Study 6 Flashcards
1
Q
What do ALL vehicles in Canada need to be operated on public roads?
A
BASIC MANDATORY AUTOMOBILE INSURANCE. No insurance? No driving!
2
Q
Who provides BASIC MANDATORY AUTOMOBILE INSURANCE in Canada?
A
It depends on the PROVINCE or TERRITORY—some use a GOVERNMENT PLAN, others a PRIVATE PLAN.
3
Q
How do British Columbians set up BASIC MANDATORY COVERAGE?
A
Through AUTOPLAN BROKERS when they REGISTER and LICENSE their vehicles.
4
Q
Can BC drivers buy extra insurance from private companies?
A
Yes! OPTIONAL EXTENSION INSURANCE is available from PRIVATE INSURERS.
5
Q
What do vehicle owners in PRIVATE insurance provinces need to do before getting coverage?
A
SUBMIT an INSURANCE APPLICATION to an INSURER. No paperwork, no coverage!
6
Q
What are the key topics covered in this study?
A
- PURPOSE of AUTOMOBILE INSURANCE APPLICATIONS
REQUIRED INFORMATION in applications
UNDERWRITING insurance policies
BC-specific UNDERWRITING
RISKS with ELECTRIC and CONNECTED CARS
7
Q
True or False: Every province in Canada has the same system for automobile insurance.
A
FALSE! Some use GOVERNMENT-RUN systems, others use PRIVATE INSURERS.
8
Q
What’s special about electric and connected cars in this study?
A
They have UNIQUE EXPOSURES that impact insurance UNDERWRITING.
9
Q
What do insurers in Canada need to use for applications, policies, and claims forms?
A
STANDARD FORMS approved by the INSURANCE REGULATOR—no making up your own!
10
Q
True or False: Insurers can modify standard forms as long as the changes don’t affect the substance.
A
TRUE! But don’t go crazy with changes!
11
Q
Can you apply for automobile insurance online in Canada?
A
Yes, but the info must be TRANSCRIBED into the STANDARD APPLICATION FORM.
12
Q
Why do you still need to talk to an agent after getting an online insurance quote?
A
Because you CAN’T BIND COVERAGE online—at least not yet!
13
Q
How does ICBC deliver its services?
A
Through a BROKER DISTRIBUTION MODEL, not direct online sales.
14
Q
What’s the PURPOSE of an automobile insurance application?
A
To UNDERWRITE, RATE, and ISSUE the POLICY.
15
Q
True or False: In BC, your vehicle licence is proof of your basic insurance.
A
TRUE! No need for a separate policy—just your LICENSE.
16
Q
Why are written applications rare for basic insurance in BC?
A
Because REGISTRATION, LICENSING, and INSURANCE are all done at AUTOPLAN BROKERS.
17
Q
What’s one way ICBC has modernized insurance renewals?
A
ONLINE RENEWALS—if no changes are needed, you don’t have to visit a broker!
18
Q
What does ICBC’s online estimation tool do?
A
Helps estimate PREMIUM CHANGES when ADDING DRIVERS or CHANGING COVERAGE.
19
Q
If you want extra income replacement coverage beyond ICBC’s limit, what must you do?
A
ANSWER QUESTIONS on an INSURANCE APPLICATION for additional coverage.
20
Q
What’s the broker’s role in the insurance application process?
A
Ensure FULL DISCLOSURE, explain POLICY TERMS, and PASS ON INFO to the INSURER.
21
Q
True or False: A broker’s knowledge is legally considered the same as the insurer’s knowledge.
A
TRUE! So if they forget to mention something important, it’s on the insurer too.
22
Q
Do you always need a SIGNED application before an automobile policy is issued?
A
No, but it’s HIGHLY RECOMMENDED to PREVENT FRAUD and PROVE TERMS.
23
Q
What does the Insurance (Vehicle) Act say about signed applications?
A
If there’s NO SIGNED APPLICATION, the INSURER must include a COPY in the POLICY.
24
Q
Why might BC’s Insurance (Vehicle) Act need updates?
A
Because ONLINE APPLICATIONS and E-SIGNATURES are CHANGING insurance practices.
25
What kind of personal information do insurers collect?
Name, ADDRESS, DRIVING RECORD, CLAIMS INFO—basically, everything they need to know!
26
What laws regulate personal information in BC’s insurance industry?
FIPPA for ICBC, PIPA for private insurers, and PIPEDA for federally regulated ones.
27
What’s the main risk of insurers storing personal information?
CYBERCRIME—identity theft and fraud are big threats!
28
How can insurers protect clients’ personal info?
By using STRONG SECURITY MEASURES against UNAUTHORIZED ACCESS.
29
True or False: A written application is the best way to prevent misrepresentation.
TRUE! It’s harder to dispute later if it’s signed and on paper.
