Chapter 6

Question 1

Government Crown Corporations control insurance in what provinces

Answer 1

British Columbia, Saskatchewan, Manitoba
-all manditory coverages must be obtained through the government
-no policy is issued (DL or registration prove insurance)
-additional (excess) coverages can be obtained by private or government corporations

Question 2

Manitoba Insurance

Answer 2

-manditory coverages by the government
-min $200,000 third party liability
-personal injury coverage required (comparable to accident coverage)
-physical damage coverage required
-no-fault plan lawsuits are not permitted for pain and suffering

Question 3

Saskatchewan Insurance

Answer 3

-manditory coverages by the government
-min $200,000 third party liability
-personal injury coverage required (comparable to accident coverage)
-physical damage coverage required
- offers no-fault and tort plans

Question 4

British Columbia Insurance

Answer 4

-manditory coverages by the government
-min $200,000 third party liability
-accident benefit coverage required

Question 5

Quebec

Answer 5

-bodily injury coverage by the Societe du l’assurance automobile du Quebec (SAAQ) no-fault plan and lawsuits are prohibited for paing and suffering
-civil liability coverage is by private insurers for property damage and accidents outside of Quebec. Min $50,000
-DCPD agreement applies to Albertans in Quebec (Albertans would not have to ability to sue in Quebec)

Question 6

Provinces with private insurers

Answer 6

$200,00 liability in all but NS. Accident benefits manditory in all but NFLD
Alberta - Insurer covers claim expenses intially, then subrogates the at-fault party to cover costs with their parties third party liablity coverage. If the insured does not carry collision it is their responsibility to persue recovery against the at-fault party and deal with their insurance company to have the claim resolved.
Ontario - DCPD -also the right to sue for pain/suffering is based on severity.
Quebec - DCPD
New Brunswick - DCPD
Nova Scotia - min $500,000 liability - DCPD
Newfoundland - accident coverage optional
Prince Edward Island - DCPD
NWT
Yukon

Question 7

Direct Compensation Property Damage Agreement DCPD

Answer 7

DCPD plans also referred to as NO-FAULT plans
-fault is still determined for future premium calculations and indemnification (including deductibles and loss of use) is received based on the extent to which the insured is not responsible or at fault. Each insurer will indemnify their own client based on the extent which the insured was NOT responsible.
-the insurer may not subrogate (take legal action after indemnification of the claim) nor can insured parties sue eachother

Question 8

9 statutory conditions on all policies

Answer 8

1. Material Change in risk - insured must give written notification to insurer of any significant material change in risk. Ex: new driver, change in use, lien
2. Prohibited use by insured - ex: illegal use, racing, not a valid DL
3. Loss or Damage to Persons or Property - written notice in the event of an accident or bodily harm with the vehicle. Stat Dec may be necessary to establish details and driver was covered under insureds policy. Insured must not voluntarily assume responsibility and must cooperate fully and not interfere with insurance company negotiations (unless acting on their own behalf away from an insurance claim.)
4. Loss or Damage to the Automobile - prompt written notice and make sure no further damage occurs if possible. Within 90 days of the loss or damage, a Stat Dec, and proof of loss form must be provided. No repairs unless necessary to protect it from further damage. Keep any physical evidence intact. Examination under oath if requested. Insurers liability is limited to the LEAST of actual cash value or the cost to repair or replace with like, kind and quality. Disputes will be handled through dispute resolution as per the Insurance Act.
5. Inspection of Automobile - insured must permit insurer at all reasonable times to inspect the automobile and equipment
6. Time and Manner of Payment of Insurance Money - Once proof of loss form is received, the insurer has 60 days to pay. If dispute resolution is used must be paid 15 days after decision.
7. Who May Give Notice and Proofs of Claim - an agent of the insured may do so. Any person to whom any part of the money is payable to may also do so if the insured is unwilling or unable.
8. Termination - by the insurer - 15 days of notice by registered mail effective from the date it is delivered or 5 days written notice personally delivered. Pro-rated unearned premium must accompany the notice unless it needs to be adjusted or determined and refunded as soon as practical. Any minimum retained premium outlined in the policy will not be refunded.
   - by the insured - at any time upon request. unearned premium will be returned on a short-rate bases as soon as practical and is subject to any minimum retained premium.
9. Notice - Any written notice to the insurer may be sent by registered mail to the chief agency or head office in Alberta. Written notice to the injured may be sent registered mail or personally delivered.

Question 9

Actual Cash Value (ACT)

Answer 9

The cost to replace an item at time of loss with one of like kind and quality, less depreciation.

