Chapter 2

Question 1

Define tort

Answer 1

A legal wrong arising from duty fixed by law. A breach of this duty that causes injury to persons or property is repressible by legal action for damages. Liability for tort involves a private or civil wrong or injury and is distinct from that under contract in that the duty is owned to people generally rather than Tina specified individual

Question 2

Negligence

Answer 2

Failure to use the degree of care expected from a reasonable and prudent person

Question 3

Liability insurance

Answer 3

Insurance that agrees to indemnify the insured by law to pay to third parties as damages for bodily injury or damage to property. The maximum amount of insurance provided under a policy of liability insurance.

Question 4

What is the tort system ?

Answer 4

under tort law, one person a is found at fault due to negligence for damage to person B’s automobile, person b as the third party looks to person a. When person b is responsible for damaging person A’s automobile, person a expects to recover from him or her to the extent of his or her liability.

Question 5

Why do people purchase liability insurance?

Answer 5

people purchase liability insurance from an insurer for financial protection against the claims of another party, the third party.

Question 6

Define onus of proof

Answer 6

The burden or responsibility of proof, and is sometimes referred to by its Latin term onus probandi

Question 7

Define driver’s fault chart

Answer 7

a set of accident scenarios to determine fault reliability between drivers involved in an accident and the compensation payable. It takes into account the highway traffic code and case law

Question 8

Define precedent

Answer 8

Illegal decision that serves as a basis to resolve subsequent disputes in similar cases

Question 9

Define direct compensation

Answer 9

in the event of an accident, each insured will obtain compensation from his or her according to the insurance degree of fault for an accident

Question 10

What is the direct compensation system

Answer 10

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. Ensured cannot claim against third parties or third parties insurers. Their own insurers will am dignify them for the cost of repairs as well as damage to contents carried in the vehicle and its loss of use to the extent that they are not at fault. automobile insurance policies in these systems include direct compensation property damage coverage to provide this compensation.

Question 11

Define direct compensation property damage

Answer 11

Direct compensation property damage covers damage to, or the loss of use of, and automobile or its contents, to the extent that the driver of the other vehicle was at fault for the accident. It is called direct compensation because even though someone else caused the damage, the insured person collects directly from his or her insurer instead of from the person who caused the accident

Question 12

Define legal liability

Answer 12

Liability imposed by law on individuals or corporations to pay for harm done to others. Such a law may be the common law statute law or Customs that over a period of time have taken on the same status as law. Legal liability may also be assumed under the terms of contract

Question 13

List the aims of direct compensation systems and the ultimate aim

Answer 13

Ultimate aim: cost savings that result in lower premiums

Less investigation 
Less subrogation 
Less litigation 
Speedier settlements for insureds
Insureds deal only with their own insurer

Question 14

Define additional insured

Answer 14

a person other than the named insured who is protected by the terms of the policy the additional insured may be named or unnamed

Question 15

Define minimum limits

Answer 15

The smallest amount of third-party liability insurance that may be purchased in any Canadian jurisdiction

Question 16

Define priorities of payment

Answer 16

A system that specifies how much of the minimum policy limit will apply to bodily and reclaims and how much will apply to property damage claims in situations where there is not enough insurance to cover all the combined claims

Question 17

Who is the insured under third party liability coverage under the owner’s policy SPF 1

Answer 17

insured means not only the named insured under the policy, but also anyone who personally drives the automobile or operates a part of it with the insurance consent

Question 18

What constitutes you to be legally liable for injuries or damage to other persons?

Answer 18

The driver owner must either have deliberately cause the injury or damage or be considered negligent to some degree

Question 19

the possibilities of being involved in an accident and being found negligent and therefore responsible to third parties are increasing constantly list five main causes of this

Answer 19

The greater numbers of vehicles and drivers on the roads

The continual increase in the number of vehicular accidents

The use of hand held technology and media devices installed in vehicles

The use of automated and unique vehicles

Changes in road infrastructure

Question 20

List exclusions under third party liability coverage

Answer 20

• Liability imposed on an insured by a workers compensation law
• loss or damage to an employee of an insured who is engaged in operating or repairing the automobile
• damage to property carried in or on the automobile or damage to other property owned, rented by, or in the care, custody, or control of the named insured or other insured persons
• contamination of property being carried
• amounts over the policy limit purchased

Question 21

Additional coverage available under third party liability coverage require the insurer to do the following:

Answer 21

• pay all costs taxes against the insured and interest on any part of the judgment that is within the limits of the policy after the judgement has been rendered
• reimburse the insured for any outlay for necessary medical aid at the time of the accident causing injury
• investigate, negotiate, and settle claims on behalf of the insured or other insured persons.
• defend the insured and pay the costs of any civil action
• be liable up to the minimum limits prescribed in the province or territory where the accident occured if that limit is higher than the policy limits
• do not defend against a claim that would not be defended if the policy were issued in the province or territory where the accident occured

Question 22

Ts of the insured under third party liability coverage

Answer 22

The owners policy outlines the following responsibilities for insureds under third party liability coverage:

• Agree to the insurer being appointed as the insureds attorney to conduct civil defense in actions arising out of the ownership use or operation of the automobile
• reimburse the insurer upon demand for any payments it was required by law to make even though it was not otherwise liable for them under this policy this can arise due to absolute liability provisions of the law