30
If a misrepresentation is made in a WRITTEN application, who has the advantage?
The INSURER—it’s easier to PROVE.
31
What happens if an application is taken over the PHONE and a misrepresentation occurs?
It’s the INSURER’S WORD vs. the INSURED’S—courts usually side with the INSURED.
32
How can brokers protect themselves from misrepresentation claims?
Have clients INITIAL and SIGN POLICY DOCUMENTS to confirm details.
33
What are E-SIGNATURES in insurance?
DIGITAL SIGNATURES that allow applicants to sign forms ELECTRONICALLY.
34
Why are E-SIGNATURES not yet standard practice in auto insurance?
The TECHNOLOGY is EVOLVING, and different companies have different SECURITY LEVELS.
35
What warning must be included on all insurance applications and policies?
FALSE STATEMENTS = CLAIMS DENIED (See Section 75 of the Insurance (Vehicle) Act!)
36
What are examples of misrepresentation that can forfeit a claim?
- LYING about the VEHICLE
HIDING MATERIAL FACTS
VIOLATING POLICY TERMS
COMMITTING FRAUD
37
Why is it better to have a WRITTEN application than a verbal one?
It avoids 'He said, she said' disputes and helps insurers PROVE FRAUD.
38
True or False: If a policy is issued differently than the application, the insurer must notify the insured.
TRUE! Otherwise, the insured could argue for the original terms.
39
What happens if the insured doesn’t object to changes in the policy within seven days?
The policy STANDS AS WRITTEN. Speak now or drive quietly!
40
What can happen if a policy is issued with LESS coverage than requested?
If a WRITTEN application exists, the insured may get the HIGHER coverage if challenged.
41
Why is a written application important in disputes over coverage amounts?
It serves as PROOF of what was ORIGINALLY REQUESTED.
42
What is the main source of information needed to issue an automobile insurance policy?
The INSURANCE APPLICATION—it’s the golden ticket!
43
True or False: The format of an insurance application (written or verbal) affects the required information.
FALSE! Same questions, same answers—just different delivery!
44
Why is accuracy in an insurance application so important?
Because the POLICY is RATED and ISSUED based on the given FACTS—no room for 'creative' answers!
45
What happens when you buy basic Autoplan coverage in BC?
You get your LICENSE PLATES along with your VEHICLE REGISTRATION—one-stop shopping!
46
Who must approve the application forms used by private insurers?
The PROVINCIAL or TERRITORIAL INSURANCE REGULATOR.
47
What are some key pieces of information required in an insurance application?
- APPLICANT’S IDENTIFICATION
POLICY PERIOD
DESCRIBED AUTOMOBILE(S)
DRIVER INFORMATION
ACCIDENT & CLAIM HISTORY
CONVICTIONS
VEHICLE RATING INFO
REQUESTED COVERAGES
PREMIUM & DECLARATION
Applicant’s Identification & Contact Info
48
Why is the applicant’s ID needed in an insurance application?
To VERIFY the DRIVER’S RECORD and CHECK VEHICLE USAGE—no mystery drivers!
49
When does an automobile insurance policy typically start and end?
Usually ONE YEAR, starting and ending at 12:01 A.M. LOCAL TIME.
50
Why is the policy period's time zone important?
So there’s NO CONFUSION about whether a loss is COVERED.
51
What details about the vehicle must be included in an application?
YEAR, MAKE, MODEL, BODY TYPE, and VIN—no guessing!
52
What does a VIN help determine?
If a VEHICLE was STOLEN, WRECKED, or WRITTEN OFF before—no buying lemons!
53
What must be disclosed if the car has a LIEN or is LEASED?
The NAME & ADDRESS of the LIENHOLDER or LESSOR—they have a financial stake too!
54
Why must insurers know if a vehicle has been modified?
To ASSESS RISK and ensure they’re not paying for OLD DAMAGE in new claims!
55
How does vehicle usage affect insurance premiums?
Business use, long commutes, or carpooling INCREASE RISK and raise premiums.
56
True or False: If you aren’t the registered owner of the car, you can still insure it.
TRUE! But DETAILS ARE REQUIRED to prove INSURABLE INTEREST.
57
What info must be provided for all drivers in a household?
NAME, DRIVER’S LICENSE NUMBER, and DATE OF BIRTH.
58
Who must be listed as the primary driver on an application?
The person who drives the vehicle MOST OFTEN.
59
What happens if an UNLISTED DRIVER gets into an at-fault accident?
The OWNER PAYS A PENALTY unless they purchased UNLISTED DRIVER PROTECTION.
60
What types of drivers are EXCLUDED from unlisted driver protection?
- UNLICENSED DRIVERS
HOUSEHOLD MEMBERS
REGULAR DRIVERS
PREVIOUS AT-FAULT ACCIDENT DRIVERS
61
How far back does an application require accident & claim history?
