMPP) claimants could sue for economic and non-economic loss in Ontario
• Non-Economic losses
o Lawsuits subject to a per-person deductible
o Changes to Ontario Automobile insurance legislation (1990, 1994, 1996, 2003, and 2010) have established the verbal threshold system where claimants can sue for non-economic general damages if they suffer
- Permanent serious disfigurement; or
- Permanent impairment of an important physical, mental, or psychological function
• Economic losses
o There is a right to sue without the need to meet a threshold for all types of economic loss
o Recovery from tortfeasors for loss of income and loss of earning capacity (both as determined by regulation) is limited
Explain how absolute liability means the insurer is responsible for paying third party claims even though the insured has breached a policy condition
• Absolute liability requires insurers to pay third party claims up to provincial/territorial minimum limits even if insureds have breached a policy condition
• Absolute liability provisions in the provincial/territorial insurance acts mean third parties’ rights to payments are not prejudiced by
o Any assignment, waiver, surrender, cancellation, or discharge of the policy by the insured after the even giving rise to the claim
o Any act or default of the insured before or after the event in violation of the act or the policy
o Any violation of the Criminal Code or statute of any province or territory by the owner or driver of the automobile
Explain how claims for vehicle damage caused by a third party are compensated under direct compensation-property damage coverage
• Direct compensation- property damage (DCPD) coverage
o Insureds deal with their own insurers to indemnify them for the cost of repairs, damage to contents carried in the vehicle, and vehicle loss of use to the extent that they are not at fault
o DCPD applies if damage occurs in Ontario, and both vehicles are insured under Ontario auto policies (or where insurers from outside Ontario have signed DCPD agreements)
• Subrogation is limited:
o Insureds can sue negligent parties if they are insured outside of the province, and their insurers do not subscribe to DCPD agreements
o Insurers that pay DCPD claims can subrogate against garage risks, tow trucks, and other insurers for contents losses over $20,000
Identify who is covered under the accident benefits section of the owner’s policy
• For Accidents in Ontario with insured/ other automobiles
o Named insured and any person specified in the policy as a driver of the insured automobile
o Spouse of the named insured
o Dependent of the named insured or spouse
o Person who is involved in an accident involving the insured automobile
• For accidents outside Ontario
o Person who is an occupant of the insured automobile and who is a resident of Ontario, or was a resident of Ontario at some point during the 60 days prior to the accident
• For persons not actually involved in accidents
o If they suffer psychological or mental injuries because of an accident that injures certain relatives or dependents
o There is a legislated order of payment for a person who is injured in a car accident in Ontario that is covered by more than one automobile insurance policy
Ontario SABS Priority of Payment
Victims own insurer -> Insurer of the automobile victim was an occupant in-> insurer of any automobile involved in the accident-> Ontario Motor vehicle accident claims fund
Summarize the coverage provided by the accident benefits section of the owner’s policy
- Accident Benefits under Ontario owner’s policies
o Income replacement benefit- for people who are disabled from an accident and can’t work and were working at the time of loss/ or sufficiently prior to the loss, subject to seven day deductible maximum limits
o Non-Earner Benefit- Subject to four week waiting period and maximum limits; payable to insureds who suffer inability for normal life and
Do not qualify for an income replacement benefit
Cease to receive a caregiver benefit because there is no longer a person in need of care
Were enrolled on a full-time basis in elementary, secondary, post-secondary, or continuing education at the time of the accident or had completed it less than one year prior and not yet working in their field
o Caregiver Benefit- Paid to persons who were primary caregivers of others (and not paid for that role) who suffer catastrophic impairment in an accident, Subject to maximum limits.