Question 23

Define absolute liability

Answer 23

Liability associated with very dangerous actions often found in cases involving explosives and in many automobile laws. Negligence does not have to be proven

Question 24

What happens when the insured is sued for greater amounts than their policy limit

Answer 24

The insured May needs to hire a lawyer at their own cost to protect themselves against the additional risk. If a judgment is rendered for the amount greater than their policy limits the insured is responsible for the portion that exceeds policy limits and any post judgment interest on that portion

for example, if the driver is sued for 5 million and the policy limit is only 2 million the driver should hire an attorney since he or she is exposed to a judgment in Access of the policy limit

Question 25

explain how absolute liability means the insurer is responsible for paying third-party claims even though they insured has reached a policy condition

Answer 25

There are situations, however, when Insurance may have done something to avoid or negate their own automobile insurance policy. if they are then involved in an accident, their insurance will not apply. However, legal provision has been made so that innocent third parties will not be jeopardized by the insurance actions.

Question 26

the insurance acts of the provinces and territories contain absolute liability provisions so that the right of any third parties to payment under a third party in a judgment against an insured will not be prejudiced by

Answer 26

any assignment, waiver, surrender, cancellation, or discharge of the policy by the insured after the event giving rise to a claim

any act or default of the insured before after the event and violation of the act or the policy

any violation of the criminal code or statue of any province or territory by the owner or the driver of the automobile

Question 27

Who does absolute liability provisions protect?

Answer 27

Absolute liability provisions only protect the third party claimants only up to the minimum limit amounts and the jurisdiction where the incident occurred

Question 28

What is the best defense for insurers against absolute liability claims

Answer 28

the best offense for insurers against absolute liability claims is to establish effective risk management practices before coverage is bound

Question 29

What provinces and territories use direct compensation systems

Answer 29

New Brunswick
Newfoundland and Labrador
Nova Scotia
Ontario
Prince Edward Island
Quebec

Question 30

When does direct compensation apply

Answer 30

• applies if damage occurs in a province with direct compensation system
• applies if both vehicles are insured under automobile policies issued by licensed Insurance in the province or insurers from outside the province that have signed agreements to be bound by the direct compensation system

Question 31

True or false insureds can sue their own enter if they are unsatisfied with the degree of fault or the settlement

Answer 31

True

Question 32

True or false a claim could be made under dcpd even though the other driver was not directly struck the insureds vehicle

Answer 32

True

Question 33

Can you sue other motorists under DCPD?

Answer 33

Insureds cannot sue other motorists involved in accidents unless negligent parties are insured outside the province and motorists insurers do not subscribe to DCPD agreements with that province

Question 34

In ontario, the insurer that pays the dcpd claim cannot use subrogation to recover the amounts paid for the claim from other insurers that are signatories to the dcpd agreement, except as permitted by regulation

List the 3 permitted regulations

Answer 34

• when someone who is in a business relating to automobiles selling, repairing, maintaining servicing storing or parking is negligent and damage to an insured automobile results that ensure may segregate against that responsible party
• for damage that occurs when an automobile is being towed, if the tow truck driver is negligent, the insurer of that automobile May segregate for the attributable portion under the fault rules
• if a contents loss is over $20,000 and insure or may recover from the insurer of the at fault party of the amount that is over $20,000. It will be appointed according to the fault rules

Question 35

Define no fault

Answer 35

Simply, it means paying certain claims without reference to who was at fault. Used to describe a system for improving the compensatory process for automobile accident victims by eliminating costly and lengthy litigation. An automobile insurance system where accident victims are compensated by the entire regardless of fault.

Question 36

Define fault determination rules

Answer 36

rules set out in automobile insurance legislation that are used by insurers to determine fault or responsibility for direct compensation property damage claims, but not for injury claims

Question 37

Deductibles under DCPD

Answer 37

automobile insurance claims for loss of or damage to the automobile paid by optional collision, comprehensive, or all perils coverages are subject to a deductible. The deductible under dcpd coverage is typically $0 but an insured may choose to have a deductible amount that will lower the premium and apply against a not at fault loss. Insurers are prohibited from forcing a dcbd deductible on an insured, even if there is a history of dcpd claims. The amount of the dcpd deductible and insured pays is subject to The fault determination of the collision

Question 38

Determining fault in a dcpd system

Answer 38

insurance only claim against the dcpd section of the policy to the extent that they are not at fault. This means that if, for example, they are 100% at fault they cannot claim anything under the dcpd section.

Question 39

What is a true example of a 100% no-fault system

Answer 39

Accident benefits section

Question 40

When do fault determination rules not apply

Answer 40

when a loss occurs involving an automobile and other properties such as a building or a bridge the fault determination rules do not apply

Question 41

What is inverse liability and where is it used

Answer 41

Inverse liability is used in British Columbia As a part of their basic auto plan. It covers British Columbia Insurance who are involved in collisions and parts of Canada or the United States where local laws prevent them from seeking compensation for other at fault driver after the crash restrictions were insured and or their insurers are responsible for paying the cost of repairing their own vehicles. Inverse liability covers vehicle damage only it does not cover any medical or rehabilitation costs as these will be covered by accident benefits. The amount of coverage provided under inverse liability corresponds to the degree of fault assign to the other driver for the loss.