6 YEARS for general claims, but in BC, ICBC only looks back to March 1, 2017.
62
What happens if a past accident is NOT disclosed in an application?
The insurer may INCREASE THE PREMIUM or VOID THE POLICY.
63
How far back must drivers disclose traffic convictions?
3 YEARS—no hiding those speeding tickets!
64
What happens if a driver has multiple traffic convictions?
They PAY SURCHARGE PREMIUMS—bad driving = expensive insurance!
65
What factors influence the rating of a vehicle?
- VEHICLE CLASS
CLAIM HISTORY
LOCATION
DRIVING EXPERIENCE
SAFETY TECH DISCOUNTS
66
Why must the usual parking location of a car be disclosed?
Because a CAR KEPT IN A HIGH-CRIME AREA may have a HIGHER PREMIUM.
67
How is an insurance premium calculated?
RATE x AMOUNT OF COVERAGE PURCHASED = TOTAL PREMIUM.
68
True or False: The premium estimated on an application is final.
FALSE! The insurer can ADJUST THE PREMIUM based on additional information.
69
What is a minimum retained premium?
The NON-REFUNDABLE PORTION of a policy if it’s canceled early.
70
What does THIRD-PARTY LIABILITY coverage do?
Covers you if you INJURE SOMEONE or DAMAGE PROPERTY.
71
How much third-party liability does basic Autoplan provide?
$200,000, but you can buy MORE COVERAGE from ICBC or private insurers.
72
What does BASIC VEHICLE DAMAGE COVERAGE (BVDC) cover?
Damage to your car in a NOT-AT-FAULT ACCIDENT—up to $200,000.
73
What does ENHANCED ACCIDENT BENEFITS cover?
MEDICAL TREATMENT, WAGE LOSS, and FUNERAL EXPENSES—ICBC helps even in no-fault crashes.
74
What is UNDERINSURED MOTORIST PROTECTION?
It covers you when the at-fault driver DOESN’T HAVE ENOUGH INSURANCE—up to $1 MILLION.
75
What is OWN DAMAGE COVERAGE?
Optional coverage for YOUR CAR—includes COLLISION and COMPREHENSIVE.
76
What does HIT-AND-RUN coverage protect against?
Damage caused by a DRIVER who FLEES the SCENE—no 'mystery damage' surprises!
77
Why must applicants SIGN the insurance application?
To WARRANT the TRUTH of their statements—lying = no coverage!
78
What happens if an applicant knowingly misrepresents facts?
Their CLAIMS can be DENIED under Section 75 of the Insurance (Vehicle) Act.
79
What are common misrepresentations on insurance applications?
- LYING about VEHICLE USAGE
HIDING MODIFICATIONS
FAILING TO LIST DRIVERS
80
What legal risk do brokers & agents face when filling out applications?
ERRORS & OMISSIONS (E&O) claims—mess up, and they could get SUED!
81
What happens if a broker incorrectly describes a vehicle on a policy?
The insurer may DENY COVERAGE if the car DOESN’T MATCH the description.
82
Why must a broker ensure a lienholder is listed?
Because if the car is stolen & the insurer pays the owner instead of the lienholder, LAWSUITS ENSUE!
83
What key details must a broker provide in an insurance application?
- IF THEY BOUND THE RISK
TYPE OF LIABILITY CARD ISSUED
HOW LONG THEY’VE KNOWN THE APPLICANT
84
Why does it matter if the business is new to the insurer but not the broker?
It may mean the CLIENT SWITCHED INSURERS for a REASON—worth investigating!
85
What does UNDERWRITING mean in insurance?
SCRUTINIZING a risk and deciding if it’s ELIGIBLE for insurance. Basically, insurance gatekeeping!
86
What are underwriting decisions based on?
MARKET TRENDS, PAST EXPERIENCE, and STATISTICS—because gut feelings don’t cut it.
87
Why did underwriters used to sign policies?
To PERSONALLY BIND COVERAGE—now, it's mostly done at scale. Less dramatic, but more efficient!
88
True or False: Underwriting is only done at the branch level.
FALSE! It happens at HEAD OFFICE and BRANCH LEVELS.
89
What are the two levels of underwriting?
HEAD OFFICE UNDERWRITING (big-picture rules) and INDIVIDUAL UNDERWRITING (case-by-case).
90
What is the main role of HEAD OFFICE underwriting?
To set the MARKETING STRATEGY and UNDERWRITING POLICIES for PROFITABILITY.
91
True or False: All insurers write all types of automobile risks.
FALSE! Some specialize, some mass market, and some avoid high-risk stuff altogether.
92
What is a RESIDUAL RISKS MARKET?
Where HIGH-RISK policies go when no one wants them.
93
What is a RESIDUAL RISKS MARKET?
Where HIGH-RISK policies go when no one wants them—like the Facility Association or risk-sharing plans.
