Chapter 1 Introduction to Automobile Insurance and Autopac Key point questions
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1) Identify 2 distinct legal systems used in Canada.
Common Law and Civil Code of Quebec
2) Why is common law also called“judge-made law”?
Because it is a system of rules based on precedent.
Precedent: is a legally enforceable decision made by a judge that will guide judges in making subsequent decisions in similar cases.
The common law is unique because it exists only in past decisions, and cannot be found in any code or legislation. This characteristic makes common law flexible and adaptable to changing circumstances.
3) What is the Civil Code of Quebec?
The Civil Code of Quebec: is a general law that contains all of the basic provisions that govern life in society, namely the relationships among citizens and the relationships between people and property.
- The Civil Code of Quebec governs all civil rights, including automobile insurance contracts. Unlike common law courts, courts in the civil law system first look to the Code as a basis for a decision, and then they refer to previous court decisions for consistency.
4) Give an example of a law that has been enacted with respect to the operation of an automobile by each of the 3 levels of government of Canada.
Federal Government: the criminal code which is federal legislation that applies in all provinces, has several sections on driving offences.
Ex: Section 220 deals with criminally negligent operation of a motor vehicle.
- Sections 253, 254 and 255 cover impaired driving, driving with more than 0.08 mg of alcohol in the blood, and refusing to give a breath sample to a peace officer.
Ex: speed limits, rules respecting traffic lights and stop signs, and who has the right of way in various situations.
Ex: zoning, smoking, animal control, and the issuance of construction permits.
5) What coverages were first provided by automobile insurance policies?
The first coverages provided by an automobile policy were those indemnifying the insured for injury or death and damage to the property of others. Later the contract was extended to cover damage to the automobile itself by collision, fire, or theft.
6) Why did the provinces establish mandatory policy wordings for automobile insurance policies?
Because a few companies sold policies with so much fine print in them that when a legitimate claim was reported, some insureds found themselves without coverage. To address this problem, all provinces established standard policy wordings by the early 1930s
7) How has automobile insurance developed along with the automobile?
Automobile insurance has developed with the automobile:Increased traffic congestion, higher accident frequency, and escalating repair costs and injury awards have led to the development of an important and complex insurance product.
8) In which province is Accident Benefits optional?
9) In what 2 ways is automobile insurance distributed in Canada?
Automobile insurance is distributed in 2 ways in Canada:
1) It is sold by private insurance companies that sell their products
§ Directly to the public through the telephone or internet( sometimes called “direct writers”);
§ Through brokers/agents selling on behalf of a number of private companies; or
§ Through a combination of both direct writing and brokers/agents.
2) It is also sold by Crown corporations specifically set up for this purpose by provincial governments, such as Manitoba Public Insurance(MPI) or the Insurance Corporation of B.C. (ICBC). These corporations may sell their products
§ Through brokers/agents (who also sell the products of private companies);
§ Through their own direct sales departments; or
§ Through other government agencies.
10) Who is responsible for purchasing insurance for an automobile?
It is the responsibility of the owner of an automobile to purchase insurance.
11) In which provinces do Crown corporations provide the basic compulsory automobile coverage?
B.C., Manitoba and Saskatchewan have Crown corporations that provide the basic compulsory automobile coverages.
12) Where can a vehicle owner in B.C., Manitoba or Saskatchewan purchase additional coverages?
Additional optional coverages may be purchased either through the Crown Corporation or through private insurers. These additional coverages(aka extension policies) are similar to the standard automobile policies issued in the non-government insurance provinces.
13) When is the premium paid in a province where a Crown corporation provides basic compulsory coverage?
The premium is paid annually, when the vehicle license plate is renewed, and in some cases, a fee is charged when the driver’s license is renewed. No policy is issued, and an identical copy serves as the owner’s certificate of insurance.
14) Explain why it is said that Quebec has a “dual” system of automobile insurance.
It can be said that Quebec has a “dual” system of automobile insurance. In Quebec, bodily injury claims are covered by a government compensation plan and property damage claims are covered by standard automobile policies issued by private insurance companies.
15) How is the government bodily injury plan funded in Quebec?
The government bodily injury plan is funded by premiums collected when license plates are renewed and when drivers’ licenses are renewed, as well as by gasoline sales tax. For the remaining coverages, premiums are paid to the private insurance companies that issue standard automobile policies.
16) How can coverage granted by approved standard policy forms (SPFs) be varied?
Coverage granted by the approved standard policy forms may be varied only by the use of approved endorsement forms or by specific approval of the provincial Superintendent of insurance. No other variations are permitted.
17) List 6 standard policy forms, and state what kind of coverage is provided by each.
a) SPF1 Standard Owner’s Automobile Policy – provides coverage for owners of vehicles
b) SPF2 Standard Driver’s Automobile Policy – provides coverage for drivers who are driving vehicles they do not own
c) SPF 4 Standard Garage Automobile Policy – provides coverage for garages with respect to owned, non-owned, and customers’ vehicles
d) SPF 6 Standard Non-Owned Automobile Policy – provides coverage where there is responsibility for the use and operation of non-owned vehicles
e) SPF 7 Excess Automobile Policy –provides excess liability coverage for use along with an SPF 1, 2, 3, 4, and/or 6
f) SPF 8 Lessor’s Contingent Automobile Policy – provides a contingent coverage for businesses that lease vehicles on a long-term basis
18) What was the mandate of Manitoba Public Insurance (MPI) when it was first established?
