chapter 6 - auto

Question 1

1. Explain third party Liability – financial responsibility laws and priority payment scale

Answer 1

• Financial responsibility laws are enacted by provincial governments to make sure that anybody whos driving a vehicle on public roads is financially responsible for losses they cause to third parties.
• $200,000 min limit required
• Priority or payments scale - When losses exceed $200,000 coverage is designated for bodily injury and property damage. Most of the available $200,000 is reserved for bodily injury losses

A minimum limit of $200,000 is required.

Question 2

How do clients prove compliance with Financial Responsibility Laws?

Answer 2

• Inter-Province Motor Vehicle Liability Insurance certificate
• Government automobile provinces with certificates of vehicle registration

These documents serve as proof of insurance compliance.

Question 3

How do governments deal with uninsured drivers?

Answer 3

Have a separate pool, a reserve fun set up for people that are injured by uninsured drivers, known as unsatisfied judgment fund, judgment recovery fund or highway victims indemnity fund

This fund compensates those injured by uninsured drivers.

Question 4

What are accident benefits?

Answer 4

• Compulsory in most provinces
• Coverage paid without regard to fault
• Payments made when insured persons are injured in automobile accidnets
• Accident benefits received from own insurance company
• Medical expenses, funeral expenses, disability income, death benefits, dismemberment or permanent impairment benefits

Payments are made when insured persons are injured in automobile accidents.

Question 5

What does physical damage coverage entail?

Answer 5

Covers damage to the automobile itself

It is optional in most provinces but compulsory in Alberta and Manitoba.

Question 6

In which provinces is government automobile insurance provided?

Answer 6

• British Columbia
• Saskatchewan
• Manitoba

In these provinces, private insurers compete for excess coverages only.

Question 7

What is the role of Facility Associations?

Answer 7

Provides coverage to those who cannot purchase automobile insurance from traditional insurers due to poor driving history or lack of experience

This helps ensure that high-risk drivers can still obtain insurance.

Question 8

What is no fault insurance?

Answer 8

Provides generous benefits to injured persons in exchange for limited rights to sue the responsible driver

This system aims to simplify claims and reduce litigation.

Question 9

What information is required on application forms for automobile insurance?

Answer 9

• Full name and postal address
• Driver’s abstract and territory rating
• Policy period
• Information of automobile (model, year, VIN)
• License and insurance history
• Declaration of ownership

The application forms are part of the contract and must be signed by the applicant.

Question 10

What information is required on the list of drivers?

Answer 10

• Names of all drivers
• Percentage of use
• Number of years licensed

This helps assess risk and determine premiums.

Question 11

What is included in the driver history information?

Answer 11

• Conviction history (3 years)
• Accident and claim history (6 years)

This information is crucial for underwriting and risk assessment.

Question 12

What information is required regarding the use of the automobile?

Answer 12

• Purpose of use
• Commuting information
• Estimated distance driven per year

This helps insurers understand how the vehicle will be used.

Question 13

What information is required for business use of the automobile?

Answer 13

• Rented or leased?
• Carrying passengers or goods for compensation?
• Carrying explosives or radioactive materials?

This information is necessary to assess additional risks associated with business use.

Question 14

How can clients jeopardize coverage?

Answer 14

• Providing a false description of automobiles
• Knowingly misrepresenting the risk
• Failing to disclose required facts
• Breaching a policy term
• Committing fraud
• Making a false statement regarding a claim

These actions can lead to denial of coverage.

Question 15

What coverages are found on SPF No.1 – owners form?

Answer 15

• Section A – Third party liability
• Section B – Accident benefits
• Section C – Loss of or damage to insured automobile

This form outlines the basic coverages for automobile insurance.

Question 16

What does Section A – TPL cover?

Answer 16

Insures losses arising from ownership, operation, or use of automobiles when legally liable for bodily injury or property damage to a third party

Coverage extends to named insured and anyone using the automobile with consent.

Question 17

What are the exclusions of Section A?

Answer 17

• Coverage only when legally liable
• Liability imposed by WC laws
• Employee injuries
• Property in CCC
• Contamination of property

Coverage is provided even when the driver is intoxicated.

Question 18

What are the additional agreements of the insurer and insured under Section A?

Answer 18

• Insurer covers costs to investigate, negotiate, and defend
• Insured appoints insurer as irrevocable attorney
• Reimbursement of moneys paid by insurer

These agreements clarify the responsibilities of both parties.

Question 19

Who is insured under Section B Accident benefits?