94
What key tools do head office underwriters create?
- UNDERWRITING MANUALS
## Footnote
LIMIT TABLES, CLASSIFICATION GUIDES, ACCEPTANCE LISTS
95
Why are LIMIT TABLES important in underwriting?
They show the MAXIMUM LIABILITY LIMITS based on the insurer’s REINSURANCE AGREEMENTS.
96
What does a senior underwriter only acceptance list mean?
Some risks require EXPERIENCED DECISION-MAKERS—not rookie calls!
97
True or False: The more detailed the underwriting manual, the fewer mistakes occur.
TRUE! Clear guidelines = fewer headaches.
98
What is the role of BRANCH-LEVEL underwriting?
To review INDIVIDUAL APPLICATIONS and ensure they follow HEAD OFFICE GUIDELINES.
99
What are the three typical functions of branch underwriting?
- RISK SELECTION
## Footnote
RATING, USING ENDORSEMENTS CORRECTLY
100
What are the three choices an underwriter has when evaluating a risk?
ACCEPT IT, ACCEPT WITH CONDITIONS, or REJECT IT.
101
What factors do underwriters consider in risk selection?
- APPLICANT’S INFO (moral hazard check!)
## Footnote
PHYSICAL HAZARDS, EXPOSURE LEVELS
102
What does EXPOSURE mean in underwriting?
The TOTAL POTENTIAL LOSS an insurer faces if a claim happens.
103
Example: A flood destroys 4 insured vehicles worth $128,000. What’s the exposure here?
$128,000—the amount the insurer could be on the hook for.
104
What are some reasons an underwriter might REJECT a risk?
- The insurer DOESN’T COVER THAT CLASS
## Footnote
The risk is TOO HAZARDOUS, The applicant REFUSES RISK IMPROVEMENTS, Claims history is TOO SEVERE
105
True or False: Insurers in Ontario must file their underwriting rules with regulators.
TRUE! No making up rules as they go.
106
What is RATING in insurance?
Determining the COST of a policy based on the RISK involved.
107
Who performs rating?
UNDERWRITERS, RATING CLERKS, and sometimes ACTUARIES.
108
What do modern insurers use for rating?
COMPUTER PROGRAMS & MODELS—less math stress, more accuracy!
109
True or False: Artificial Intelligence is expected to replace human underwriters in the future.
TRUE! "VIRTUAL UNDERWRITERS" could be faster and more precise.
110
What is MANUAL RATING, and when is it used?
A pricing method based on EXPERIENCE, used for COMPLEX OR HIGH-VALUE RISKS.
111
What is a LOADING in rating?
An EXTRA CHARGE added for riskier situations.
112
What are DEDUCTIONS (CREDITS) in rating?
Discounts applied when a risk is LESS HAZARDOUS than average.
113
What are the two main types of endorsements?
- EXTENSIONS (added coverage)
## Footnote
RESTRICTIONS (limits on coverage)
114
What’s an example of an endorsement EXTENSION?
FAMILY PROTECTION ENDORSEMENT—extra coverage for family members.
115
What’s an example of a RESTRICTION endorsement?
NAMED DRIVER LIMITATION—restricts coverage to specific drivers.
116
Who underwrites basic auto insurance in BC, SK, and MB?
GOVERNMENT-OWNED INSURERS (ICBC, SGI, MPI).
117
Can government insurers deny basic coverage?
NO! They must insure ALL DRIVERS—no cherry-picking.
118
What do private insurers compete for in BC, SK, and MB?
OPTIONAL COVERAGE, like extended liability or collision.
119
True or False: There’s a Facility Association in BC, SK, and MB.
FALSE! The government insurer covers all high-risk drivers.
120
What’s the main underwriting function in government-run insurance provinces?
Determining the CORRECT RATE GROUP—not denying coverage.
121
What underwriting criteria are banned in some provinces for being discriminatory?
AGE, GENDER, MARITAL STATUS, and REGION.
122
True or False: Private insurers in BC, SK, and MB can set their own underwriting rules.
TRUE! But they mostly follow similar rating methods.
123
Who provides BASIC automobile insurance in British Columbia?
ICBC (INSURANCE CORPORATION OF BRITISH COLUMBIA)—it’s a government-run monopoly!
124
True or False: ICBC can deny basic coverage to high-risk drivers.
FALSE! ICBC must insure EVERYONE—no cherry-picking allowed.
125
What mandatory coverages does ICBC underwrite?
- THIRD-PARTY LIABILITY (minimum limits)
## Footnote
ENHANCED ACCIDENT BENEFITS, BASIC VEHICLE DAMAGE COVERAGE (BVDC), UNDERINSURED MOTORIST PROTECTION
126
What law requires ICBC to provide universal auto insurance?
Insurance (Vehicle) Act, Part 1, Section 7.
