Chapter 3:Automobile Insurance May 8 , 2012.
Quebec (for bodily injuryonly),B.C.,Manitoba,and Saskatchewanhaveagovernment-run autoinsurance
industry forthe basic, mandatory coverage that is the minimum required coverage
In these provinces,no policiesare issued for thismandatorycoveragesince everyonehasthesamebasic
Theinsurance premium ispaid at the same timelicensesarerenewed
- Allthree levelsof government are involved inregulatingtheuseof automobilesinCanada
- The federal government,throughthe Insurance Act of Canada,hasgiven provincesand territories
legislative power to manage their own automobileinsurance industries
- The federal Insurance Act wascreatedtocontroland monitor insurance companies,outline the
mandatory automobile insurance coveragethatan individualisrequiredtohold
- Government Regulationof Insurance:
Federal Level Provincial Level Municipal Level
Criminal Code of Highway Traffic Acts set Createsand set lawsfor
Canadahasseveral outlawsrelatingto parkingandcrosswalks.
sectionscovering various speed limits,age Convictionsfor
aspects,such as restrictionsondriving, violationsdonot affect
impaired driving, testingrequirements, premiumsand coverage.
dangerousoperation ofa different licenseclasses However,municipal
vehicle, failure to stop at (M1,G,L,etc.), seatbelt governmentscan
the scene of an accident, requirements,and impound vehiclesand
criminally negligent defineswhohastheright givefindsthatmust be
operation of a vehicle, ofway.
and theft. Convictionsfor license.
Convictionsfor violations violationsaffect
affect premiumsand premiumsand coverage.
Responsible for the Set rate guidelinesand
Insurance Act. coveragerequirements.
Types of Coverage: Covering only auto policy and there are similar personal coverage for motorcycles, motor
homes,trailersand camper units,off-road vehicles,motorized snowvehicles,and historic vehicles.
- Compulsory Coverage: allprovinces and territoriesrequirealldriverstohaveautoinsurance andto
have the following coverage:
Third-Party Liability: providescoverageupto$200,000($500,000for NovaScotia,$50,000in
Quebec)to pay other people towhomtheinsured can belegallyliableforbodilyinjuryand/or
damage to property of others.
Accident Benefits: provide compensation,regardlessoffault,for insuredpersons(the driver,
the driverspassengers,and pedestrians)injuredorkilled inautoaccidentfor allprovincesand
territoriesexcept Newfoundland and Labrador,whereAccident Benefitsareprovided through
the provincialhealth care plan.
Uninsured Automobile: providesthesame amount ofcoverageasthird-party liabilityifa
person isin an accidentwith an uninsured or unidentified(hit-and-run)autotocompensate the
victim for the amount heor shewould beentitledtoreceivefromanuninsured or unidentified motorist. If the victim isnot coveredbyan insurance policy,severaljurisdictionshaveaMotor
Vehicle Accident Claim FundsorUnsatisfied Judgment Fundtocompensate theinjured party.
Direct Compensation-Property Damage: inthefour provinceshaving no-fault insurance
coversphysical damage to thevehicleand lossof useofthevehiclecaused byanother driver.
In B.C.and Ontario,direct compensationcoversonlytothedegreetowhichtheinsured isnot
at fault.Manitoba, Saskatchewan,B.C.and Quebec forbodilyinjuryonlyhavegovernment-run
insurance plansfor mandatorycoverage.In Manitobaand SaskatchewanAll-perilsCoverage
for damage to the vehicle regardlessoffault ispart ofthebasicautopolicyand is,therefore,
Occasionally,itis suggestedthatthe mandatoryAccidentBenefitsCoverage shouldbe optionalif
the driver already has coverageatwork.Thiswould reducethepremiumsforthose drivers but
would likely increase the cost toother drivers.
- Optional Coverage:insuredscan get coverageforthefollowing:
Loss or damage to ones own vehicle.In B.C.and Ontario,no-faultinsurance coversdamage
to the ownersown vehicle to thedegree towhichthedriver isnotat fault.In Saskatchewan,
optional insurance isavailabletolower the$700 deductible.
o Additional Liability coverageover themandatoryminimum (manybrokersand agents
recommend $1,000,000 oreven $2,000,000liabilitycoverage)
o Additional Accident Benefits
o Additional Loss and Theft Coverage
Summary of Automobile Insurance Policiesfor Ontario:page72-73
- Private Insurersfor mandatory coverage,direct compensationfor propertydamage,righttosue for
pain and suffering with verbal threshold and $30,000deductibleand rightto sue for economicloss in
excessof no-fault benefits with conditions
- Name of Insurance Policy:OntarioAutomobilePolicy(OAP1)
Legal Principles:There are three legalprinciplesfor autoinsurance:
1. Absolute Liability:
- A person injured or killed by your vehicle(third parties)havethe righttocollect fromyour insurance
company even if coverage isdenied toyoubecauseyouhaveviolated thetermsofthecontract
- If you violate the termsof your contract,your property isnotcovered
- However,third parties whosuffer lossordamagecaused byyouarestillcovered byyour insurance
policy under the absolute liability doctrine
- The insurer hasthe right to be reimbursed by youfor any moniespaid tothird parties for property
damage, bodily injury,or death
- Thisdoctrine holds true in alljurisdictionsfor medicalbenefitscoverage(anyoneinjured orkilledby
- Third-party liability coversdamage or injurytoaninnocent third partycaused byyour negligent
operation of a motor vehicle-negligent inthatyoucaused theaccident
- To be negligent isto fail to do what a reasonableand prudent personwould do,ornotdowhatsucha
person would do; the negligent act causesproperty damage,bodilyinjury,and/ordeath
- New Brunswick,Ontario,Saskatchewan,and Quebec forbodilyinjuryhaveno-faultordirect
compensation insurance,which meansthateachpersoncollectsfromhis orher own insurance
company and the victimsinsurer cannottrytoget compensationfromtheat-fault driversinsurer
- These provinces have removed the rightofsubrogation-the righttocollect the claimpaid fromthe
insurer of the at-fault driver TheAutomobile Policy asa Contract
- An automobile policy isa contractthat laysoutin greatdetailwhattheinsurer,thesecond partyto
the contract, will and willnot pay for under whatcircumstances,terms,and conditions
- Determining the Premium: many factorscontributetotheamount ofyour insurance premium:
1. Probability of a loss: (historic dataand information)
- Young,single males have,asagroup,higher ratesofautoaccidents,theirpremiums
are higher than thoseofsomeone withasimilar driving record whoisolder,married,
- Insurance companiesdepend on historicaldatabecausetheyhaveno waytopredict
exactly whowillexperience aloss
- If you cause a accident,either asingle-car accident orone involving another vehicle,
the insurernowhasspecificinformationaboutyouand yourrateswilllikely increase
- Can reduce premiums for newly licensed drivers
Number of yearslicensed
- More experienced driverstend tohavefewer accidentsthan newlylicensed drivers
Number of claims
- Insurance isdesigned toprotect against catastrophiclosses,and insurersareoften less
concerned with the sizeoftheclaimand more concerned aboutthenumber ofclaims
- Filing twoor three claimsinafewyearswillincrease premiumsdramaticallyand may
even get you cut off
- Calling an insurance companytoask aquestionaboutaminoraccident youhave
caused meansyou havereported theaccident and willaffect your autopremium(but
not a home insurance premium)even ifyoudonotmake a claim
Number of at-fault accidents
- If the policy doesnot