Answer 19

Injured drivers, occupants, and pedestrians

Coverage is paid without regard to fault.

Question 20

What does subsection 1 of accident benefits cover?

Answer 20

• Medical payments (not covered by provincial hospitalization plan)
• Funeral expenses (usually limited to $1,000)

This ensures that immediate medical needs are addressed.

Question 21

What are the death benefits and loss of income payments?

Answer 21

• Death benefits paid to survivors of the deceased
• Loss of income payments for those unable to work after an accident

Coverage ceases after 2 years and has a 7-day waiting period.

Question 22

What is the uninsured motorist coverage?

Answer 22

Coverage available when injured or killed by an uninsured or unidentified automobile, with a minimum limit of $200,000

This protects insured persons from losses due to uninsured drivers.

Question 23

Define uninsured automobile and unidentified automobile.

Answer 23

• Uninsured automobile: No applicable and collectible bodily injury liability insurance
• Unidentified automobile: Contacted your automobile but identity of driver or owner is unknown

These definitions clarify the types of coverage available.

Question 24

What are the unidentified auto coverage claims requirements?

Answer 24

• Neither driver nor owner can be determined
• Police notified within 24 hours
• File a statement within 30 days
• Automobile must be available for inspection

These requirements ensure proper handling of claims.

Question 25

What are the **exclusions of accident benefits**?

Answer 25

* Suicide * Workers compensation payments * Caused by radioactive materials * Race or speed test * Sickness or disease * Illegal use ## Footnote These exclusions limit coverage in specific situations.

Question 26

Explain **Section C – loss or damage to insured auto**.

Answer 26

Coverage on the automobile itself, including: * Subsection 1 – All perils * Subsection 2 – Collision or upset * Subsection 3 – Comprehensive * Subsection 4 – Specified perils ## Footnote Clients usually purchase sections 2 and 3 together.

Question 27

What are the **benefits of All Perils coverage** in Section C?

Answer 27

Provides coverage when the automobile is stolen from a person residing in the insured’s dwelling premises ## Footnote Comprehensive covers theft but not from people residing in your home.

Question 28

When will **deductibles be waived** in Section C?

Answer 28

* Fire * Lightning * Theft of entire auto * Collision with animals ## Footnote Waiving deductibles applies to specific situations.

Question 29

What are the **exclusions of Section C**?

Answer 29

* Normal use losses * Conversion or embezzlement * Fraud * Radioactive damage * Trailers, rugs, robes * Detached stereo equipment ## Footnote These exclusions limit the insurer's liability.

Question 30

What are **general average charges**?

Answer 30

Charges levied against the insured when other automobiles are thrown overboard for safety ## Footnote This is a maritime insurance concept.

Question 31

What is **salvage** in insurance terms?

Answer 31

Expenses incurred by the insured to protect the automobile from further loss after an accident ## Footnote This ensures that the insured takes steps to mitigate damages.

Question 32

What are **Fire Department Charges**?

Answer 32

Bills received from fire departments dispatched to fight fire involving the insured automobile ## Footnote This coverage helps cover costs associated with fire incidents.

Question 33

What are **Custom Duties** of Canada or the USA?

Answer 33

Custom duties levied against the insured when the automobile is damaged in the USA ## Footnote This ensures coverage for international incidents.

Question 34

Explain **Agree to Waive Subrogation**.

Answer 34

Insurer agrees to waive subrogation when someone operates the insured automobile with consent, except in certain conditions ## Footnote This protects the insured from liability in specific situations.

Question 35

What is a **Temporary Substitute Automobile**?

Answer 35

Coverage for damage to a temporary substitute automobile when the insured is legally liable ## Footnote Coverage is for the same perils as the insured's own automobile.

Question 36

What is **loss of use by theft**?

Answer 36

Access up to $25 per day for up to 30 days to rent a substitute automobile when the entire automobile is stolen ## Footnote A 72-hour waiting period applies after reporting the theft.

Question 37

Explain **section D – uninsured/unidentified automobile**.

Answer 37

Liability coverage in reference to Atlantic Canada ## Footnote This provides protection against uninsured drivers.

Question 38

What is the **territory of SPF 1**?

Answer 38

Canada and the United States or vessels traveling between ports of these countries ## Footnote This defines the geographical limits of coverage.

Question 39

Can thieves access any coverage on your client’s automobile policy?

Answer 39

No, when operators do not have the consent of the insured, there is no coverage available ## Footnote This protects the insured from unauthorized use.

Question 40

Define **automobile** in the context of insurance.