Can be extended for non-cat impairments for additional premium
o Medical, rehabilitation and attendant care benefits- benefits have an aggregate total for the amount paid (depending on cat or non cat impairment)
Medical benefit – pays for all reasonable and necessary medical expenses that are not payable under another insurance plan or law; minor injuries subject to minor injury guideline
Rehab benefit- pays for reasonable measures to reduce or eliminate the effects of any disability resulting from the impairment
Attendant care benefit- for payment of all reasonable expenses incurred by or on behalf of an insured person for services provided by an aide or attendant or a long term care facility including a nursing home, home for the aged or chronic-care hospital
o Payment of other expenses – covers certain other expenses, including educational expenses, expenses of visitors; housekeeping and home maintenance expenses; damage to clothing, glasses, hearing aids, and other devices, cost of examination
o Death and funeral benefit- Pay lump sums on the death of the insured, insureds spouse or dependents, also pays $6000 for funeral cost, option to increase to $8000
o Optional benefits- increased limits to the various accident benefit and annual indexation of benefit and limits based on the CPI
Identify the exclusions under the accident benefits section of the owner’s policy
- Excluded person under income replacement or non-earner benefits, educational expenses, expenses of visitors and housekeeping and home maintenance expenses
o Person convicted of impaired driving or failing to provide breath sample
o Drivers who knew or ought to have known that they were operating an uninsured automobile
o Persons driving the automobile without a valid driver’s license
o Drivers who are excluded under the policy
o Drivers operating the automobile at the time of the accident without the owner’s consent - Excluded persons under all accident benefits
o Any person who has made, or who knows of, a material misrepresentation or who intentionally failed to notify the insurer of a change in the risk material to the contract
o An occupant of an automobile who knew or ought reasonably to have known that the driver was operating the automobile without owner’s consent
Describe how the Statutory accident benefits schedule (SABS) interacts with the other systems when Ontario Residents are involved in an automobile accident outside Ontario or Eligible for payments under other benefit plans
- Accidents outside Ontario
o Ontario residents injured in accidents outside Ontario (anywhere in Canada or the united states or a vessel travelling between these countries) can choose between Ontario level of benefits and the no-fault benefits available where the accident occurred - Social assistance payments
o Automobile insurers are the first payer of benefits to an insured person who is also entitled to receive social assistance payments - Collateral benefits
o Sources of entitlement outside the automobile policy including employer plans income continuation plans and others
o Insurer may deduct certain amounts in calculating the amount of weekly income replacement or non-earner benefit payable to an insured person
o Insures are required to top up the loss of income paid by these sources to 70 percent of gross income to a maximum top up of $400 per week - Workers compensation- insurer is not required to pay benefits to a person who is entitled to workers compensation
o An employee injured in the course of operating an automobile has a legal right to take action against the party responsible for the accident
Identify indicators of accident benefits fraud associated with injury claims
- Fraud rings
o Auto collisions typically happen between two vehicles, producing many claimants who may be eligible for accident benefits
o Claimants may also be involved in multiple accidents and in different vehicles (rental vehicles, for example, claim benefits simultaneously form several insurers and use various names)
o Witnesses for certain claims may appear on many claims’ reports - Planned accidents
o Accident are typically staged at night, behind buildings or in area where there are no witnesses.
o The vehicle (often an older rental vehicle) may be driven into a wall at a low speed, typically causing less than $500 damage
o Phony claimants are referred to clinics for treatment (that they do not need or receive) accident benefits forms are then submitted to the insurers after a few weeks of extensive treatment; the goal is to obtain cash settlement from the insurer - Rehabilitation and medical service providers
o Fraud includes overbilling, collusion with patients to increase insurance payments, operating illegal referral schemes and paying fees to third parties for referring patients
Outline the coverage provided by the owner’s policy for accidents caused by uninsured or unidentified motorists
- Uninsured auto coverage
o Insureds can recover from their own insurer for damages arising from accidents caused by
Uninsured auto- neither the owner nor the driver has liability insurance
Unidentified auto- the owner or driver cannot be determined
o Insureds must be legally entitled to recover from the uninsured or unidentified motorist
o Section 5 covers damage and loss of use of the auto and or damage to contents that insureds have a legal right to recover from the identified owner or driver of an uninsured auto subject to $300 ded and $25,000 max limit - Insured persons
o For death or bodily injury- the insured, the insureds spouse, and any dependent relative of either when occupants in uninsured auto or if struck by uninsured/unidentified auto (with limitations)
o For property damage- the owner of the automobile, the owner of contents damaged - Claims
o Insured policy must comply with explicit policy requirements for claims that differ somewhat between bodily injury or death and property damage claims and if the third party is unidentified or uninsured - Limitation and exclusions
o Impact how much the insurer will pay for uninsured auto coverage claims
o Limit payments in cases where insureds can recover from other parts of the policy, other insurance policies or unsatisfied judgement funds