127
What factors CANNOT be used to set ICBC rates?
AGE, GENDER, MARITAL STATUS—discrimination isn’t allowed!
128
True or False: ICBC can decline OPTIONAL coverage for high-risk drivers.
TRUE! If you're a risk magnet, ICBC can say “no” to extras.
129
What are the four main factors in ICBC premium calculation?
- DRIVERS (experience, claims history)
## Footnote
VEHICLE (territory, use), DISCOUNTS (safe driver, anti-theft, etc.), ADD-ONS (unlisted driver protection, learners add-on)
130
What does "at-fault accidents follow the driver, not the owner" mean?
If you crash someone else's car, YOUR RECORD GETS THE HIT—not the owner’s.
131
How many years of accident-free driving can earn ICBC discounts?
Up to 40 years of clean driving = BIG SAVINGS!
132
How does ICBC treat new residents’ driving experience?
They credit up to 15 years from out-of-province licenses.
133
What is a DRIVER FACTOR?
A three-decimal risk score—lower = safer driver, higher = “brace yourself” pricing!
134
What’s the baseline DRIVER FACTOR reference point?
1.000—numbers below are GOOD, numbers above… not so much.
135
What two major vehicle factors affect ICBC premiums?
TERRITORY (where it’s driven) & RATE CLASS (how it’s used).
136
What are common VEHICLE RATE CLASSES?
- PLEASURE (errands, trips)
## Footnote
COMMUTING (work/school), BUSINESS (salesperson, realtor), DELIVERY (drop-offs, couriers)
137
True or False: A "pleasure use" vehicle can be used for commuting anytime.
FALSE! Only 6 DAYS PER MONTH—otherwise, you're bending the rules.
138
How does ICBC divide BC for insurance rating?
By TERRITORY—because city driving is riskier than country cruising!
139
What are some DISCOUNTS ICBC offers?
- DISABILITY DISCOUNT (for qualifying persons)
## Footnote
SENIOR DRIVER FACTOR (65+ years old), ADVANCED SAFETY TECH (Autonomous Emergency Braking), ANTI-THEFT DEVICE (immobilizers), LOW-KM DISCOUNT (<5,000 km or <10,000 km per year)
140
What safety feature earns a discount for preventing front-end collisions?
AUTONOMOUS EMERGENCY BRAKING (AEB)—brakes for you when you’re not paying attention!
141
How do drivers prove they qualify for a LOW-KM DISCOUNT?
By submitting an ODO READING (photo, garage receipt, app reading).
142
What happens to the SENIOR DRIVER DISCOUNT after one at-fault accident?
It DECREASES—and after a second crash in 10 years, it’s GONE!
143
What are two common ICBC add-ons?
UNLISTED DRIVER PROTECTION & LEARNERS ADD-ON.
144
What does UNLISTED DRIVER PROTECTION cover?
If you OCCASIONALLY LEND your car and that driver crashes, you avoid a HEFTY PENALTY.
145
What does the LEARNERS ADD-ON do?
Prevents crashes caused by LEARNER DRIVERS from counting against them.
146
Why don’t ICBC brokers need to ask about past insurance refusals?
Because ICBC CAN’T REFUSE BASIC COVERAGE—they insure everyone!
147
What past driving details DOES ICBC check?
- LICENSE STATUS
## Footnote
DRIVING EXPERIENCE, PAST CHARGEABLE CLAIMS, MOTOR VEHICLE INFRACTIONS (tickets, violations)
148
What past driving details does ICBC NOT consider in ratings?
LICENSE SUSPENSIONS, CANCELLATIONS, OR LAPSES—they don’t hold grudges.
149
Can ICBC apply HIGHER DEDUCTIBLES for risky drivers?
YES! If you’re a claims machine, expect BIG DEDUCTIBLES.
150
True or False: ICBC can deny collision coverage to extreme high-risk drivers.
TRUE! They’ll insure you for basics, but collision coverage isn’t guaranteed.
151
What does ICBC’s ONLINE ESTIMATION TOOL do?
Helps drivers see HOW CHANGES AFFECT PREMIUMS—before they commit!
152
True or False: The ICBC online tool gives the final premium price.
FALSE! It’s an ESTIMATE—the broker confirms the final cost.
153
Why must brokers explain driver factors and underwriting risks?
Because the TOOL ONLY SHOWS NUMBERS—the broker gives CONTEXT.
154
What are the two major automotive trends disrupting insurance?
ELECTRIC VEHICLES (EVs) and CONNECTED CARS.
155
True or False: Electric vehicles require a special insurance application process.
FALSE! They are insured the same way as regular INTERNAL COMBUSTION ENGINE (ICE) vehicles.
156
Why do electric vehicles usually have higher insurance premiums?
Higher REPAIR & REPLACEMENT COSTS—EVs are expensive to fix!