Question 10

Short-Rate Cancellation

Answer 10

When an insured cancels an insurance policy before the expiration date. The insurer must return unearned premium but the amount returned will be less than the per diem amount due to administration expenses.

Question 11

Review Standard Policy, Endorsement and Application Forms

Answer 11

Page 88

Question 12

Liability

Answer 12

legal responsibility for damages to another as a result of negligence.

Question 13

Negligence

Answer 13

Omission or failure to do something which a reasonable person would do in a similar senario.

Question 14

Absolute Liability

Answer 14

Legally, an insurer would NOT be contractually obligated to indemnify the insured if a policy condition had been breached. The injured third party would have access to section A coverage up to the compulsory limit of $200,000 even if the insured had breached contract. The insurer can then seek recovery from the insured.

Question 15

Priorities of Payments

Answer 15

When the liablity policy amount is not adequite amounts get paid for bodily injury first. 95% or $190,000 of the $200,000 must be applied to bodily injury claims, leaving only 5% or 10,000 for property damage.

Question 16

Exclusions to Third Party Liability Coverage

Answer 16

What is the insurer NOT liable for
-liability imposed on the insured by any workers compensation law
-bodily injury or death to an insured’s employee while engaged in the operation or repair of a vehicle
-damage to property in or on the vehicle if owned or in the care of the insured
-$ in excess of section A limit or additional amounts agreed to under the Additional Agreements section (nuclear energy hazard)
-contamination of property carried in the vehicle
See Statutory Conditions, General Provisions, Definitions and Exclusions sections of the policy

Question 17

Third Party Liability

Answer 17

Provides coverage for the insured and anyone else driving the insured’s vehicle with their consent (or implied consent) if legally liable for bodily injury or damage to the property of the third party.

Question 18

Additional Agreements of the Insurer

Answer 18

-Investigate, negotiate and settle claims
-Provide defense and cover costs of any civil action brought against the insured
-Pay the cost of damages the insured is liable for up to the policy limit
-Reimburse the insured for medical costs
-be held liable for the third party minimum of other provinces (ex: Nova Scotia is $500,000) Alberta insurers will honour the insurance laws of other provinces

Question 19

Additional Agreements of the Insured

Answer 19

-Appoint the insurer as the irrevocable attorney for any action arising from the use, ownership or operation of the vehicle
-Reimburse the insurer for any amount they may have paid because of a statute but for which they are not contractually liable (absolute liability)

Question 20

Section B: Accident Benefits

Answer 20

Mandatory coverage in Alberta to provide coverage of an insured person who suffers bodily injury or death involving use or operation of a vehicle
-Medical Payments - up to $50,000 within 2 yrs
- hospital, surgical, dental, therapy, ambulance
- Up to: Chiro $750 Massage/Acupuncture $250
Minor injuries are resolved within 90 days with no major impact to perform tasks get up to $5296 involving 21 approved treatments. If unresolved within 90 days regular section B benefits apply
-Grief Counselling/ Death/ Funeral - Funeral expense up to $5000
Counselling up to $400 per family
in death principle amount subject to age and status. 3 steps to calculations
1.Heads of household death gets a principal sum $10,000 (Dependents death gets $1000-$3000 depending on age.) If only dependents survive the $10,000 will be split between them
2.To calculate for dependent survivors. If there are 2 or more survivors 20% of 10,000 is added for each dependent other than the main survivor that gets $10,000
3.add $15,000 for the first survivor and $4,000 for each remaining survivor.
Only payable to survivors living 60 days after the death. Any disability paid out to a survivor of the same accident will be deducted from the total
-Total Disability - total and complete disability unable to perform duties of their occupation. Must have arisen within 60 days of the accident. They must have been working at the time of accident or must be 18 or older and can prove 6 months worked within the preceding 12 months
No benefit for the first 7 days then weekly for 2 years. Total will be lesser of 80% gross weekly earnings from all sources or
$600 per week. (Gross weekly earnings is calculated as either average gross weekly earnings in the last year OR over the 4 week period preceding the accident)
$135/wk? for 26 weeks for non-workers over 18 that cannot perform household duties
-Supplemented Benefits from accidents outside of Alberta in No-Fault Jurisdictions - agreements with all 4 Ontario, Manitoba, Quebec, Saskatchewan that an Albertan will receive benefits regardless of fault from their own insurer based on the benefit schedule applicable in the province the accident occured. (In exchange for benefits under the no-fault system they waive the right to sue)
-Uninsured Motorist Coverage - noninsured vehicle or owner cannot be found. Report to police within 24 hours and file a statement with insurer within 30 days. If injured person recovers damages legally the Insurer will not be liable for amounts in excess of limited liability of policy or province, use of unsatisfied judgement funds, settling without consent of insurer