Answer 40

The described automobile, including newly acquired and temporary substitute automobiles ## Footnote Coverage is limited to specific conditions outlined in the policy.

Question 41

What are the **excluded uses of SPF 1**?

Answer 41

* Leasing or renting to others * Carrying explosives or radioactive materials * Carrying passengers for compensation ## Footnote These exclusions limit the types of activities covered under the policy.

Question 42

Identify **compensation situations allowed** by automobile policies.

Answer 42

* Car pools * Sharing trip costs * Carrying servants * Driving students to educational events ## Footnote These situations are permissible under the policy.

Question 43

Describe **Statutory Condition Prohibited Use by Insured**.

Answer 43

* Not operate unless qualified by law * Not operate while license is suspended * Not operate underage * Not use in illicit trade or races ## Footnote These conditions outline prohibited uses of the insured vehicle.

Question 44

What are the **requirements where loss or damage to persons or property** is concerned?

Answer 44

* Prompt written notice of loss * Verify loss arose from use of automobile * Forward legal papers received * Assist insurer in securing information ## Footnote These requirements ensure proper claims handling.

Question 45

What are the **requirements where loss or damage to the automobile** is concerned?

Answer 45

* Promptly report details of loss * Protect the automobile from further damage * Submit proof of loss within 90 days * Not make repairs without consent ## Footnote These requirements help manage the claims process effectively.

Question 46

Describe **Inspection of Automobile** requirements.

Answer 46

Insured shall permit insurer to inspect the automobile at any reasonable time ## Footnote This helps the insurer assess the condition of the vehicle.

Question 47

What are the **Time and Manner of Payment of Insurance Money** requirements?

Answer 47

Payment to the insured must be provided within 60 days of submission of proof of loss ## Footnote This ensures timely compensation for claims.

Question 48

Explain **SEF 19A – Valued automobile endorsement**.

Answer 48

Used for antique or classic automobiles, requiring appraisal and agreed value prior to loss ## Footnote This endorsement protects the value of unique vehicles.

Question 49

What is **SEF 20 – loss of use endorsement**?

Answer 49

Coverage for renting substitute auto or using public transportation when insured auto is damaged ## Footnote Coverage begins immediately when the auto cannot be operated.

Question 50

Explain **SEF 27 – legal liability for damage to non-owned auto**.

Answer 50

Provides physical damage coverage on short-term rentals when legally liable, with specific conditions ## Footnote This coverage is limited to certain types of autos.

Question 51

What is **SEF 32 – Recreational vehicle endorsement**?

Answer 51

Provides coverage for underage, unqualified, and unlicensed operators to use insured vehicles off public roads ## Footnote This includes vehicles like snowmobiles and mini bikes.

Question 52

Explain **SEF 43R limited waiver of depreciation endorsement**.

Answer 52

No depreciation applied to losses on new automobiles for the first 24 months, limited to lesser of actual purchased price or manufacturer's suggested list price ## Footnote This protects the value of new vehicles.

Question 53

What is **SEF 44 family protection endorsement**?

Answer 53

Coverage when insured is injured or killed by underinsured or uninsured driver, increasing available liability coverage ## Footnote This endorsement provides additional protection for the insured.

Question 54

Explain **SPF NO2 – standard drivers auto policy**.

Answer 54

Insures people who usually operate automobiles belonging to others and do not own an auto themselves ## Footnote This policy addresses concerns about inadequate coverage from vehicle owners.

Question 55

What is **SPF 4 – standard garage policy**?

Answer 55

Used for businesses that work with autos, covering: * Section A – third party liability * Section B – accident benefits * Section C – loss or damage to owned automobiles ## Footnote This policy is tailored for automotive businesses.

Question 56

What is **SPF 6 – Standard non-owned auto policy**?

Answer 56

Insures businesses responsible for losses from autos not owned by the business ## Footnote Commonly purchased as an endorsement on a CGL.

Question 57

What is **SPF 7 standard excess auto policy**?

Answer 57

Provides additional Section A TPL coverage above the limit provided on SPF 1 ## Footnote This policy is for those needing higher liability limits.

Question 58

Explain **SPF 8 – standard lessors contingent auto policy**.

Answer 58

Purchased by businesses leasing automobiles to others, providing coverage when leaseholder fails to maintain required coverage ## Footnote This protects the lessor from liability.

Question 59

Define **occupant** in the context of automobile insurance.

Answer 59

Any person who drives an automobile or is being carried in or upon or entering into or leaving the automobile ## Footnote This definition is important for determining coverage in accidents.