Chapter 2 Model Narrative/Model Application Questions/Answers

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Chapter 2 Model Narrative/Model Application Questions/Answers
2014-02-15 17:29:12
Chapter Model Narrative Application Questions Answers

Chapter 2 Model Narrative/Model Application Questions/Answers
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  1. a) Define the term negligence.   

    b) List 6 pieces of information that you would find on a pink card.  

    c) State the duties of MPI in regards to Third Party Liability Claims.
    a) Negligence: is the omission to do something which a reasonable person, guided by those considerations which ordinarily regulate the conduct of human affairs,

    - would do,

    - or doing something which a prudent

    - and reasonable person would not do. 

    b) Pink Card:  

    - Name and address of insurer  

    - Name and address of insured 

    - Agency or brokerage of insured  

    - Description of insured vehicle(make/model/year) 

    - Policy number (license plate number in those provinces with full government insurance plans) 

    - Effective date and expiry date   

    c) Duties of MPI: Third Party Liability Claims 

    - They state where a claim is made against an insured, MPI shall upon receipt of notice of the claim, assist the insured by investigating

    o   And negotiating a settlement when MPI deems that it is expedient to do so;

    o   Without cost to the insured, defend on the insured’s behalf, any civil action for damages brought against the insured in respect of injuries,

    o   Death,

    o   Or loss of,

    o   Or damage to, the property of another; 

    - Pay all costs taxed against the insured in any civil action defended by the Corporation,

    o   Except the cost of an appeal taken by the insured without the consent of the Corporation,  

    o   And any interest accruing after entry of judgment,

    o   Upon the part of the judgment that is within the limits of the liability of the Corporation;  

    - Reimburse the insured for payment for immediate medical aid for a person injured in an accident for which coverage is provide under Autopac Third Party Liability
  2. 2) Identify the 15 exclusions to coverage under Autopac Third Party Legal Liability coverage.
    - Damage to property the insured owns or rents or has in his care or control caused by the insured’s vehicle 

    - Loss or damage to other people’s property in or on the insured vehicle 

    - Loss or damage occurring through the use of machinery or equipment mounted on or attached to the vehicle while the vehicle is parked at a work site 

    - Damage caused while the vehicle was being driven by someone in the business of repairing, servicing, storing, or parking vehicles or someone who is an automobile dealer and is not the insured’s employee or partner 

    - Loss or damage suffered by an employee of the insured who was injured while operating or repairing the insured’s vehicle  

    - Loss or damage from criminal activity  

    - Liability imposed by any workers’ compensation law  

    - Liability for damages from injury, death, or damage to property  due to a nuclear energy hazard 

    • - Operating a Government of Canada vehicle  
    • - The insured’s own injuries or death – Third Party Liability coverage is for claims others may make against the insured 

    - Operating a commercial truck, with a gross vehicle weight of (GVW) over 5,499 kg, or a public service vehicle such as a truck or bus more than 161 km outside of Manitoba 

    - Operating a municipal or other government--owned fire department vehicle  

    - Vehicles covered under Single Trip Registration Permits 

    - Operating a tractor  

    - Loss or damage caused by a semi-trailer
  3. You are a broker in Brandon, and you have just sold an insured, Doug, a basic Autopac insurance policy for his new sports car.  

    Several days after obtaining insurance Doug decides to race another vehicle. Doug loses control of his vehicle and crashes into a commercial building. Doug is 100% at fault.
    The accident results in damages estimated at over $145,000 to the commercial building.  

    How would the basic Autopac coverage you sold Doug respond under the above conditions? Explain your answer. As part of your answer include any legal concepts that may apply.
    Absolute Liability 

    - In Doug’s case, absolute liability would apply 

    - Absolute liability is another legal concept that can influence the settlement of automobile insurance claims  

    - Under absolute liability the insurer (MPI) is responsible to pay third party claims even though the insured (Doug) has breached a policy condition. 

    - The automobile policy is a contract between the insured (Doug) and the insurer (MPI). 

    - Like most contracts, it is subject to terms and conditions.  

    - For example, one of these conditions stipulates that the insured (Doug) will not use his or her vehicle in any race or speed test.  

    - Under the terms of the contract insurer (MPI) does not have to pay, and the insured (Doug) would have to compensate the innocent third party from his or her own pocket.  

    - This leaves the third party in a difficult situation. 

    - A lawsuit by the third party against the insured (Doug) will take time and money, and there is no guarantee the insured (Doug) has enough assets to fully pay the damages if found liable.

    - The third party could end up recovering nothing. 

    - To mitigate this, under the various absolute liability provisions applicable in each jurisdiction, the law extends some rights to a third where there is automobile liability insurance. 

    - 3rd parties are given a direct right of action against the insurer (MPI) to have the insurance money under the policy paid directly to them.  

    - This means claimants are ensured of being able to share in the money payable under a motor vehicle liability policy even if the insured (Doug) contravenes a policy condition.  

    - Some jurisdictions require a judgment to be obtained in favor of the 3rd party before money will be awarded under absolute liability.  

    - Others do not require it if liability is clear-cut.  

    - Manitoba Insurance Act, confirms the rights of 3rd parties to have the insurance money under a policy applied to their judgment or claim against the insured (Doug) under Section 258 (1)— Application of insurance money under motor vehicle liability policy and 258(4) states  

    - The right of a person who is entitled under subsection 

    o   (1) to have insurance money applied upon his judgment or claim is not prejudiced by,

    §  a) an assignment, waiver, surrender, cancellation or discharge of the insurer after the happening of the event giving rise to a claim under the contract; or

    §  b) any act or default of the insured before or after that event in contravention of this Part or of the terms of the contract; or  

    §  c) any contravention of the Criminal Code (Canada) or a statute of any province or territory of Canada or of any state or the District of Columbia of the United States of America by the owner or driver of the automobile;  §  and nothing mentioned in clause (a), (b) or (c) is available to the insurer as a defense in an action brought under subsection(1).   

    - Thus, even though an insured (Doug) may have made a misrepresentation in an application for insurance or breached a policy condition, due to absolute liability 3rd party claimants can still be compensated under the policy 

    - However, the insurer (MPI) has a legal right to recover from its own insured (Doug) any amount paid by reason of absolute liability.  

    - This means that if a person insured by MPI breaches a condition of his policy and causes an accident that injures or damages a 3rd party, the 3rd party will still be compensated by MPI and the insured will be required to repay MPI for all monies paid out to the injured or damaged party. 

    - In spite of the absolute liability, the responsibility for satisfying claims resulting from accidents occurring while insureds (Doug) are in violation of their policies still rests squarely on their own shoulders. 

    - It is recognized that innocent 3rd parties could be severely disadvantaged if an insured (Doug) has no assets with which to pay a claim immediately.  

    - The absolute liability provision takes care of that by requiring the insurer (MPI) to satisfy 3rd party judgments when the insured has an automobile policy.  

    - Insurers (MPI) are then given the full force of the law to recover their outlay from their insureds (Doug).  

    - Obviously, insureds (MPI) will find it difficult to obtain future insurance until they have repaid any amounts their insurers had to pay on their behalf because of the absolute liability provision.  

    - Manitoba’s insurance Act provides that where one or more contracts provide for coverage limits that exceed the minimum legally required limit of liability, the insurer may, with respect to these excess amounts, use any defense that it is entitled to set up against the insured (Doug). 

    - If the insured has contravened a section of his policy and been denied coverage as a result, this defense may also be used by the insurer against a 3rd party for any amounts claimed in excess of the minimum limits