157
What types of discounts might insurers offer for electric vehicles?
"GREEN CAR" DISCOUNTS—if they feel like being nice.
158
What are three key factors impacting EV insurance?
REPAIR FACILITIES, COST OF REPAIRS, and VEHICLE VALUE.
159
Why are EV repairs often more expensive than ICE vehicle repairs?
- PROPRIETARY SYSTEMS require manufacturer servicing.
## Footnote
HIGH-TECH SOFTWARE makes diagnosis trickier. BATTERY REPLACEMENTS cost THOUSANDS if damaged.
160
What challenge do independent repair shops face with EVs?
Limited access to manufacturer systems & parts—good luck changing more than a tire!
161
What happens if an EV battery is damaged in a crash?
It might need full replacement—and that’s NOT cheap!
162
Why might some insurers refuse to cover certain electric vehicles?
They are classified as HIGH-VALUE VEHICLES, which need specialized coverage.
163
What is the Internet of Things (IoT)?
A network of smart devices that share data—like thermostats, watches, and CARS!
164
True or False: IoT devices are designed with security as their main focus.
FALSE! Most are designed for functionality, NOT security—hello, hackers!
165
What’s a connected car?
A vehicle that connects to the Internet and can share data with other devices.
166
What famous IoT-related car hack proved security risks?
A JEEP WAS HACKED, and a third party controlled its steering!
167
What technologies will make IoT risks more common?
5G and EDGE COMPUTING—faster, smarter, but riskier!
168
If a hacker crashes a connected car, who might be responsible?
- The CAR MANUFACTURER (for selling a vulnerable product).
## Footnote
The SOFTWARE PROVIDER (for making weak software). The HACKER (if they can be caught). The DRIVER (but is that fair?).
169
Why might traditional insurance hold the driver responsible?
Because old laws assume humans control cars—which isn’t always true with IoT!
170
Why might the manufacturer’s product liability insurance cover hacked accidents?
The car had a design flaw (cyber vulnerability), making it like any other defective product.
171
Why is it hard to sue software providers for a hacked accident?
Many manufacturers use open-source software, which spreads responsibility around.
172
True or False: A manufacturer’s cyber liability policy would always cover a hacked accident.
FALSE! Most CYBER POLICIES EXCLUDE BODILY INJURY & PROPERTY DAMAGE.
173
What’s the current reality for insurance coverage on hacked vehicle accidents?
The DRIVER’S AUTO INSURANCE pays first, but this may change as cyber risks evolve.
174
What are the three key purposes of an insurance application?
UNDERWRITE, RATE, and ISSUE the policy.
175
What is the professional responsibility of brokers and agents?
To uphold UTMOST GOOD FAITH—no sneaky business!
176
What must insurers and intermediaries do with clients’ personal info?
PROTECT IT from unauthorized access, collection, or use—cyber thieves love data!
177
What happens if a signed insurance application contains a misrepresentation?
The insurer can USE IT AS EVIDENCE against the insured.
178
True or False: If a policy is issued differently from the written application, the insured must accept it.
FALSE! The insured may INSIST ON THE WRITTEN TERMS.
179
What are the typical sections of an insurance application?
- APPLICANT DETAILS
## Footnote
POLICY PERIOD, DESCRIBED VEHICLE(S), DRIVER INFO, ACCIDENT HISTORY, CONVICTIONS, RATING INFO, COVERAGES REQUESTED, REMARKS & PREMIUM, DECLARATION & BROKER REPORT
180
What does UNDERWRITING involve?
SCRUTINIZING A RISK to decide if it’s eligible for insurance.
181
Where does underwriting take place?
At HEAD OFFICE (big-picture strategy) and BRANCH LEVEL (case-by-case risk selection).
182
What does HEAD OFFICE underwriting focus on?
MARKETING STRATEGY, RISK GUIDELINES, and PROFITABILITY.
183
What are the two main functions of BRANCH LEVEL underwriting?
RISK SELECTION and RATING.
184
Why is government-run insurance different from private insurance?
GOVERNMENT INSURERS MUST COVER EVERYONE—they CAN’T DECLINE RISKS.
185
What coverages does ICBC exclusively underwrite?
- THIRD-PARTY LIABILITY (minimum limits)
## Footnote
BASIC VEHICLE DAMAGE COVERAGE (BVDC), ENHANCED ACCIDENT BENEFITS, UNDERINSURED MOTORIST PROTECTION
186
Can ICBC refuse basic coverage to high-risk drivers?
NO! Basic coverage is GUARANTEED for all BC drivers.
187
What factors impact ICBC premium calculations?
DRIVER FACTORS, VEHICLE FACTORS, and DISCOUNTS/ADD-ONS.
188
What does ICBC’s online estimation tool do?
Estimates the premium impact of adding drivers or changing coverage.
189
What two emerging vehicle technologies are changing auto insurance?