Question 21

Insured (under Section B) includes which individuals

Answer 21

-anyone in, exiting or entering the vehicle
-as a pedestrian struck by another vehicle
-spouse, partner and dependent relatives living in the same house while they are occupants of another vehicle (must not be owned by the insured persons or their employer) or a pedestrian that is struck by another vehicle (void if selling, storing, or parking automobiles at the time of accident)
-corporation, partnership or sole proprietor covers partners or employees who regularly use the vehicle or are struck by any other vehice. This extends to their spouses, partners and dependents in the home.
-If the insured person is the occupant of another vehicle, the vehicle should not be used to carry passengers for hire or commercial deliveries.

Question 22

Special Provisions and Exclusions of Section B

Answer 22

Insurer will NOT be liable when
-suicide or attempted
-sickness or disease results in disability or injury
-workers compensation applies
-racing or speed test
-illegal activity
Additionally these will apply only to total disability only
-convicted driver for impaired driving
-not legally authorized to drive
-any driver under the age of obtaining a licence to drive in the jurisdiction where the accident happened.

Written notice to the insurer within 30 days of the accident.
Insurer will pay any requested medical reports, may have the claimant physically examined, may ask a release be signed by the insured and must pay within 60 days of receipt of proof of loss form. For disability claims first payment will be made 30 days after receipt of the claim form and every 30 days after. Any action must be commenced within 2 years from the date of accident.

Question 23

Section C : Loss/Damaged to insured’s vehicle

Answer 23

Not mandatory
perils (events causing a loss) are subject to a deductible (except for fire, lightning or theft of entire vehicle.)

Question 24

Specified Perils

Answer 24

least coverage, usually purchased with collision insurance.
Only covers:
fire
lightning
explosion
sinking burning or collision of anything it is being hauled on (land or water)
theft or attempted
earthquake
riot or civil commotion
windstorm
hail
falling aircraft or parts
rising water

Any of these must be the proximate cause. The immediate cause that led to the damage without any interruption in the chain of events

Question 25

Comprehensive

Answer 25

Usually purchased with collision All Specified perils plus all other perils except collision with another object *Defined by exclusions like theft by persons in the dwelling or employee of the company engaged in the operation/maintenance of the vehicle.

Question 26

Collision or Upset

Answer 26

Colliding with another object or a rollover. Another object includes a vehicle to which the automobile is attached and any object in or on the surface of the ground including animals. (most insurers handle a deer-hit through comprehensive loss rather than collision as deductibles are lower and it will not affect collision portion of their driving record.

Question 27

All Perils

Answer 27

Offers broadest coverage combining comprehensive with collision/upset but without exclusions toward theft by persons in the same dwelling or employees. One deductible applies.

Question 28

Exclusions

Answer 28

Tire and regular use mechanical breakdown Damaged caused by anyone in lawful posession of the vehicle contamination by radioactive material damage to contents of trailers driving under the influence of drugs or alcohol or convicted of an offence while impaired (or allowing any other individual to drive under these conditions) theft of a person living in the same residence or an employee that operates/maintains the vehicle

Question 29

SPF1 Policy

Answer 29

-Only while in Canada and US or on a vessel in between -Occupant is a person on/in or getting into/out of -No person who is an occupant without consent will be covered -Garage personnel are excluded unless it is the person who owns the vehicle or their partner/employee -

Question 30

Newly Acquired Automobile

Answer 30

If all vehicle coverage is with the same insurer upon ownership of the new vehicle policy will cover first 14 days. (auto coverage will be to the extent of the least covered vehicle on the policy and the highest deductible.) An endorsement will be added when you let the insurer know and the applicable premium applied

Question 32

SPF1 policy automobile defined

Answer 32

– A temporary substitute automobile – Any private passenger being driven by the insured or husband/wife residing in the same dwelling as long as it is not used for commercial purposes and just not owned or at least by employer of the insured person residing in the same dwelling. The supplies to corporations vehicles as well.