19) What is Autopac?
Autopac was introduced on November 1, 1971. The act set up MPI as a Crown corporation, provided authority to transact insurance business and exempted the Corporation from certain provisions of the Insurance Act
20) State 2 types of vehicles not required to obtain basic Autopac coverage, and give an example of each.
a) Vehicles registered in the name of the Government of Canada or in the name of any other government, territory, or state are exempted from Autopac. However, vehicles belonging to the Government of Manitoba participate in Autopac.
b) Vehicles licensed to engage in interprovincial trade pursuant to the federal Motor Vehicle Act are eligible to be exempted from Autopac.
c) All vehicles not required to be licensed are exempted from Autopac
d) Vehicles that are licensed for operation on a highway for certain special purposes
– Ex: construction equipment licensed to travel on a highway to or from a construction project –are exempted from Autopac when operating on the highway other than in accordance with the license or permit. Vehicles not exempted from the plan are automatically covered whenever they are operated with a valid Manitoba License issued under the Highway Traffic Act or the Off-Road Vehicles Act.
21) What coverages does a vehicle require to be legally operated on Manitoba Highways?
a) Accident Benefits – under the Personal Injury Protection Plan (PIPP)
b) All Perils Physical Damage coverage (for vehicles that qualify)
c) Third Party Liability coverage
22) What does the Insurance Companies Act deal with?
The Insurance Companies Act deals with federal licensing and supervision of insurance companies and solvency standards for insurers. These are enforced through the Office of the Superintendent of Financial Institutions (OSFI).
23) What is the role of the Office of the Superintendent of Financial Institutions (OSFI)?
The Canadian constitution gives the federal government exclusive power to legislate in various fields, 1 of which is “money and banking.” Under this exclusive authority, the Canadian government has enacted the Insurance Companies Act, which deals with federal licensing and supervision of insurance companies and solvency standards for insurers. These are enforced through the Office of the Superintendent of Financial Institutions (OSFI).
24) Who administers the Manitoba Insurance Act?
The Superintendent of Financial Institutions of Insurance for Manitoba administers the Insurance Act.
25) What requirements does the Insurance Act set out?
The Insurance Act sets out the basic provisions of the “statutory policies” in respect of life insurance, sickness and accident insurance, fire insurance, and automobile insurance. It also prescribes Statutory Conditions required to form part of each statutory policy. The Insurance Act also prescribes certain general rules applicable to all policies issued in the province, such as what constitutes a contract, basic contents of a policy, grounds for voiding a policy, and certain limitations of action. The Insurance Act is not applicable to Autopac.
26) What is the purpose of the Manitoba Public Insurance Corporation (MPIC) Act?
The MPIC Act initially set up Manitoba Public Insurance as Crown Corporation, and established its board of directors. The MPIC Act also provides for the operation of the Corporation, and empowers it to do business in all classes of insurance when authorized by the Lieutenant Governor in Council –MPI is authorized to do business in all classes of insurance.
27) What does the Highway Traffic Act deal with?
The Highway Traffic Act deals with registration and licensing of motor vehicles, licensing of drivers, and traffic control of vehicles on highways. The Act has also long played a role in insurance relating to the requirements of proof of financial responsibility and safety responsibility. That role has been supplemented as the result of the introduction of Autopac. The failure to insure or to pay insurance premium may result in suspension of a vehicle of a driver’s license. Conversely, suspension of a vehicle license or driver’s license may automatically result in suspension of insurance privileges.
28) What limitation period applies to legal action against MPI?
The Limitation Act fixes the time within which a plaintiff must commence legal action against a defendant. If the action is not commenced within that time, the plaintiff’s rights are barred – the plaintiff can no longer file a lawsuit because time has run out. In general, the time limit for motor vehicle claims in Manitoba is 2 years. There are exceptions with respect to children, people with disabilities, or people considered mentally incompetent. The Limitation Act also provides for the extension of time limits by the confirmation of a “cause of action,” such as an inadvertent or poorly worded letter from an adjuster to a claimant.
The MPIC Act spells out the limitation period for action with regard to MPI. It states that every action or proceeding by an insured against MPI in respect of loss of or damage to a motor vehicle or trailer, benefits payable under any plan of automobile insurance, or a claim for loss or damage under a policy or plan shall be commenced within 2 years after the event or cause of action arose.
29) How do regulations affect statutes?
Older statutes tend to be all-inclusive statements of the law on a particular subject. To change this type of statute requires an act of the Legislature, and this tends to take time and make changing legislation cumbersome.
30) Why is the Automobile Insurance Coverage Regulation used with the MPIC Act?
Modern statutes tend to be skeleton documents setting out of the conceptual framework of the statutory objective and then delegating to the Lieutenant Governor in Council the power to make regulations that will prescribe the detail that gives shape and life to the statutory concept. Regulations cannot amend, alter, widen, or narrow the concept of the parent statute and must always conform to the concept of the statute.Regulations are made by the cabinet of the provincial government approving an “order” that, when given Royal Assent by the attachment of the signature of the Lieutenant Governor, becomes an “Order in Council” pursuant to some specified statute. If that Order in Council is filed with the Registrar of Regulations and is also published in the provincial gazette, the Order in Council becomes a regulation made pursuant to the specified statute and has the same force of law as the words of the statute itself.
In Manitoba, the MPIC Act uses this skeleton legislation method and requires the use of the Automobile Insurance Coverage Regulation to prescribe the details of Autopac coverage.
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