ELECTRIC VEHICLES (EVs) and CONNECTED CARS.
190
True or False: EVs are underwritten differently than gas-powered vehicles.
FALSE! The process is the same, but EVs often have HIGHER PREMIUMS.
191
Why do electric vehicles typically cost more to insure?
- EXPENSIVE REPAIRS & PARTS
## Footnote
SPECIALIZED KNOWLEDGE REQUIRED, HIGH-VALUE VEHICLES NEED SPECIAL COVERAGE
192
What repair challenge do independent shops face with EVs?
They CAN’T ALWAYS ACCESS MANUFACTURER SYSTEMS—more expensive repairs!
193
How does the Internet of Things (IoT) impact auto insurance?
CONNECTED CARS can be HACKED, creating DATA BREACH & BODILY INJURY RISKS.
194
What famous hack showed the risks of connected cars?
A JEEP WAS REMOTELY CONTROLLED by hackers!
195
Who might be responsible if a hacked car causes a crash?
- THE DRIVER (traditional liability rules)
## Footnote
THE CAR MANUFACTURER (faulty product), THE SOFTWARE PROVIDER (bad coding), THE HACKER (if caught)
196
Why might cyber insurance policies not cover hacked car accidents?
Most EXCLUDE BODILY INJURY & PROPERTY DAMAGE—the market is still evolving!
197
What is "Utmost Good Faith"?
It's the golden rule of insurance—both parties must be HONEST and TRANSPARENT. No fibbing allowed!
## Footnote
Example: When filling out an application, the applicant can’t leave out that speeding ticket from last month.
198
What is "Underwriting"?
UNDERWRITING is like a VIP club check—deciding who gets in (insured) and who’s left out. It’s all about RISK SELECTION.
## Footnote
Example: If you’re a driver who’s had 7 accidents in the last year, the underwriter may just give you a “TRY AGAIN NEXT YEAR” card.
199
What does "Rating" mean in insurance?
RATING is the process of calculating how much you'll pay—based on how risky you are. It’s like your insurance scorecard.
## Footnote
Example: If you’ve got a history of accidents, your premiums will look more like a luxury vacation budget than a pizza night.
200
What is an "Insurance Application"?
It’s your insurance résumé—a form that tells the insurer everything they need to know about you before they say "yes" or "no".
## Footnote
Example: Think of it like telling your insurer about your last 5 dates—be honest, they’ll know anyway!
201
What is "Third-Party Liability"?
This covers YOU when you mess up—the other driver is mad, and this insurance steps in to smooth things over.
## Footnote
Example: If you rear-end someone at a red light, your third-party liability insurance helps pay for their dent and drama.
202
What is "IoT" (Internet of Things)?
It’s the fancy term for things talking to each other over the internet—cars included! Connected cars are just IoT on wheels.
## Footnote
Example: Your car can tell your coffee machine to start brewing on the way to work. Talk about a smooth start to your day!
203
What is "Cyber Liability Insurance"?
This insurance steps in when cyber stuff goes wrong—like if your car gets hacked and you crash into someone.
## Footnote
Example: If hackers take over your car and steer you into a wall, this is the coverage that might help pay for the mess.
204
What is "Claim Subrogation"?
It’s the process where your insurer goes after the other party (or their insurer) to recover the money it paid you.
## Footnote
Example: If a drunk driver hits your car, your insurance pays you, then hunts down the drunk driver’s insurer to get the money back.
205
What is a "High-Value Vehicle"?
A fancy car that needs special care. If your car costs more than a small house, it needs special underwriting and coverage.
## Footnote
Example: A Ferrari isn’t covered the same way as a minivan—it gets VIP treatment from insurers.
206
What is "Compulsory Automobile Insurance"?
Insurance that’s mandatory—you can't skip it. In places like BC, you must have basic coverage, no excuses.
## Footnote
Example: You can’t drive in BC without the basics—it's like being told to wear pants in public.
207
What is an application in insurance?
The form where you spill the beans on all your details so the insurer can decide if they'll cover you and at what price.
## Footnote
Example: Filling out an application to get car insurance with your driving record, vehicle info, and accident history.
208
Who is the applicant?
The person who applies for insurance. It’s like being the one who signs up for the team.
## Footnote
Example: You are the applicant when you sign up for auto insurance with all your details.
209
What does utmost good faith mean?
It’s the rule that says both the insurer and you must be honest and transparent—no funny business!
## Footnote
Example: You tell your insurer about that fender bender from last year, even if it’s embarrassing.
210
What is misrepresentation in insurance?
When you say something that isn't true on your application—like exaggerating how clean your driving record is.
## Footnote
Example: Saying you’ve never had an accident when you actually rear-ended a car last year.
211
What’s a driver abstract?
A report that tells your driving history. It's like your report card, but for your car habits.