Question 33

Two or more automobiles on one policy

Answer 33

Vehicle be treated as if it were insured under a separate policy in regards to use and operation of an automobile, not owned by the insured, the insurer limit of liability will not exceed the highest limit applicable to anyone described automobile on the policy. If more than one automobile is owned and insured under separate policies with different insurer, any loss to a non-owned vehicle will be prorated between the insurer, the highest limit policy will be the maximum limit of the liability prorated insurer

Question 34

Trailer coverage

Answer 34

An automobile with a trailer attached to it is considered to be one vehicle under the third-party liability, but is considered separate for loss or damage to the insured automobile coverage only

Question 35

Risk of war

Answer 35

The insurer will not be responsible for any loss, damage, injury, or death caused by rebellion Civil War invasion or operation of the arm forces, while engaging hostilities whether war be declared or not

Question 36

The insurer will not be liable for automobile coverage when

Answer 36

– The vehicle has been rented or at least to another person – Vehicle is used to carry explosive or radioactive materials – The automobiles used as a taxi or for caring passengers for compensation or hire

Question 37

Limitation of actions

Answer 37

Recovery of insurance money for physical damage coverages must be started within two years from the date of loss For third-party liability, coverages and action against the insurer must be started within two years from the date the insured knew or known that she had the right of action against the insurer

Question 38

Standard endorsement forms SEF

Answer 38

Preapproved by the superintendent of insurance Attached to policy to change or override the terms An amendment made to an insurance policy that alters the provisions of the contract and can add additional coverage or broad in the terms of the existing coverage or it can remove or restrict coverage

Question 39

Common endorsements

Answer 39

– Permission to rent or lease – Marine use excluded – Comprehensive cover, limited glass – Loss of use – Mortgage endorsement – Legal liability for damage to non-on automobiles – Increased limit, automobiles, sound, and electronic communication equipment – Limited waiver of depreciation – Family protection endorsement

Question 40

SPF 2 form

Answer 40

For a person who does not have automobile insurance, but drives a vehicle they do not own. This is needed if the vehicle they drive is uninsured or under insured, they could purchase a drivers policy with third-party liability coverage that protects the driver rather than the owner of the vehicle, or the policy can be endorsed to cover the drivers legal liability for damage to non-on automobiles in their care very few of these policies are issued

Question 41

Soft market

Answer 41

Competition is heavy prices are driven down. There are more suppliers of the product and less demand ensures compete for business. They will be less selective in choosing insurable risk.

Question 42

Hard market

Answer 42

There is less supply and heightened demand price increases will be experienced and ensures are stricter in their underwriting processes and decision-making. A greater number of risks will be declined.

Question 43

Facility association

Answer 43

Because a minimum third-party liability is mandatory applicants with high wrist exposure can still obtain insurance, called residual markets, or facility. all automobile, liability and insurers are required to participate by law and proportionately share the results according to the amount of automobile liability insurance they write. Specified number of member companies are designated as servicing carriers. They act on behalf of the association in the day-to-day operations and are paid according to the amount agreed by the FA membership. Every broker and agent has access to a servicing carrier the brokers submit business in the association, standard application form at the rates published in their manual Brokers have binding authority and are paid the FA rate of commission for the business they produce. The FA manages the risk sharing pool for private passenger risks only. The reform also introduced grid rating and the all comers rule.

Question 44

Grid rating

Answer 44

Applies to private passenger vehicles for basic coverage and is calculated from driving records and claims history to place each risk on a grid. Downward movement on the grid results and lower premiums upward movement increases premiums and entry level premium zero on the grid applies for inexperienced drivers but we’re all driver training. The driver will benefit by starting it two on the grid. For an experienced insured, a favourable record will result in being moved down and paying a lower premium. Each year without an at fault claim will result in moving an additional step down the grid. Each at fault claim moves a driver five steps up the grid.

Question 45

Grid rating

Answer 45

Applies to private passenger vehicles for basic coverage and is calculated from driving records and claims history to place each risk on a grid. Downward movement on the grid results and lower premiums upward movement increases premiums and entry level premium zero on the grid applies for inexperienced drivers but we’re all driver training. The driver will benefit by starting it two on the grid. For an experienced insured, a favourable record will result in being moved down and paying a lower premium. Each year without an at fault claim will result in moving an additional step down the grid. Each at fault claim moves a driver five steps up the grid.

Question 46

All comers rule

Answer 46

Applies to private passenger vehicles only for required minimum third-party liability and accident benefit coverage for renewal or new applications. One exception is in the case of nonpayment of premiums.

Question 47

All comers rule

Answer 47

Applies to private passenger vehicles only for required minimum third-party liability and accident benefit coverage for renewal or new applications. One exception is in the case of nonpayment of premiums.

Question 48

Risk sharing pool

Answer 48

Managed by the facility association and applies to private passenger vehicles that are required to be insured in Alberta. Vehicle must not weigh more than 4500 kg and must be used for pleasure driving tour from work or business, including farming operations. It does not include commercial, antique emergency or recreational vehicles. RSP exists so insurance companies can transfer high-risk vehicles to the pool. they can be placed in the grid pool or a non-grid pool up to a maximum of 4% of their book of business so that they can abide by the all Comers rule without having their company results unfairly impacted.