o No coverage for losses due to radioactive material or where car is driven by excluded driver
Describe how the family protection endorsement provides coverage for damage caused by inadequately insured motorists
- Inadequate insurance
o At fault motorist is insured and identified, but carries a limit of 3rd party liability insurance that is less than the value of a judgment awarded against him or her - Family protection endorsement
o An optional coverage available in Ontario and other provinces that insureds can purchase to protect against situations involving underinsurance
o Covers the difference between the value of the insureds claims and the 3rd party limit of liability insurance - Insured persons under family protection endorsement
o Named insureds and their spouses and dependents who are occupants of insured cars, occupants of other cars ( not leasing), pedestrians struck by cars
o Officers, employees, or partners for whose regular use the described auto is provided or the dependent spouses or relatives of officers, employees, or partners when occupants of insured cars occupants of other cars (not leasing) or pedestrians struck by cars
Describe how motor vehicle accident claims funds are “payers of last resort” for people injured in automobile accidents with no other existing automobile insurance to pay their claim
- Motor vehicle accident claims fund ( MVACF)
o Set up in most Canadian jurisdictions to ensure that innocent victims of accidents by uninsured automobiles are compensated
o May also be called uninsured auto funds or unsatisfied judgement funds, and were historically called highway victims indemnity funds
o Some funds cover bodily injury only
Others also cover property damage, subject to a deductible, if the owner or driver of the car responsible for causing the loss is identified
o Payments from the MVACF are based on the extent of the uninsured driver’s legal liability. If the claimant is at fault the fund does not pay
Outline the options available for insuring loss of or damage to the insured’s automobile
- In Ontario, coverage is offered under Section 7- Loss or Damage Coverages under the owner’s policy (OAP 1). There are four subsections of coverage:
a) Specified Perils- Covers losses from the following:
• Fire
• Theft or attempted theft
• Lightening
• Windstorm, hail, or rising water
• Earthquake
• Explosion
• Riot or civil disturbance
• Falling or forced landing of aircraft or of parts thereof
• The stranding, sinking, burning, derailment, or collision of any conveyance in or upon which a described automobile is being carried on land or water
b) Comprehensive- Protects an insured automobile against all perils other than collision or upset including the following:
• Perils listed under specified perils
• Falling or flying objects
• Missiles (including windshield claims caused by stone chips)
• Vandalism
c) Collision or upset- covers damage to the vehicle caused by collision with another vehicle, person, object, or the surface of the road, or by upset. It is usually sold in combination with comprehensive coverage.
• But collision with an animal is typically a comprehensive claim
d) All Perils- combines collision or upset coverage and comprehensive coverage and covers certain types of automobile theft that are excluded under comprehensive.
• Theft by a person residing in the insured’s household
• Theft of the vehicle if stolen by an employee who drives or uses, services, or repairs the described automobile
State the exclusions under loss of damage coverages of the owner’s policy
• Exclusions under loss or damage coverages
o Damage usually associated with the general wear and tear or lack of maintenance of a vehicle
o Damage caused by theft of the vehicle by any person who is in lawful possession of the automobile
o Damage caused by the voluntary parting with title of ownership
o Damage directly or indirectly caused by contamination by radioactive material
o Damage to contents of trailers or to personal effects
o Damage to media and equipment for use with a sound system
o Damage to the insured automobile when the insured drives or operates it while impaired by alcohol or drugs to such an extent as to be incapable of the proper control of the automobile, or while in a condition for which he or she is convicted of an offence under the Criminal Code of Canada
o Under Comprehensive and specified perils coverages only, loss or damage caused by theft by any person or persons living in the same dwelling premises as the insured or by any employee of the insured engaged in the operation, maintenance, or repair of the automobile
• These perils are considered uninsurable, better insured elsewhere, or that might cause insureds to be careless if covered
Explain how deductibles affect coverage and premiums for loss or damage coverages
• Deductible
o An agreed specified amount that the insured must pay in the event of a loss before the insurance company will cover the rest of the claim
o The insured selects the deductible amounts at the time of application for insurance
o Insureds can select different deductibles under the various types of loss or damage coverage
Higher deductibles come with lower premiums, and lower deductibles comes with higher premiums
o Each occurrence giving rise to a claim is subject to a deductible, except in the case of fire or lightning, in which case no deductible applies
o A deductible may also be selected under DCPD coverage, but it is optional and many insureds choose not to have one
Outline the additional benefits under loss or damage coverages
• Additional benefits
o Payment of charges
General average charges
Salvage charges
Fire Department charges
Canadian or US customs duties for which one is legally responsible as a result of an insured peril
• Forgoing right to recover- insurer agrees to waive this right in certain circumstances (except against garage risks or people violating policy conditions or illegal use)
• Coverage for temporary substitute automobiles- Used by an insured because the described automobile is out of service because of breakdown, repairs, serving, theft, sale, or destruction
• Coverage for loss the use due to theft- 72 hour waiting period, up to $900 paid for transportation replacement when entire auto stolen and policy covers theft