## Footnote
Example: When applying for car insurance, your insurer might check your driver abstract to see if you’ve had any accidents or tickets.
212
What is a policy period?
The time frame your insurance is active—like the length of your contract with the insurer.
## Footnote
Example: Your auto insurance policy period could be from January 1st to December 31st.
213
Who is a lienholder?
Someone who has a legal claim to your car, usually because you’ve financed it—basically the bank’s claim to your ride!
## Footnote
Example: If you’re still paying off your car loan, the bank is the lienholder on your car.
214
What’s a lessor in insurance?
The person or company who leases a vehicle to someone else.
## Footnote
Example: If you're driving a rental car, the rental agency is the lessor.
215
What does insurable interest mean?
You have to have something to lose if the insured event happens. You can’t just insure any random car.
## Footnote
Example: You can insure your own car because you’re the owner, but you can’t insure your neighbor’s car without their permission.
216
What’s a rate group?
A classification used to determine your insurance rate based on factors like your vehicle type and your driving history.
## Footnote
Example: If you have a safe driving record and a family-friendly car, you might fall into a lower rate group.
217
What’s a premium in insurance?
The amount of money you pay the insurer for your policy. Think of it as the "rent" for coverage.
## Footnote
Example: You pay $100 a month for your car insurance premium.
218
What’s a minimum retained premium?
The smallest amount you pay, no matter how much coverage you cancel. It’s the “non-refundable deposit” in insurance.
## Footnote
Example: If you cancel your policy mid-year, the insurer keeps a portion of the premium as a minimum retained premium.
219
What is earned premium?
The portion of your premium the insurer has "earned" for the time they've provided coverage.
## Footnote
Example: If you’ve had insurance for six months of a one-year policy, half of your premium is the earned premium.
220
What are statutory conditions?
The set of rules an insurer and insured must follow for the contract to be valid. It's like the fine print everyone skips over.
## Footnote
Example: Statutory conditions might say you need to notify your insurer within 30 days if you’ve moved to a new address.
221
What is earned premium?
The portion of your premium the insurer has 'earned' for the time they've provided coverage.
## Footnote
Example: If you’ve had insurance for six months of a one-year policy, half of your premium is the earned premium.
222
What are statutory conditions?
The set of rules an insurer and insured must follow for the contract to be valid. It's like the fine print everyone skips over.
## Footnote
Example: Statutory conditions might say you need to notify your insurer within 30 days if you’ve moved to a new address.
223
What does it mean to underwrite a policy?
It’s the process where the insurer reviews your application and decides whether to accept or reject the risk.
## Footnote
Example: The underwriter decides whether to approve your car insurance based on your driving record and car details.
224
What’s the Facility Association?
A pool of insurers that helps provide coverage to high-risk individuals who can’t get insurance elsewhere.
## Footnote
Example: If you have multiple at-fault accidents, you might be referred to the Facility Association for coverage.
225
What’s a rate manual?
A book (or digital tool) that contains all the rates insurers charge based on specific risk factors.
## Footnote
Example: The underwriter consults the rate manual to figure out how much to charge you for insurance based on your car’s make and model.
226
What’s retention in insurance?
The amount of risk an insurer decides to keep for themselves instead of passing it off to reinsurance.
## Footnote
Example: If an insurer keeps $1 million of a $5 million claim, they have a $1 million retention.
227
What’s a risk in insurance?
The chance that something bad could happen that would trigger a claim. It’s basically the bad stuff that could happen to your car.
## Footnote
Example: The risk of your car getting stolen or damaged in a collision.
228
What’s a moral hazard?
When people take more risks because they have insurance coverage. It’s like saying, 'I’m covered, so I can go ahead and speed.'
## Footnote
Example: A driver might be more careless on the road because they know their insurance will cover the damage if they crash.
229
What’s a physical hazard?
A condition of the environment that could increase the likelihood of a loss, like a broken traffic signal at a dangerous intersection.
## Footnote
Example: A car parked in a flood-prone area has a physical hazard that increases the risk of water damage.
230
What’s exposure in insurance?
The extent to which you’re at risk for something bad happening, like an accident or injury.
## Footnote
Example: Driving a car every day exposes you to the risk of being in a crash.
231
What are underwriting rules?
The guidelines insurers follow to decide whether to accept or reject a risk, and at what rate.
## Footnote
Example: An insurer might have underwriting rules that reject applications from drivers with multiple DUI convictions.
232
What’s manual rating?
When an insurer uses a set of pre-determined rates to calculate your premium based on your risk factors.
## Footnote
Example: If your car is a sports car, your manual rating might give you a higher premium due to the risk of accidents.
233
What’s a loading in insurance?
An extra charge added to your premium due to increased risk factors.
## Footnote
Example: If you live in a high-crime area, your insurer might add a loading to your premium to cover the higher theft risk.
